Episode summary
DDQ: Why LPs Still Aren’t Buying the Venture Comeback
Swimming With Allocators
· · 30 min · Hosts: Alexa Binns, Earnest Sweat
Summary
The hosts argue that the venture rebound is not being unlocked by headline liquidity alone. They point to the SpaceX IPO and the fact that, despite a huge listing and lockup mechanics, many LPs still are not re-upping because distributions are not yet flowing back in a meaningful way. Their view is that capital returning from winners like SpaceX will move slowly through the system, especially when LPs may hold stock, foundations and endowments remain cautious, and some established VC brands are themselves under scrutiny.
They also emphasize better fundraising behavior for emerging managers. Advice from LP conferences is presented as practical and blunt: make fundraising a conversation, ask friends why they invested, and focus less on rehearsed differentiation and more on the qualities that suggest future potential. The hosts argue that GPs should be more intentional about communicating their forward-looking edge and should actively steer conversations toward the bigger vision when LPs do not ask.
Later, they revisit the case for fund of funds and the barbell in venture. The hosts say the market is swinging back toward specialized FoFs as allocators split capital between a few mega names and a small early-stage bucket. They also debate mega AI bets, with one side treating them as necessary lottery tickets and the other warning that concentration creates systemic risk. The episode closes on tactical advice: raise with anchors first, use AI to track LP preferences, and host smaller, more intentional gatherings rather than flashy events.
Key takeaways
- The hosts say SpaceX’s IPO will not quickly restart LP re-ups because distributions are slow, locked up, and often not immediately redeployed.
- They argue that emerging managers will need multiple exits, not one headline IPO, before capital really returns to venture.
- Courtney at Recast Capital’s advice is that fundraising should feel like a conversation, not nonstop talking.
- Giata at San Francisco Employees Retirement System says GPs should ask friends why they invested to identify real differentiation.
- Aaron at 50 South Capital’s frame is that allocators should look for managers with “insane future potential,” not just past success.
- The hosts think fund of funds are regaining relevance as allocators adopt a barbell strategy between mega names and early-stage venture.
Notable quotes
“LPs aren't re-uping on a headline. uh they're not going to re-up until there's a wire”
“this capital when it flows back in, it's flowing back into the full pot. It's not just hers to redeploy”
“non-stop talking is pretty obnoxious and that unless you're saying something super engaging, let's have a conversation”
“we have the confidence as VCs to be like we we can start counting the money”
“you have to raise before you start raising”
How the episode opens
Welcome to Swimming with Alligators, — The VC podcast from the LP perspective — With your hosts, Alexa Bins — And Ernest. You ready? Let's dive in.
Welcome back to Swimming with Allocators. Uh it's DDQ time. So, uh it's time for us to discuss, debate, and question.
It's where Alexa and I underwite the entire venture industry. Um, and so we got some fun for today. So, uh, football's back.
That'll be relevant later. Uh, IPO season opened, I guess. And somehow LPS we're hearing are still not writing checks.
Um, so I brought a few games and questions to Alexa that she has not seen today. She has she has not seen this. This is this is real.
We have no producer, which which you probably should um uh to to be a uh to validate this, but you have to trust me. Um and then this is just a reminder for these DDQ episodes. We take all questions or feedback and recommendations.
So you can send your questions at contact atswimingwithallocators.com or just reach out to us on LinkedIn or if you have our emails. Um Alexa, you ready to dive in?
Okay. That was a little hesitant but all right first uh we'll start with discuss uh the first D and um I wanted to bring up um first discussion of IPOs and uh if unless you've been under a rock this summer um we had SpaceX um come out and it was priced in June uh June 11th at 135 became trading at on June 12th and it raised about $75 billion. It's not a that's not a mistake.
Billion dollars, the largest IPO ever. Uh the first day it closed at $2.1 trillion. Uh and obviously because it's IPO insiders have a lock up period uh depending on 180 days or uh 365 days.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- lp fundraising
- venture comeback
- ipo liquidity lockups
- barbell strategies
- ai risks
Companies and tickers mentioned
- SpaceX
Watch the episode
Watch “DDQ: Why LPs Still Aren’t Buying the Venture Comeback” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
More from Swimming With Allocators
Swimming With Allocators, this episode and its artwork belong to Earnest Sweat, Alexa Binns. Octagon is not affiliated with the show; this page is an independent summary.
