Accepting Spikiness in Venture Portfolios

What separates elite venture LPs from everyone else… and why do most family offices underestimate the governance required to win? In this episode, I sit down with Michael P. Larsen, a longtime Partner at Cambridge Associates, to unpack nearly two decades of building venture and private equity portfolios for leading institutions and family offices. Michael shares why longevity may be the ultimate competitive advantage in asset management, how governance quietly determines venture outcomes, and why portfolio size can matter just as much as manager selection. We dive into power laws, spiky returns, growth equity’s overlooked role, co-invest best practices, and how benchmarking can help LPs stay disciplined during optically challenging cycles.

Highlights:

• Why longevity in venture investing creates perspective most LPs never develop
• The hidden edge elite LPs have in portfolio sizing, not just manager selection
• Why governance may be the most underestimated driver of venture outcomes
• How to structure a venture allocation after a liquidity event
• The real reason venture portfolios feel “spiky” and why that is a feature, not a flaw
• Why waiting for obvious top managers often leads to second-tier access
• How fund cadence compression can quietly distort portfolio construction
• The importance of underwriting firms, not just individual funds
• Why benchmarking venture is especially challenging in Mag-7 dominated markets
• Growth equity as the “third bowl of porridge” between venture and buyout
• Co-invest adverse selection risks and how scale improves access
• Systematic vs opportunistic co-invest strategies and when each makes sense

Guest Bio:

Michael P. Larsen is a Partner at Cambridge Associates, where he has spent nearly two decades advising institutional investors and family offices on venture capital, private equity, and growth equity portfolio construction.

Over the course of his career, he has participated in thousands of GP meetings and helped design durable private market programs focused on governance, manager selection, and long-term discipline. His work emphasizes strategic allocation, benchmarking rigor, and building venture portfolios designed to withstand multi-decade market cycles.

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Sponsor:

AlphaSense is the AI-powered market intelligence platform trusted by 85% of the S&P 100, helping investment professionals make faster, more confident, data-driven decisions. Built for hedge funds, asset allocators, private venture capital firms, and investment bankers, AlphaSense uses advanced AI and powerful search across premium proprietary content to surface the insights that matter most—before the market moves. Elevate your research and stay ahead of the competition. Visit https://www.alpha-sense.com/howiinvest/ to learn more.

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Stay Connected with Michael Larsen:

Michael Larsen: https://www.linkedin.com/in/michaelplarsen/

Questions or topics you want us to discuss on How I Invest? Email us at david@weisburdcapital.com.

Disclaimer:

This podcast is for informational purposes only and does not constitute investment, financial, legal, or tax advice. Nothing in this episode should be interpreted as an offer to buy or sell any securities or to participate in any investment strategy. All opinions expressed by the host and guests are their own and do not represent the views of Weisburd Capital. Participants may hold positions or have financial interests in the companies, funds, or investments discussed. Any references to specific investments are for illustrative purposes only. Investing involves risk, including the potential loss of capital. Past performance is not indicative of future results, and any forward-looking statements are subject to risks and uncertainties. Any third-party data or opinions have not been independently verified. Listeners should conduct their own research and consult their own advisors before making any investment decisions.

(0:00) The Longevity Advantage in Venture Investing (1:48) Why Venture Portfolios Behave Completely Differently (2:12) The Hidden Variable: Allocation Size Matters (4:30) Governance: The Least Sexy Alpha (6:15) Step One: Define Your Illiquidity Budget (8:33) Why Elite LPs Accept “Spiky” Returns (10:36) How Many Venture Funds You Actually Need (12:19) The Biggest Portfolio Construction Mistake (17:57) The Long-Term Game LPs Are Playing (20:54) The Real Risk in Venture Co-Investing