How Value Add Differs in PE vs VC | Julia Rees Toader

Julia Rees Toader argues that value creation changes materially across asset classes: in private equity, higher rates make leverage less effective, so operational improvement, margin expansion, and disciplined value creation matter more; in venture, by contrast, weak margins are often tolerated because the portfolio math is different. She also says venture investors need to be judged on how they help founders, not just on ownership or brand, because the best firms create access and relationships as much as capital.

A major theme is how Toader evaluates managers. She says track record is useful, but people matter most, especially for emerging managers and for strategies where history is still short. She looks for a combination of technical ability and social skill, and she says the first meeting often reveals whether a GP can actually build relationships, win over founders, and operate with humility. She also contrasts the zero tolerance of buyouts with venture’s acceptance of failures, arguing that portfolio construction and manager behavior should reflect that difference.

The conversation also covers fund structures and liquidity. Toader is positive on secondaries and says providers of liquidity tend to get paid, while continuation vehicles can be useful when handled fairly. She discusses GP stakes as a way for emerging managers to raise capital in a difficult fundraising environment, noting that families can be more flexible than institutions. Across the discussion, she returns to the idea that private markets are becoming more structurally creative as managers and allocators adapt to longer fund lives, higher rates, and more complex liquidity needs.