Episode summary
The #1 Reason LPs Reject Funds Before Looking at Track Record
How I Invest With David Weisburd
· · 31 min · Hosts: David Weisburd · Guests: Jorge Felippe
Summary
Jorge Felippe says Almulla rejects many funds before track record because alignment, governance, and growth discipline matter first. He looks for strong GP commitment, rejecting anything below 2% immediately and preferring 10% or more, because he wants managers who are truly motivated by performance rather than management fees. He is also wary of funds that keep doubling in size, since rapid AUM growth can turn an investing business into a fee business.
He argues that emerging managers can be the best source of alpha, especially fund one managers with deep networks, strong pipelines, and real hunger to prove themselves. But because attribution is hard to verify, he says diligence has to test whether the track record belongs to the manager, the brand, or a previous platform. In some cases, Almulla goes further and checks references directly with portfolio company CEOs and even verifies audit reports.
Jorge also explains why Almulla prefers funds over direct deals: directs are operationally heavy, hard to monitor, and often produce too little ownership for the work involved. The family office instead favors final closes, evergreen structures, secondaries, and a barbell of early-stage venture and pre-IPO exposure to improve capital velocity and reduce J-curve pain.
Key takeaways
- Jorge Felippe rejects funds with GP commitments below 2% and prefers 10% or more because alignment is a core underwriting factor.
- He says the best-performing venture funds are often fund ones, but only a small subset of emerging managers will ultimately become durable franchises.
- Almulla is skeptical of rapid AUM growth because scaling without strategy discipline can turn a fund into a fee-driven business.
- He prefers final closes over early subscriptions because interim capital calls and fund expenses create cash drag and distort portfolio returns.
- Jorge says family offices gain an edge through patience, flexibility, and simpler diligence than institutional LPs.
- He sees direct deals as a capability, not an asset class, and only does them when there is a clear strategic reason to be on the cap table.
Notable quotes
“if it's anything below 2% we reject straight away”
“We like to see 10 plus”
“they keep what doing what they what they're good at doing”
“Research shows that the best performing funds are the fund ones”
“we see direct deals not as an asset class but as a capability”
How the episode opens
Last time we chatted you said that we reject most funds before we even see the IRRa. What's the main reason why you would reject a fund?
I would say there are three key reasons. First one is in terms of terms and alignment. Second on governance and third is around the the way they are growing.
So let's start with the main one for us is the alignment the importance of alignment you know the fee structure but also the alignment of the GP with the GP commitment. This is for us is a critical uh a critical figure that we look at as a KPI and if it's anything below 2% we reject straight away.
So 2% GP commit absolute minimum. What do you like to see? — We like to see 10 plus — 10 plus
10 plus and we we've been in funds that are 30% GP commits. We've been to funds which are 20 and you know we really show the skins and game on the governance side. There's a lot of things that we look for but it's really you know how strong the systems are, how you know the structure is set up for us.
You know, we are based in in Dubai in UAE and of course the tax situation is very favorable to us. So we need to make sure that it's kept throughout the structure of the fund and and finally you know we hate funds that just double in size for every vintage.
Yeah. — So we are very you know we want to see people motivated for the performance and not the the fees on the management fees. — At some point you end up in an asset management business versus an investing business.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- lp fund selection
- gp commitment alignment
- fund fees and carry
- emerging manager underwriting
- private markets track record attribution
Companies and tickers mentioned
- Almulla
Watch the episode
Watch “The #1 Reason LPs Reject Funds Before Looking at Track Record” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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