I’d been talking to a Series A healthcare company the day we recorded. Good growth, and a competitor in their space who has already been king-made. Their question was blunt: should we have two decks, one for a Series B venture investor and one for growth equity? I said absolutely. One story is how you get to profitability and why this is the last check you need before a liquidity event. The other is how we’re going to the moon.
I said it on tape without thinking twice. Then Santosh said the opposite.
“I still tell founders you keep one deck, but you have to qualify.” His version is a sequence instead of a split. A warm-up wave, then three waves of intense structured outreach, and if nobody bites after that, you raise enough to go down a different path. Not the moon path. A path where the founder still gets financial freedom and flexibility, with an entirely different set of players at the end of it.
We weren’t arguing about decks. We were arguing about when a founder is allowed to know which company they have.
That question is live because of something I said earlier in the hour. When I got into this ten years ago at Prologis, the advice was to be non-consensus and right, and buried inside it was an assumption nobody stated: that right arrives in eighteen months, maybe three years, and that capital is still there when it does. The ellipsis between non-consensus and right has gotten long enough to be a death valley now. That’s what pushes founders into double consciousness early. Not just what you think is a great company, but what the next funder will think about it.
Santosh had the LP side of the same problem. There are very few firms, he said, willing to underwrite something they can’t easily get marked up in under twelve months. He is blunt about the large LPs who skip the first close and turn up for the third. “I’ll be real here. Like those are the most annoying people in the world.” Some genuinely need the time. A lot of them, in his read, are looking for social validation.
That last part I didn’t learn on this recording. I walked in believing it, and better to say so than pretend the hour turned me around. My first brush with consensus was in equity research. I’d build a REIT model on my own assumptions, get to NAV and FFO, then bring it to my boss, who told me to go check consensus. Are we within a cent or two? Good, now we can feel good. What’s the point of our job if it isn’t our assumptions? That was public markets, and it arrives earlier and earlier in private ones now. People are buying permission, not information.
What did move was Santosh’s answer on what flexibility costs. An LP of his who has been on Swimming with Allocators pushed them on reserves: if you believe you have a non-consensus winner, you need it to become consensus at some point, that’s the part about being right, so keep feeding it. He pushed back, because you need more shots on goal now and LPs still want fund sizes constrained. One LP they both know has asked for pre-seed portfolios as small as fifteen. His conclusion is that maybe reserves give, and you raise discrete capital against a Series A or Series B risk separately, matching risk and reward at capital formation instead of inside one fund.
That’s the first version of a flexible strategy I’ve heard that costs the GP something specific. I keep saying uniformity is going away, and I also know uniformity is what gets you funded. It’s efficient to say my buddy Santosh does pre-seed, this check size, this ownership, here’s his email. It’s much harder to say I’m a market hawk who will use any tool in the private toolkit. His reserves answer is what that harder sentence costs.
Caroline Hale came on for the Citizens Private Bank segment, and the line I wrote down was about the guest list for her annual GP and LP retreat. “I don’t want just the seat filled with an LP, I want them filled with an allocating LP.” Santosh called finding an actively deploying LP the hardest part of fundraising. She does it for a living.
So I came out close to where I went in. Our biggest allocators have become long-only hedge funds, so the craft shops have to borrow from the boutiques: more strategies in the toolkit, more market inputs, real comfort with secondaries and with bootstrapped companies in verticals you know. Market truffle pigs, legible to LPs even in cursive.
with gratitude,
Earnest