Semil Shah on LP Pressure and Emerging Managers (Term Sheet)

A Term Sheet interview with Semil Shah (Haystack, Lightspeed) on the pressure LPs were under in spring 2020.

Why it was kept

Two excerpts: LPs under pressure as the proliferation of young emerging-manager funds meets a downturn, and how hard it is to build relationships and prove a track record — it was easy to start these funds, and a lot of people did.

As Kyle captured it

• Interview in Term Sheet (Fortune) with Semil Shah at Haystack and Lightspeed Venture Partners - Investment Returns LP
  • Investors in venture capital firms—the limited partners—are under pressure right now. Venture capitalists think the younger venture capital with emerging managers will be the first to be hit. What is your take?
  • It is so hard to spend time building relationships, and it takes so long to prove a track record. So it was easy to start these funds—but a lot of people have not been able to put together the track record to become established. Now in a pandemic world, I think that is just going to be intensified, and **it’s going to be extremely difficult for newer managers to get to the institutional level. **Just think about the largest investors in the venture capital asset class—nonprofits, foundations, and university endowments—they are under layers of stress they’ve never encountered before. We’re talking about students not enrolling in the fall potentially, furloughs or firing university staff. So I think fundraising is going to be significantly harder.