E318: The Biggest Mistake Investors Make When Building a Venture Portfolio

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Mar 5, 2026

Michael P. Larsen, Partner at Cambridge Associates with nearly two decades advising institutions and family offices. He explains why longevity creates an edge, how governance quietly shapes venture outcomes, and why portfolio size and cadence matter as much as manager selection. Conversations cover power-law spikiness, growth equity’s role, and practical co-invest and benchmarking considerations.

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INSIGHT

Longevity Creates A Competitive Edge

Longevity in an investment role creates an informational edge through accumulated meetings and outcomes.
Michael P. Larsen sat in ~5,000 GP meetings over 19 years, giving a “dog year” volume of experience for pattern recognition.

INSIGHT

Portfolio Size Matters As Much As Manager Selection

Venture returns follow power laws so portfolio construction matters as much as manager selection.
Larsen notes top families win partly by having larger footprint in venture and private growth, not just better picks.

ADVICE

Set Governance And Stick To The Plan

Establish governance up front and commit to a plan to preserve continuity in venture programs.
Larsen compares governance to building Central Park: you must endure years of uncertainty to realize the intended future.

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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.

Our Podcast now receives more than 300,000 downloads a month. Are you interested in sponsoring an episode? Please email David Weisburd at david@weisburdcapital.com.

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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