Only the top decile is worth the illiquidity. Everything else follows from that.

Private equity and venture capital returns are not distributed like public market returns. They are skewed. A relatively small set of managers produces results that clearly compensate investors for ten or more years of lockup.

Selectivity is what makes the asset class work: chosen well, a private commitment can be one of the most rewarding allocations a portfolio holds, and choosing well is our entire discipline. So we do not allocate blindly to private markets as a blanket asset class. Instead, we allocate to specific managers whose records place them at the top of the asset class, and we pass on everything else.

A multiple on invested capital ignores time. An internal rate of return can be flattered by one early exit. Neither, on its own, tells you whether a manager will repeat. What does is a record of both, fund after fund, across different market environments and company sizes. That is the thesis of Harris, Jenkinson, Kaplan and Stucke, whose study of persistence found that managers with consistently top quartile records tend to show it again in the funds that follow, and it is the thesis we invest on.

High returns delivered consistently make vintage investing compound. Through vintage investing, a portfolio can be built where distributions from earlier funds fund the commitments that follow, and capital that comes back can be put to work again.

Vintage investing is also how we manage risk. Persistence is a probability, not a promise: even a firm whose record puts it in the top decile will typically, over six funds, put two in the top quartile, two in the second, one in the third and one in the fourth. A single commitment to a single fund can be the one that lands at the bottom, however good the manager. Committing to several managers across several of their successive funds is what turns a manager’s average into an investor’s outcome.

The managers who meet that standard rarely need to raise capital. Their existing investors typically take the entire allocation of the next fund, minimums are set at institutional scale, and new relationships are formed by invitation, usually with investors who bring something beyond a check.

This is why family offices and ultra high net worth individuals so often find themselves in the wrong funds: the ones that market. Our answer is to earn the relationship first, then pool capital through a dedicated vehicle so that a group of qualified investors can participate in a commitment none of them would make alone.

We keep fees and carried interest to an absolute minimum. We set the preferred return above the one the underlying fund uses so that what we earn reflects the work we do: finding exceptional managers and opening the door to them. We are paid only after our partners are. To ensure alignment with our investors, we invest our own capital in every vehicle on identical terms.

The intent is simple. Our partners should experience the manager’s returns with as little friction as possible, and we should earn only when the structure adds value.

Private fund performance is private by design, so we rebuild it from the outside. Commercial databases advertise fund level performance and charge upwards of $100,000 a year for it, yet by our count they hold returns for only about a quarter of a manager’s funds, which says little about persistence or consistency. So we maintain our own proprietary database of fund level performance, collected from public pension, endowment, and regulatory disclosures, commercial sources, and our network, giving us thousands of funds across vintages to work from.

That data is the screen. Only managers with consistent top decile performance across multiple funds are considered. From there the work becomes qualitative. We meet the senior team, test whether the strategy holds at the size of the fund being raised, and decide whether we would commit our own capital to it, because in every vehicle we form, we do. We collect the data, run the analytics, find the promising firms, then interview, vet, and down select. All of it is done once and shared among the partners in each vehicle for a small fee, paid only if the fund clears a high hurdle.