A Guide for the Contrarian LP
with Benedikt Langer
For this issue, I sat down with someone I've been following for a while, Benedikt Langer.
Benedikt is an LP in emerging venture funds and author of Embracing Emergence, a blog I love for its refreshing, first principles take on fund investing.
It’s no secret that we're in a different environment for new venture funds. In 2024, total fundraising declined 21%, and three-quarters of all those commitments concentrated in just 30 large firms. The market is still recalibrating from the 2020-2022 bubble, and liquidity constraints and macro uncertainty continue to extend these dynamics.
At the same time, we’re seeing a profound technology shift, with AI reshaping every industry. And there's growing evidence that smaller, emerging firms are a more reliable source of alpha, especially in moments when market instability intersects with rapid technological progress.
Storied firms are born in times like this, when incumbents rest on the old playbook, prices reset, and market shocks shake up the marketplace of talent and ideas.
If a renaissance is somewhere on the horizon, perhaps now is the time to reframe the value proposition of new firms, and to refine the playbook for how to evaluate them. I wanted Benedikt's take, and to put the LP and GP perspectives into a more candid conversation.
01 | “Everyone has a track record.”
EO: I want to start with what you look for in emerging managers. You’ve written about concepts like proximity, magic, linguistic consistency. I like those frameworks, more than traditional heuristics, like a manager’s “right to win” or “unique sourcing.”
Could you distill the 2-3 things you center on when figuring out if an emerging manager has what it takes?
BL: At the family office, we primarily look for a GP’s ability to invest in people. This is especially relevant in venture.
There’s a concept I love from Thomas Merton, a monk and writer. He wrote about the false self. It’s what we tell ourselves about who we are, and then in turn what we tell the world about who we are. But that sense of self is never completely accurate – it’s a false narrative we all carry.
VC as an industry is more prone to the false self.
For people building a startup, who dream of changing the world – they tell themselves a story that is very unlikely to come true, because the big outcomes so rarely materialize. So there’s a heightened need for venture GPs to see through the false self, to pinpoint this discrepancy in the founders they invest in.
Personal self-awareness is one of the clearest signals of a GP's ability to do this. The more integrated someone is themselves, the more clearly they can see where others are headed.
EO: And what else do you look for?
BL: A balance between thoughtfulness and conviction. Too much thoughtfulness, and you never get anything done. Too much conviction, and you end up running in the wrong direction.
I can usually get a sense of this quickly, on the first call. When a manager describes how they think about their fund, why they picked the strategy, and what they believe the world will look like in 5-10 years, I get a window into how thoughtful they are — what they care about, how they’ve developed their taste, what motivates them.
And when we talk about how they’ve executed in the different seasons of their life, I can assess their conviction and how they reach decisions.
How do you validate those attributes? Some people are great at marketing and lack substance, and vice versa. It feels like there’s a lot of room for LPs to make Type I and II errors if they’re not evaluating this well.
I think this ties to what a few LPs might be doing wrong. LPs invest according to what they think they should be doing – not what they’re actually good at.
For example, I’m a pastor, and the son of the family I work for is also a pastor. We’ve seen people go through all sorts of stages in their life, including marriages ending and businesses falling apart. We’ve seen how people say certain things and don’t live up to their word, or how they do.
Our strength is assessing people. We trust our discernment there.
We get under that by asking GPs about their upbringing and their friendships, to understand their story and if their past is reflective of what they’re saying in the present. The key is to ask questions that reveal value in hidden places, answers you otherwise wouldn’t hear.
Can you give an example?
Yeah, we’ve asked GPs about their insecurities quite a bit, and that opens the conversation.
It’s really about second-order questions. We’ll ask – what do you look for in founders? You nearly always hear the standard attributes – grit, humility, etc. But the moment you ask – how do you assess humility? – most people stop having answers. If a GP has a strong, specific answer about what humility looks like in a founder, it tells me they’ve really thought about it. They’ve likely seen it firsthand, and they’ve probably reflected on what humility looks like in themselves too.
That kind of self-awareness and applied insight is what we’re looking for.
It’s interesting — as a GP, I’m rarely asked deep, personal questions. But as you're talking, I'm realizing those are often the clearest windows into my judgment and thinking patterns.
