matt curtolo

Fabri Cara: of the groups that I worked with over 40 last year did an informal survey, 80 % of them said, we get zero or minimal feedback after a meeting from LPs. It's shocking when you hear that number, but it's actually not surprising when you think about the incentive structure. And so as it evolved, realize that being an objective truth teller is where GPs need some of that. And there are some great LPs out there that do deliver feedback.

but more feedback is necessary and transparency into the process. Season four, episode seven, and we are doing something a little bit different today, jumping the fence ⁓ or sort of close to that. We're not talking to a manager. We're talking to Matt, an independent LP advisor and 20 year private market veteran who deployed capital at Hamilton Lane, MetLife and Allocate before deciding he could do more good outside the seat.

But then in it, Sunwoo, tell us a little bit more about this one. Now, this is a special episode. Matt has been seated at many different sides of the table. His practice now sits quite in the middle, helping emerging GPs sharpen their narrative, understand the LP mindset, and stop pitching into a void.

I think we really like the way in which he interacts with the managers and how he's helping emerging LPs as well build a process from scratch. Let's get into it. Matt, welcome to the SlicePod. Thank you so much for being here today.

You are the first go at having somebody that's not a manager beyond the pod as a guest. So we're very excited for the conversation. Before we dive into things, let's start at the very beginning. What were you dreaming about as a kid growing up in Philadelphia?

Well, first, it's an honor to be the first. Hopefully I can do you proud and set the bar high, but I grew up about 90 miles north of Philadelphia. So I always say it's no man's land. I was product of a third generation Italian American family.

Family was super close. And when I say super close, like both of my sets of grandparents were three blocks from each other. dad was a high school math teacher. My mom owned her own business.

We were in a small rural town. Family was really close. I think my expectation was just, I'm going to continue to be a functioning member of this family. was fortunate to be.

Top of my class growing up in high school and I had options, but just didn't really have a ton of direction. seems like you knew that you were always going to do something with numbers. can think of the influence from your father being a math teacher. The dinner conversations would be something that has to do with capital and how money moves.

always say that the numbers point is a good call out because I was a huge sports fan. I would gravitate towards the box scores rather than the articles and like, okay, what do these numbers mean? How can I dissect them? I approached it.

It was the same thing with ticker symbols. That was the way I looked at it in the finance and the money pages of the newspaper. Those were the things that I was gravitating towards. Initially I said, okay, I'm doing well in school.

Let me be in a small town. You think Dr. Lawyer are the paths to go down to be successful? I certainly had the path of, could be a teacher.

Summers off was pretty attractive when you were like a 15 year old kid. I went into college as an undeclared major in Allentown, Pennsylvania, about 40 miles south of where I grew up. And that was, do I want to do pre-med? I took some science classes, took pre-law track and none of that was really appealing.

So the rubber met the road when I was a sophomore and you have to declare if you want to graduate on time. I picked finance as I could get the broad business track gravitated towards it really liked some of the coursework. Ended up supplementing that with a professional communications minor. You finished college with communications and finance, and then you go on to Hamilton Lane.

Was that an obvious path for you to go into private markets or what were you thinking about after college? The least obvious for me, honestly. This was 2004. Did not have a class on private equity, private markets.

I think we had a chapter in an investments book about alternative assets. Even at the Ivy league schools, private markets was not a huge focal point. I was looking for a job, honestly. So 04 was not the worst job market, but it wasn't the best.

I wanted to stay within the New York to DC corridor. So I was expanding my horizons at 21, 22 years old. I'm like, I think I'm ready to move out on my own. Of the hundred or so applications I put out there, I'd done some internships with a financial advisor doing cold calling and worked at a smaller RIA where we were doing portfolio planning.

None of that really spoke to me. So I said, I want to do something different. But this was one where it's like, yeah, it seems really cool. I don't know a lot about it.

Opportunity to learn. I was not prepared for everything that would happen. Serendipitous that I found that role or they found me and got to start at that point in time. long were you there for?

How did your role change throughout the times? And what were the patterns that you saw early on that kept you interested to stay there? The business at the time. 2004 was much more of a consulting practice.

So working with large public pension funds, primarily some sovereign wealths, but basically being their consultant on investment opportunities, portfolio, all that sort of stuff. There was very little in terms of asset management, other products and geographic coverage. So it was very large institutions, high velocity, high profile, but we didn't have ultimate discretion on those assets. For me, the real moment in time came in early 2005, one of the big groups in the West coast ended up dissolving and splitting off, which formed Tory Cove and formed StepStone, what it is today.

