Episode summary
Why LPs are Investing into Independent Sponsors
How I Invest With David Weisburd
· · 24 min · Hosts: David Weisburd · Guests: Tom Duffy
Summary
TIFF’s private market platform is built around two businesses: an OCIO service for institutions and standalone private equity and venture capital strategies, with the latter focused on lower middle market opportunities. Tom Duffy says TIFF now manages roughly $9 billion, with more than $3 billion in private assets, and is expanding beyond its historic nonprofit base into wealth management and family offices.
A major theme is the rise of independent sponsors. Duffy argues the market has grown sharply over the last 5 to 10 years, attracting more seasoned investors who are leaving established firms to launch deal-by-deal platforms. He says that growth has also improved the quality of managers, while still leaving plenty of low-quality or undifferentiated sponsors in the mix. TIFF’s response is a sponsor-first diligence process that underwrites both the manager and each deal, rather than blindly backing every transaction.
Duffy also makes the case that the model’s economics and flexibility are a big draw. Independent sponsors can earn carry on a deal-by-deal basis, commit meaningful personal capital, and stay selective without the pressure of committed fund capital. TIFF uses early deals to assess trust, sourcing, track record, and resilience, and often turns sponsor relationships into future fund commitments.
Key takeaways
- Tom Duffy says TIFF manages roughly $9 billion, with over $3 billion in private markets, and is broadening from nonprofits into wealth management and family offices.
- Duffy argues the independent sponsor market is more professionalized today than in 2014, but still offers limited institutional competition and attractive entry valuations.
- TIFF underwrites both the sponsor and each deal, which Duffy says is a key advantage over blind-pool fund investing.
- Duffy says independent sponsors commonly commit 5 to 10% of their own deals, versus about 1 to 5% for traditional private equity GPs.
- According to Duffy, TIFF often uses one or two deals to decide whether a sponsor can become a long-term fund partner.
Notable quotes
“we have a double layer of of diligence on on every every deal. And we have a purpose-built purpose-built team that”
“what we typically see and there's no broad blanket answer but speaking averages here um these type of sponsors tend to commit 5 to 10% to their own deals”
“The market is is deeper and more professionalized. Valuations still remain well below mainstream PE levels and institutional competition is still limited”
“we want to underwrite investors that we can build long-term partnerships with”
How the episode opens
So, give me a sense for where TIFF is today as a business.
Yeah. So, to give you a sense of where TIFF is as a business today, David, I I really do think it's impactful to start with a little refresher of where we came from and what we do to give your listeners a better idea of the value ad that we bring to the table here at TIFF. So, TIFF was founded over 30 years ago really to provide investment solutions primarily to nonprofit institutions at the time where we specialized in outsource CIO solutions and private market solutions.
We have two distinct business lines. We have our OCIO or outsource chief investment officer business that manages the full wallet share of our client portfolios. That's what we've been doing since inception since 1991.
always had a strong focus on alternatives and private markets. And then that second business line that we have since 1997, we've been offering standalone private equity and venture capital strategies, which is where I focus today. And those strategies combined, we've grown to a roughly $9 billion organization uh with over three billion of that in privates where we continue to serve our historic nonprofit ENF base and also expanding our footprint into the wealth management and family office community where we've seen a lot of demand for the types of strategies and customization that we can bring to the marketplace.
They deliver what we view as as high quality investment returns consistently uh and over long periods of time for them. so many of these large institutions, they they're just overpowered with with so many resources and so many people on staff that these these smaller and mid-size firms just don't have and they viewed that as as such an inequality and wanted to help out any ways they could to that community.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- independent sponsors
- lp alignment
- private equity fees
- gp diligence
- emerging managers
Companies and tickers mentioned
- TIFF
Watch the episode
Watch “Why LPs are Investing into Independent Sponsors” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