If these questions get skipped or glossed over, there’s risk of missing the experiences and traits that can predict outperformance in the context of a new venture: clarity under pressure, adaptability, lateral thinking. The things you can’t see in a deck or data room, but that determine how someone will show up when they're bringing a new vision to life.
Exactly. That’s the stuff that matters.
So why do you think LPs aren’t diving enough into those signals?
It’s a misunderstanding of what is provable. Everyone says, “Fund 1 managers don’t have track records.” But of course they do. Everyone has a track record.
Are GPs well positioned in their thesis area? Have they been scrappy? Have they built long-term relationships? Those threads are more predictive than crunching the numbers on a track record from a prior firm, which doesn’t map to the new context a GP is operating in.
I learn the answers from stories, references, and listening closely.
For example, if a GP tells me – “This founder said, ‘I need you in this round,’” or “I took a bet on this founder before anyone else saw it,” — and if the founder validates that — that says something about how you build long-term relationships. I can’t skip over that.
I can also assess a GP’s general thoughtfulness — whether they have a perspective about where the world is heading in 3, 5, 10 years. I can gauge their ability to raise capital by watching how they pitch. I can assess whether they’re commercially minded by seeing how they think about building a generational firm, not just a personal brand.
Most LPs don’t ask the right questions on Fund 1 calls because they haven’t re-defined or thought differently about what is actually provable.
02 | “Can a new context lead to even better performance?”
Correct me if I'm wrong, but there seems to be a bias for GPs that have “done it before.” LPs like the same strategy, from the same team. The logical extreme of that is defaulting to wait for Fund 2 or 3, when there’s more certainty – or maybe, more perceived certainty.
This is very, very different from how I evaluate founders and startups.
I’m looking for raw capabilities in people – non-obvious, future indicators. I try to look beyond the common signals of success. Because if something is a known quantity, that means there’s consensus. But consensus isn’t where you find alpha. The return profile of your average venture fund makes that concept pretty clear.
Is this LP orientation around certainty a structural problem in how capital gets allocated? Or simply a rational reflection of the different risk/return profile between a startup versus a fund?
It might be both.
There is a difference in what LPs and GPs are underwriting. When GPs evaluate a founder, they only need them to be successful once. If a founder hits a home run, they did their job. But when I bet on a GP, I need them to pick the right teams and products with consistency. I need a different level of repeatability.
But I do agree there is an unnecessary bias toward waiting for more information, which can lead LPs to miss out on great Fund 1 returns, or lose downstream access.
By Fund 2, you’ll know if the GP has executed against their strategy, if they did what they said they were going to do. But you won’t have much more certainty around outcomes. Even at Fund 2 and 3, you’re still backing potential.
I think what also gets missed is how much context matters. It is very different to operate inside someone else’s machine versus building your own.
LPs focus on the risk of that. They aren’t sure how a GP will fare managing their own firm. So they punt.
But what about the upside potential?
I don't have data here, but I'd argue the best founder-GPs – once they have the resources to self-actualize – usually shine so much brighter running their own strategy, in their own context, than what they achieved inside someone else’s shop.
And you’d miss those returns if you’re only asking, “Have they done this exact thing before?”
I agree. At established firms, you have brand recognition, infrastructure, resources, a set culture, even a different financial cushion. That’s a completely different way of investing. It changes everything.
And LPs have to think about not just what could go wrong, but can a new context lead to even better performance?
03 | "Managers need to embrace the productivity that comes with inefficiency."
I believe one of the biggest asymmetries in the emerging GP-LP dynamic is a vastly different discount rate on time.
LPs have long relationship-building timelines. But emerging GPs need money yesterday. Emerging GPs can easily get caught in the chicken-egg problem – asked to show proof points before they are afforded the capital or resources to generate them.
What do you think about this? Do you think the best emerging GPs or LPs manage or value their time differently than others, in a way that is more aligned?
One GP comes to mind. She was very deliberate about her follow up cadence, and accelerated fundraising by dropping LPs quickly, instead of keeping up with everybody.
It also depends on the type of LP. Family offices will always be slow, since mostly they’re optimizing for not losing money. Fund of funds might be more aligned with a GP’s pace.
Maybe another way to think about this — LPs, like venture capitalists, rely on proxies to save time. For example, if a GP is coming out of a name-brand firm, or you get a warm intro from someone you trust, those signals drive momentum.
Are there any creative or nontraditional signals you’ve seen LPs rely on that help you get to a deeper sense of a manager, more efficiently than the usual path?
