Let GPs excel

There’s a “standard” term in venture capital that needs to die.

It’s called “Co-Investment Rights” and while this clause sounds great in theory, it almost never works out the way anyone thinks in practice.

One dirty secret of venture is that almost every large or institutional LP wants co-investment rights — they want the ability to also invest directly in any deal that your fund participates in.

In reality, co-investment rights are mostly useless.

In theory, every LP wants direct access to your portfolio companies.

In practice? You can deliver the perfect deal to them on a silver platter, and most won't even respond, let alone participate.

If you’re an LP, the whole purpose of backing a fund manager is because you believe that THEY are a great Investment Manager and steward of capital. You've done the diligence. You've vetted THEIR strategy. You’ve seen their performance and now you've committed your capital.

So why are you trying to play GP?

LPs should focus on finding great GPs and let them do what they do best — invest. Just like GPs should focus on finding the best founders and let them operate.

The best LPs don’t try to be GPs. They back great investors and let them do their job.

LPs, do you agree? GPs, have you had this experience?"