While tech professionals earn 7-10% in traditional investments, families with $10M+ are capturing 15-25% returns through a completely different playbook
PE has severely underperformed in the last 4 years and is bogged down by a huge pipe of companies that don't have liquidity. It is a different think to look at Vista and Benchmark and different to average PE fund.
Panos - great to hear from you. Agree that PE is a large animal and a lot of the larger funds have underperformed. The funds that have done well are those that use the same strategies of high-performing VC funds. They look where others aren't, they don't overcomplicate their business model, bloat with fees, etc.
My goal is to extract some of these funds to start reporting on them and provide visibility of what a good mid to small tier PE fund looks like. Make sense?
Small tier PEs is where is the meat but it’s a full time job to uncover them and get into them. Now looking at illiquidity windows and the performance of the markets to date it is hard to argue in favor of PE. And as always you need to lose money to earn. I have been happy with private credit so far but also feel nervous about it.
Panos - you are absolutely right about the challenges. This is why I work on my portfolio as a job, so I can find the right operators before committing capital. (Similar to your VC).
The liquidity issue is real, and the mega funds have some scale issues for sure. What I have discovered during my ten-year deep dive in private equity is that the differentiation between the large funds and the smaller nimble funds is massive. The smaller, more nimble operators who stay focused on their core competencies have been and continue to deliver consistent returns while the larger players get bogged down in complexity.
You mentioned a full-time job, and yes, I agree it takes time, but I have found the payoff to be worth it as the nimble PEs deliver consistent distributions, grow equity, and provide depreciation systematically like well-oiled machines.
Your point about Private Credit is interesting. I have been investing in Private Debt and Credit for several years, and it has performed well and continues to do so.
For me, the liquidity trade-off has been worth it for the tax-efficient income generation, but you're right that it's not for everyone, especially in today's market, where liquidity matters.
Most important is to build a portfolio based on how you want it to perform and know what you are investing in.
PE has severely underperformed in the last 4 years and is bogged down by a huge pipe of companies that don't have liquidity. It is a different think to look at Vista and Benchmark and different to average PE fund.
Panos - great to hear from you. Agree that PE is a large animal and a lot of the larger funds have underperformed. The funds that have done well are those that use the same strategies of high-performing VC funds. They look where others aren't, they don't overcomplicate their business model, bloat with fees, etc.
My goal is to extract some of these funds to start reporting on them and provide visibility of what a good mid to small tier PE fund looks like. Make sense?
Small tier PEs is where is the meat but it’s a full time job to uncover them and get into them. Now looking at illiquidity windows and the performance of the markets to date it is hard to argue in favor of PE. And as always you need to lose money to earn. I have been happy with private credit so far but also feel nervous about it.
Panos - you are absolutely right about the challenges. This is why I work on my portfolio as a job, so I can find the right operators before committing capital. (Similar to your VC).
The liquidity issue is real, and the mega funds have some scale issues for sure. What I have discovered during my ten-year deep dive in private equity is that the differentiation between the large funds and the smaller nimble funds is massive. The smaller, more nimble operators who stay focused on their core competencies have been and continue to deliver consistent returns while the larger players get bogged down in complexity.
You mentioned a full-time job, and yes, I agree it takes time, but I have found the payoff to be worth it as the nimble PEs deliver consistent distributions, grow equity, and provide depreciation systematically like well-oiled machines.
Your point about Private Credit is interesting. I have been investing in Private Debt and Credit for several years, and it has performed well and continues to do so.
For me, the liquidity trade-off has been worth it for the tax-efficient income generation, but you're right that it's not for everyone, especially in today's market, where liquidity matters.
Most important is to build a portfolio based on how you want it to perform and know what you are investing in.