Should LPs Back First-Time Fund Managers?

This week on Swimming with Allocators, it’s time for another discuss, debate, and question (DDQ) episode as Earnest and Alexa riff on founders behaving badly and the cultural and governance failures enabling fraud-like behavior, then dive into how enterprises will actually adopt AI and what that means for the future of SaaS and vertical software. They unpack the rise of GP-led secondaries, strip sales, and mounting impatience around liquidity, using recent market data to explain why secondary activity is accelerating. The conversation shifts to Brendan Baker’s three-tier venture framework (mega, middle, and small funds), where they debate where innovation, desperation, and real differentiation will come from. They explore whether LPs should back first-time fund managers without a traditional track record, what “track record” should really mean, and why softer skills, pattern recognition, and learning velocity matter. They also discuss treating fundraisers like enterprise B2B sales, how to qualify LPs and build authentic GP–LP relationships, and close with a playful “start, bench, cut” on SpaceX, OpenAI, and Anthropic to frame how they think about pre-IPO AI and space bets.

Highlights from this week’s conversation include:

• Prediction: 2026 as the Year of Founders Behaving Badly (1:16)

• Misuse of Startup Funds and Rise in Legal Issues (1:48)

• Narrative-Driven Investing and Weak Governance in VC (2:28)

• Enterprise AI Adoption: Rory O’Driscoll’s Five Paths (3:25)

• Will Big SaaS Survive the “SaaS Apocalypse”? (5:43)

• LP Liquidity Pressure and GP-Led Secondaries (9:19)

• Data on Secondary Pricing, Continuation Vehicles, and Strip Sales (12:04)

• Venture Splitting into Mega, Middle, and Small Funds (15:26)

• Desperation, Differentiation, and Innovation Across Fund Sizes (17:52)

• Should LPs Back First-Time Fund Managers Without a Track Record? (21:41)

• Learning Velocity, Curiosity, Kindness, and Willingness to Schlep (24:49)

• The Value of Apprenticeship and Seeing Portfolios Over Time (25:50)

• Game: Start, Bench, Cut – SpaceX, OpenAI, Anthropic (30:16)

• One Question to Ask a First-Time Fund Manager (34:32)

• Signs of Strong GP–LP Fit: Informal Contact and Vulnerability (36:48)

• Closing Remarks and Episode Wrap-Up (37:40)

Swimming with Allocators is a podcast that dives into the intriguing world of Venture Capital from an LP (Limited Partner) perspective. Hosts Alexa Binns and Earnest Sweat are seasoned professionals who have donned various hats in the VC ecosystem. Each episode, we explore where the future opportunities lie in the VC landscape with insights from top LPs on their investment strategies and industry experts shedding light on emerging trends and technologies. 

The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this podcast are for general informational purposes only.

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