Episode summary
Why the Best GPs Refuse to Raise More Capital
How I Invest With David Weisburd
· · 37 min · Hosts: David Weisburd · Guests: Deepak Sindwani
Summary
Deepak Sindwani argues that Wavecrest’s edge comes from discipline, not scale. He says the firm intentionally capped Fund III at $450 million even with excess demand because moving beyond a sub-$50 million equity check size would push the firm into a more competitive part of the market and dilute its strategy. In his view, growth equity only works when the fund size, check size, portfolio concentration, and sourcing model all stay aligned with a consistent playbook.
He describes Wavecrest as a “treasure hunter” for profitable companies growing roughly 20% to 100% annually, typically around 50%, in overlooked markets outside the obvious tech hubs. Deepak says the firm prefers direct-sourced deals, long relationship periods, and founder-friendly structures where the entrepreneur rolls a majority of equity and wants a partner who can help scale sales, pricing, customer success, analytics, and talent.
Culture matters as much as strategy. Deepak says Wavecrest’s “no assholes” policy is intentional, because the firm wants to work only with people they like and respect. He also says adversity is part of the job: every company faces bumps in the road, and the best investors help founders navigate them with humility, pattern recognition, and trust.
Key takeaways
- Deepak Sindwani says Wavecrest capped Fund III at $450 million to preserve its sub-$50 million check strategy and avoid a more competitive market.
- He expects growth equity to deliver superior risk-adjusted returns when it stays concentrated, direct-sourced, and focused on 10 to 12 positions.
- Deepak says Wavecrest targets profitable companies growing roughly 20% to 100% annually, with an average around 50%.
- He argues founders choose growth capital for help scaling, diversification, or strategic expansion, not just because they need money.
- Deepak says culture is a performance advantage, and Wavecrest’s “no assholes” policy is meant to improve both morale and expected value.
Notable quotes
“we need to we want to maintain that discipline which means your fund size is limited otherwise if you either your check size grows or you end up uh in a different strategy”
“there's a break point in our view in growth equity where above $50 million equity check the market gets somewhere between 5 and 10x more competitive”
“No, it's 100% about motivation. It's 100% about passion”
“part of the reason you start any company is one, you're passionate about it, but two, part of the passion for us was to build a culture that we were excited and proud about”
How the episode opens
Deepac, I've been very excited to chat. Welcome to the How and Dust podcast. — Thanks so much, David, for having me. Great to be here.
So, last year you raised your third fund, $450 million, and you did it in four months. Given that it was a relatively easy raise, why not raise more capital? So from our standpoint, we really believe in a consistent approach to investing and we started the firm actually having come from larger firms, bank capital and Vist equity partners intentionally to come down market.
We used to be in the mid-market. We used to invest kind of $50 to $150 million equity checks per deal. And so part of creating Wave Crest was being in the lower middle market, the sub $50 million equity check market.
And so when you think about um our overall strategy which we'll get into we need to we want to maintain that discipline which means your fund size is limited otherwise if you either your check size grows or you end up uh in a different strategy. So from our standpoint um obviously we're grateful for the interest from our existing investors and new investors that enabled us to get it done quickly as you mentioned but the focus and the name of the game was always stay on strategy and the reason for that is we believe that our end of the market in growth equity at least is the is kind of the sweet spot is where the the superior riskadjusted returns are.
I know you'll probably reflexively say no but wasn't there a temptation to make the fund bigger? you get essentially 20% of those management fees guaranteed. — Look, there's always a temptation and you know we'll give you the exact number but you know there was a multiple on the amount we closed of interest even towards the end even the existing investors or in the new investors who came in wanted to do more and so again grateful for that interest had the opportunity to upsize the fund.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- growth equity fund sizing discipline
- culture and integrity in investing
- growth equity competitiveness
- sub-50m equity check strategy
- direct sourcing and founder relationships
Companies and tickers mentioned
- Wavecrest Growth Partners
- Bain Capital Ventures
- Comcast Ventures
- Credit Suisse
Watch the episode
Watch “Why the Best GPs Refuse to Raise More Capital” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from How I Invest With David Weisburd
-
Hunter Walk: Why Venture is Getting Harder, Picking Great Founders, and Investing Against Consensus -
True Anomaly’s Even Rogers on Space Warfare, China’s Military Advantage, and the Defense Tech Boom -
Finding the Next Anthropic, Quantifying Venture Capital, and the Science of Picking Winners -
Why 95% of AI Projects Fail, Anthropic still at $2T?, and Why AI Is Still in the First Inning -
Peter Thiel's 27-Year Partner on the AI Bubble, the Venture Capital Crisis, and the PayPal Mafia -
Why Venture Is Eating Public Markets, Picking Great VCs, and the AI Boom w/Brijesh Jeevarathnam
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.