I think there are a lot of shortcuts LPs take that don’t end up working.
For example, a lot of LPs rely on aggressive personal branding or a large following to indicate that a GP attracts founders. But I’m not convinced that will lead to performance. It’s a red herring.
One analogy that might help – a lot of wealthy people contract artists to create custom pieces, or they hire the same interior designers for multiple projects. The artist becomes their conduit to the creative world, their way to access a space they otherwise wouldn’t have the ability or time to pursue.
Fund 1s are the artists for these LPs. These GPs let them participate in new technology, to be at the frontier. So if you manage the relationship in a way where LPs feel that, it can create a connection where they want to be on this journey with you.
I love this analogy. I started my career at Bridgewater. And Ray Dalio was brilliant at building these types of connections with his early capital partners.
Unlike venture, redemption is a real risk in hedge funds. As soon as performance dips, LPs might want out. Most firms manage this contractually – through lock-up periods and notice requirements. But Ray flipped the script. He made sure his capital partners understood macro through a long-term lens, through advisory work and the Daily Observations newsletter. He cultivated a much deeper LP-GP dialogue.
Trust became a tangible asset, and led to a more durable capital base. This powered a long-term investment strategy.
One of the reasons we launched Timespan is because we believe the LP-GP relationship in venture can be done better. There are still all sorts of perverse incentives in VC. Valuations are opaque, long-term decisions are made off short-term data.
But to your point — if LPs, especially in a Fund 1, want to be part of the artistry of technology, maybe there’s room to innovate around how that gets done.
Yes, although this goes back to your question on how LPs value time differently than emerging managers.
Investing in relationships takes time, wisdom, and discernment. Managers need to embrace the productivity that comes with inefficiency. The best relationships aren’t easy to build. The Bridgewater example proves that out.
One tactic is to systematize your touch points. A good analogy is Toast — the POS system restaurants use now. Before Toast, waiters had to write everything down on paper, which broke the flow of conversation with customers. But with technology, they can take your order while continuing the conversation. They check you out on the spot. The system didn’t take time away from the customer — it gave them more of it.
And how would you advise LPs and GPs on how to decide who to spend time with? You can spin your wheels courting someone who will never be the right fit. Or pass too quickly and miss the perfect partner, all because of one awkward call.
Some LPs value those relationship building moments more than others, that inefficient expenditure of time. You and I could probably spend time on calls like this over and over, and it would keep compounding the relationship.
But some LPs who just need to deploy, or keep relationships warm until they are ready to deploy. More of a utilitarian approach.
It’s hard, but just know who you’re dealing with and what they want.
I want to go back to transparency, because I think there may be something more structural at play than relationship building.
Venture is an idiosyncratic asset class. Valuations can get divorced from fundamentals quickly. Technology is moving at a fast clip. I fear many GPs – and LPs by extension – don’t use or try the products they’re investing in.
Is that depth something LPs are dialed into, or would even want to be more dialed into? Have you seen GPs successfully bring LPs into the fold, so they better understand the products their capital is nurturing, and understand the nuanced ways those products create value?
I have to believe there’s a way for GPs to build in a faster feedback loop – way ahead of DPI – so LPs can improve their decision-making and processes?
That’s a very good question, and one I haven’t thought about much, which might be proving your point.
The quick answer is yes, venture is more obscure than other asset classes. But I only know the relationship I have with my GPs. We text, we go out to dinner, we have personal conversations. This opens the door to getting more under the hood.
I haven’t seen a systemized way of doing that differently, but one underutilized resource is the quarterly update. I recently surveyed LPs, asking them how important the quarterly update is. Nearly everyone ranked it as highly important. I was surprised by that, since most GPs feel like nobody reads them.
I think these best practice communication channels could be modernized, and lead to better transparency. But I need to ponder this more, it’s a good question.
From the GP perspective, I feel like too many of us succumb to fear. Startups are volatile, products don’t evolve linearly. It’s scary to tell an LP, when you're a new firm trying to prove yourself, that something’s not working, especially if you know they probably aren’t hearing that from your peers.
But there’s a serendipity and connection that can happen if you lay it on the table, assuming both parties are thinking long-term.
That’s a good point. You’re incentivized to keep things positive. Every existing LP is a potential partner for your next fund. That’s a very unique dynamic, and not every industry has it.
