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What are your thoughts on co-investing with institutional LPs to build credibility and relationships for emerging managers?

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May 03, 2023
Regarding co-investment rights as discussed on the AMA agree re co-investment in follow-on is ideal. What are you thoughts on co-investing with institutional LPs (not participating in fund 1) as a way of 1) building our credibility in the market as emerging manager and 2) building relationship with that LP for subsequent funds? In this specific case we have a state insurer (65B fund biggest healthcare investor in the country) that are interested such a relationship as a start their check size is 2-50m for direct so we are looking at the lower end ideally with us leading. We are thinking ideal scenario would be to announce first close and first investment with marquee names alongside us. Appreciate your thoughts on this.
1 answer
Accepted Answer
May 03, 2023
It’s not really going to build your credibility in the market. Your brand and your experience will do that. Also, they will not make investment decisions on your timeline, most likely, because they have to get approvals etc… There are other ways to build a relationship with them besides doing co-investments that will yield just as good of an ROI. In my personal opinion, this is a distraction right now.

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