Episode summary
How to Separate Yourself When Everyone Has the Same Deck
Swimming With Allocators
· · Hosts: Alexa Binns, Earnest Sweat · Guests: Zach Ruchman, Rebecca Stuart
Summary
The guest argues that private-market investing is really an exercise in making decisions under uncertainty, and that venture in particular only makes sense if allocators are comfortable with long duration, illiquidity, and the possibility that a 10-year fund becomes a 15-year or even 20-year fund. He says venture still needs to be judged by power-law outcomes: if capital is tied up that long, the target should be 10x returns or better, not just a modest gain.
He also says fund size is strategy. A billion-dollar venture fund has a very different math, cost of capital, and incentive structure than a $100 million fund, and that should change how LPs underwrite it. His own firm, HB Wealth, manages private-market portfolios for families across credit, real estate, private equity, and venture, with venture often handled more selectively because it behaves differently from the other private asset classes.
Across the discussion, the guest emphasizes manager differentiation, authentic relationship building, and alignment of incentives. He prefers smaller managers with clear edges, deep curiosity, and a track record that matches their stated philosophy. The legal segment adds that non-competes are weakening across the U.S., so founders and VCs should rely more on confidentiality, invention assignment, non-solicit, and trade secret protection, especially in remote-work environments.
Key takeaways
- The guest says venture investing only works for LPs who can tolerate 15- to 20-year illiquidity and still expect 10x outcomes.
- The guest says fund size is strategy, because a $1 billion venture fund has very different return math and incentives than a $100 million fund.
- The guest prefers smaller managers whose track records, deal focus, and philosophy match, rather than firms trying to be all things to all LPs.
- The guest says non-competes are becoming less reliable, so portfolio companies should lean more on confidentiality, invention assignment, and non-solicit provisions.
- The analyst says remote work makes jurisdiction-specific restrictive covenant drafting essential, especially for companies with employees in California and other protective states.
Notable quotes
“we at HB we always talk about your fund size is your strategy”
“there are all sorts of people out there who are looking at private wealth and they're saying, hey, there's retail money that doesn't know better”
“the erosion of non-competes means that a departing founder has more freedom to start a competing venture”
How the episode opens
Welcome to Swinging with Alligators, — The VC podcast from the LP perspective — With your hosts, Alexa Bins — And Ernest Sweat. You ready? Let's dive in.
Welcome back to Swim with Alligators. I'm Ernest Sweat. Uh today, Alexa and I are joined by Zach Rachman, uh who is at HBealth.
Um he focused there on building private market portfolios for high- netw worth families across venture, private equity, real estate and credit. Uh Zach's career has taken him from a fullbrite uh fellowship in Jordan uh to consulting to black rockck and now allocating capital across private markets. uh Alex and I got an opportunity to talk to him about why venture investing requires comfort with long-term uncertainty, why fund size defines your strategy as a fund manager, and what actually helps managers stand out um when there are thousands and thousands of venture firms competing for LP attention.
Uh with that, here's our conversation with Zach.
Thanks so much for being here. We appreciate it. Zach, your path has been anything but linear. Uh Ernest mentioned consulting, the Fulbright, now HB. Is there a thread connecting things or have you sort of discovered your true north in this process?
Yeah, obviously it's been uh it's been a non-traditional pathway to be sure. Uh, I think that being an LP is probably secretly the best job in finance and I I love what I do. So, I'm hoping that this is true north here.
But certainly, uh, you know, I think every stop that I've had through my career has been a really important stop in my career that makes me a much better allocator. You know, if I think about uh living in the Middle East, working in the international development world, living through the Arab Spring, like uh that was all about learning how to make decisions in uncertain environment and with unclear information and you know, never knowing what the next thing was going to be that hit the news.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- vc differentiation
- fund size strategy
- gp lp incentive alignment
- non-competes and non-solicits
- trade secret protection
Companies and tickers mentioned
- BLK
- HB Wealth
- BlackRock
- Sidley Austin LLP
Watch the episode
Watch “How to Separate Yourself When Everyone Has the Same Deck” 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.