04 | “Linguistic consistency sparks the imagination.”
Let’s talk about manager differentiation.
There’s a quiet debate among GPs – is differentiation mostly a marketing exercise, or does it truly drive performance?
The argument goes – the best firms historically didn’t start with a one-of-a-kind thesis or sourcing engine that was impossible to replicate. Their success wasn't because they had something that no one else could tap into.
It was because they just showed up differently. They were more curious, more tenacious, more willing to adapt and take risks when others didn't. They had a clear, directionally accurate point of view on where to find value in technology, but it wasn’t a radical departure from other investors. And they backed it with good, old fashioned hard work.
What’s your take? Do the best emerging GPs have a real, structural differentiator? Does differentiation matter more now than in the past?
Or is the market getting distorted – are LPs creating artificial distinctions to make sense of a crowded market?
The other day, I reviewed 30 emerging GP pitch decks. They were all effectively the same. There were some great nuggets. But the storytelling wasn’t clear.
Put yourself in an LP’s shoes – ideally they’re looking at 500 to 1,000 managers in a year. I know you probably look at more startups than I do funds, but funds blend together very, very quickly. And some GPs really lack the ability to communicate what it is they’re doing and why it matters.
There are some real assets GPs underutilize. For example, most GPs don’t articulate why they chose their fund name. Can I ask, why did you pick the name Timespan?
My co-founder and I like to nerd out over tech history. To think about technology on a timeline – so we can spot patterns and filter out legacy software.
Thinking this way keeps us focused only on the products that are truly novel, that structurally could not have been built just a few years ago. And it's a repeatable and adaptive way to build an investment mandate, so our firm can remain at the forefront and endure over a long period of time.
See, that communicates a lot. It says that you value analyzing the past, that you have a general understanding of cause-and-effect, and that you will most likely apply that same thinking to markets and people. And that will carry through on the big and small things you do.
Differentiation is important, because (1) GPs are generally not good at communicating it, (2) we’re in a very crowded market, there is a lot of noise, and (3) LPs don’t always ask the right questions to discern it themselves. We lack the attention span to really pinpoint differentiation. We move on quickly. One bad, 30 minute intro call, and the probability your fund gets dropped is very high.
I believe there’s a famous clip of someone asking Steve Jobs what he learned at Apple after his first stint. And he said he now takes the long view on people.
I think as LPs, we may have lost sight of that. We don’t get close enough to people, and so we substitute by relying on a pitch deck, on LinkedIn or Twitter.
But if we look at the generational firms, they did signal something. Maybe it wasn’t in their thesis, or in the exact vision for the firm they were going to build. But they could articulate who they are and what they stand for. Maybe it’s less important to communicate your thesis in some differentiated way, and instead to communicate who you are in a way that leaves an impression.
I think that’s right. If GPs think of it as a marketing exercise, as wordsmithing, then that’s what it becomes. But as a GP, you have to stand out, however you can. That’s on you.
And the good LPs, that are a fit for your specific fund, will move on that when they see it. They will take the time to peel back the onion and validate that, and come up with an independent thesis on the qualities that make an emerging GP worth the bet, or not.
I really agree.
J.R. Tolkien wrote one of the best, most recognized books in the English language, Lord of the Rings. He was a linguist at his core. When he was a kid, he studied old languages. He came up with the elf language and the names of people and places.
That linguistic consistency sparks the imagination. It can set great funds apart.
One GP I reference a lot is Erica Wenger. She compares the founders she invests in to elephants. They are communal animals. They have bigger ears than mouths, meaning they listen more than they speak.
This is not a concrete play-by-play of her diligence process. But it takes me into her world of assessing founders. I get a sense of where she spends time when she meets a new entrepreneur. Sure, there’s some marketing to it. But it goes beyond that. It positions her a little bit differently, and lets me into her process.
05 | "Don't fall into the trap of reductionism."
Last question – what advice would you give LPs investing into emerging managers?
Don’t fall into the trap of reductionism. This is not a business of clear recipes, of completing a checklist. Be as holistic as possible.
And what about advice for emerging managers just getting started?
Think deeply about why you want to do this. Don’t do this for financial reasons. It’s too hard. On a probability-weighted basis there are more lucrative paths. There has to be a ton of motivation and purpose behind doing it.
That’s so true. And that same advice extends to founders building companies as well.