1/ There has always been an enormous amount of diligence done by LPs of potential GPs. This has also included moral and ethical judgements based on whatever arbitrary system of beliefs the LPs deeply believe or simply use to create hierarchy and leverage.. wsj.com/articles/the-m…
But it seems that the time is coming for GPs have the same discussion about LPs. What if the LPs money was stolen by an autocratic leader? What if their family made guns or alcohol or tobacco? What if they believe in Pro-Life vs Pro-Choice or No-Guns vs Ok-Guns?
The best GPs should know that they can pick their Capital partner and I would encourage them to ask tougher questions of their LPs...why make the Harvard endowment any more money? What systemic bias do you perpetuate?
Founders will probably impact these decisions a lot more going forward. They seem to be much more thoughtful in how they construct their mission, values and culture. A critical question for founders and employees should be:
“Where is my money coming from?”
“Where is my money coming from?”
It’s not really from Sequoia or Andreesen FYI. It’s from a whole grab-bag of funding sources you may actually not agree with.
And don’t fall for the line that “our LPs are non-profits.” The NRA is a non-profit!
And don’t fall for the line that “our LPs are non-profits.” The NRA is a non-profit!
Founders (the best of them) will probably start asking these questions and a version of an ESG score can/should exist so that both GPs and Founders who take GP capital can have more transparency about where and who the money comes from.
Note: I have ZERO issues with the Mormon church but this article forms a fine point on a trend.
