Episode summary
The Investment Office E11: Buyer Beware
The Investment Office
· · Hosts: Matt, Wendy
Summary
The host and a guest argue that picking individual private companies is usually a weaker way to build a portfolio than investing through a fund manager, especially for investors without deep sector expertise. They contrast how institutional LPs typically rely on managers with sourcing, diligence, and portfolio construction skills with the way individual investors are often drawn to single deals through clubs and platforms.
A major theme is information asymmetry. In private markets, the guest says investors should ask why they are seeing a deal, what underwriting was done, and how the platform or club makes money. The host adds that regulatory rules have made it easier for some investors to buy into individual private companies than into private funds, which may perversely push them toward riskier choices.
The discussion also turns to AI and private-market selection risk. The guest argues that AI is changing company cost structures so quickly that it is becoming harder to predict winners, especially among late-stage private tech companies and secondaries. Both agree that cocktail-party appeal and “shiny object syndrome” should not override portfolio discipline, and that even seasoned investors should be humble about how little can be known in fast-moving markets.
Key takeaways
- The host says individual investors should ask why they are being shown a private deal before writing a check.
- The guest argues that private-market information asymmetry makes standalone company selection much riskier than fund investing.
- The host says current regulations can make private funds harder for many investors to access than individual private deals.
- The guest warns that AI is likely to make picking winners in late-stage private tech and secondaries harder, not easier.
- The guest says the appeal of naming a specific company can create “shiny object syndrome” that distracts from portfolio construction.
Notable quotes
“that sort of like shiny object syndrome is, you know, it just like don't don't fall for it”
“there is just a lot less transparency. There is no such thing as fairness in distributing information”
“the idea of cherrypicking and evaluating standalone individual investments for most institutional investors, it is just so outside of how they would think about constructing a portfolio”
“what you're able to do now is you're able to produce an equivalent product let's say with far fewer resources and and far fewer people and in less time”
How the episode opens
You know, there's this appeal of being able to speak to like an individual investment versus just being invested in a fund. Like one is sexier and has more appeal, right? Like as an investor, you're probably more excited about being able to talk about a specific company you're invested in versus like a fund that you're invested in, right? And so that sort of like shiny object syndrome is, you know, it just like don't don't fall for it.
Hi, this is Matt Paler with Wendy Lee. We're co-founders at Ivy Invest and welcome to this week's episode of the investment office. As always, we're here to discuss the latest in institutional investing, private markets, and alternative assets.
Uh this week wanted to talk about a topic which a lot of uh my friends and family ask me uh from time to time uh which is should I be investing in this opportunity, this deal, this company, and how should I evaluate it? And of course my answer to them often is uh you probably shouldn't be picking individual companies but it is a topic that we hear a lot and so thought it was worth exploring. Uh Wendy I would love to hear your initial thoughts on this topic.
So it's funny because I think this is something that as institutional investors, endowments foundations, it's so not how endowments foundations typically think about investing, cherrypicking individual companies to invest in outside of co-investing alongside GPS in which these institutional investors may already be invested in their funds. Right?
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- private company investing
- fund selection vs direct investing
- single-name evaluation challenges
- ai risk
- institutional investing approach
Watch the episode
Watch “The Investment Office E11: Buyer Beware” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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