Zero to one. That is the number Trish Spurlin gave us, and if you are raising a first fund with endowments anywhere on your target list, it is the only number in this piece you need. Trish is Investments Director at Babson College, where she runs about $300 million of a $910 million endowment, roughly 70% of it in venture. Eighteen manager relationships, thirteen of them active, and she thinks the right number is fifteen or sixteen. She took the job on March 13, 2020, with twenty four hours to decide, and did not pick her own first new manager until January 2023. She takes three to five hundred calls a year.
So do that math before you send the next note.
Her team runs a four pillar framework: team, track record, strategy, and Babson fit. The first three are the ones you have spent a year polishing. The fourth is the one she said “kills half the stuff.” The first three mostly do not separate you, because, in her words, most people have an incredible team. You do not go out and raise a venture fund if people do not like you and you have not done cool stuff. Alexa put it as everybody being a nine out of ten, and Trish agreed.
What separates you is whether you happen to fit the shape of a book you cannot see. She is mapping pre-seed, Series A and a little Series B, asking where the white space is and who is best in it, and she is not looking for a network that fully overlaps hers or one that does not overlap at all. You can be excellent and be the wrong shape this year. When she got to the honest version of how that call actually gets made, that she knows it when she sees it and that GPs hate hearing it, I said on the recording that it is the real answer and that it is not personal. I still think that is true. It is also thin comfort when you are the one who got passed on, and I am not going to pretend otherwise.
Here is the part I did not walk in expecting. Babson does not start from a view of the world. Trish said they are not in the business of deciding the world is going somewhere and then hunting for the best manager there. They do the reverse: find the best manager, then ask where that person thinks the world is going. That is what the 2% is for, she said, and if she were smart enough to know it herself she would just do it.
I said something close to that about my own work in the same conversation, which is probably why it stuck. Almost twelve years in, and the alpha almost never came from the thesis I built or the market map I made. It came from a founder showing me something that seemed obvious the second I saw it and that I had somehow never seen. Sorry, associates, if you still exist. Hearing an LP run that logic one level up changed how I think about what I am selling in a room like hers. She is not buying the thesis. She is buying the judgment.
Then the liquidity question, where I came in skeptical and left more so. Alexa put the GP sentiment on the table directly: with SpaceX and Anthropic, there have to be six or seven new slots now. Trish said the lockup still exists and the money is not back, that she would guess six to eight months at least before anything comes off the table, and that when it does come it goes to the total endowment and gets reallocated to targets. So if four or five names exit and everybody gets paid, plenty of LPs are simply back in line with where they were supposed to be all along. They do not get more allocation. She quoted Chris Dubos on it: the moolah is not in the cooler yet.
I have been saying on this show that LPs do not re-up on a headline, they re-up when there is a wire, so I will take the confirmation from inside an investment committee. She was careful not to be read as bearish, though. She said people should keep putting money in, and that she is not telling anybody to take their foot off the venture pedal.
When I asked how she finds fund ones before everybody else does, I reached for Billy Beane, because in 2009 Babson was running a list nobody wanted and that list became the list everybody wanted. Her answer was deflating in a useful way. You find them by trying to be everywhere, which she admitted is not what people want to hear. Her team is on planes, a month in New York in the fall and San Francisco in the spring. She coaches them that they give more than they get, because she knows she cannot fund most of the people she likes, and so do they.
Alexa closed by saying any GP would be lucky to get that last slot. She is right. It is one slot, it might not open this year, and Trish will have taken four hundred calls by the time it does.
Trish Spurlin joined Alexa Binns and me on Swimming with Allocators, with Shane Goudey of Sidley Austin on what LPs are actually diligencing in a fund team.
Listen here: https://swimmingwithallocators.com/podcast/the-fund-everyone-will-wish-they-backed
With gratitude,
earn