In that interim period, Hamilton Lane was the beneficiary of a lot of those public pension, those large clients looking for someone to fill that gap. So in nine months into my role there, we were getting newer and bigger clients and we didn't have a huge client service team to support. So they're like, Hey, you've been here the longest of the analysts. are you interested in doing this?

And I said, sure. I'm willing to take on anything. It was daunting. It was thrown in the deep end of the pool and like the first line of defense.

The junior analyst had to understand the portfolio that these clients had understand internally what funds we could bring to them, what fit their mandates. Had to answer a lot of questions. So you're a liaison between people within the firm and had to learn how to talk to these folks. Investment officer at a public pension is also not the final decision maker.

So you want them to look as good as they can. You need to get information from them, but also provide it. They're the client. So a lot of learnings just around that behavior.

did that in 05 to about 09 in various client service roles. The firm continued to grow. So was going in front lines, doing a lot of that activity in that period, directly to your question. private markets were growing like a weed.

think if you look back, there were articles referencing the golden age of private equity in 2006. You had buyout strategies emerging. You had an emerging manager ecosystem starting. have been firms who've been around long enough that there were spin outs and things like that.

The secondaries market, I think we lose perspective like where we sit today. Private markets are only 45, 50 years old in terms of. how long they've been around in their purest form, but really the last 20 years in terms of evolution. So I got to have the front row seat for that.

And what I learned from a pattern recognition perspective was no two clients are the same. While you could have a perspective on the market and we don't think venture is very good right now. Clients can have a very different view on that. As the consultant or advisor, you need to take those inputs, put your own biases aside, weigh that collectively, and then move forward.

As an advisor, being a thoughtful partner with folks, you may think this, but we have more insights. Let me explain to you that. it was iterative, consultative. That's where I got to learn a lot of this.

I left that client service role to be one of the first members on our secondary investment team. We had an internal and secondary fund. We launched an external product for third parties. We didn't have a dedicated team.

So I moved over and worked on that for 18 months. Went over to. Hong Kong when we first opened our office to help. I was afforded all these opportunities by pure luck of getting there at the moment in time when I did, but it did show me different business building activities, differences in clients, regions, product types.

So all of that formed the basis for me. There was no other choice but to stay excited about it because it was something new almost every day. said something interesting where you spent so much time with the LPs and seeing what their portfolio looked like. understanding what they're motivated by.

And the same for emerging managers. It's really important for them to understand their customers, the LPs and what their LPs are motivated to buy. And you have that specialty of being able to understand an LP. Whereas a lot of emerging managers who are new to the game might not completely understand.

That's really interesting. is a hard thing sometimes. I use the phrase when I advise emerging managers on It's concept of critical distance. Like you're in the weeds with your strategy.

You're telling folks all about it, but you should start every meeting or have the entire first meeting be you listening to the LP and what they want. Cause you can be selling these things to folks who just aren't your natural buyer. And that's difficult if you don't give them the chance to tell you it's not, you still have to sell at the end of the day, but understanding that you need to be pushing the LP in the right direction. My background.

It was a commercial role because we were the GP and LP in a lot of cases. We had internal fund of funds. We were the LP for those GPs. Our investment team was doing the work on a manager.

So we were the LP representative there. There are different machinations of how do you behave in both roles while understanding when to push, when not to, who's really driving the bus. There's so much nuance to it. And in emerging manager world, it's even.

more complicated. I wrote something about this element of inertia. People, you don't know what to do next. There's any more you can do.

I've already given you all my information. We've had so many conversations. What do I do to continue moving this forward? A lot of that comes from knowing the LP, but it's also incumbent on the LP to share that information back.

Where'd you post it on LinkedIn? I get an idea. I just start writing it and I usually give myself like a 10 minute pause before I press publish, but it's very much a stream of consciousness. It was prompted by a conversation I had with the GP yesterday and I've been thinking about it.

I said, let's see if we can write something here. Cool. I'm excited to read it after our recording. And how did you end up getting interested in early stage?

The rest of my journey. So was seven years at Hamilton Lane. I left to join an outsource CIO investing on behalf of mostly smaller institutions. So they don't have an internal team.

They're outsourcing, getting the benefit of scale on the other side. So we were a $25 billion. Outsource CIO, our largest client might've been a billion dollars. So all of these smaller clients were getting the benefit of the collective.

We manage an in-house fund of funds. And that was the first time I worked on the team and ultimately took over the team and the program. But that was the first time I really got to start thinking about portfolio construction. We had a broad private markets portfolio, probably two thirds buyout, a third venture.

We had no constraints other than that. So you could look at emerging managers, early stage. We had existing relationships, but when I was brought in in 2011, there was a moment in time where we could rebuild some of that stuff. So that was my first taste into really having more ownership and agency over the asset selection.

Sat on our investment committee, all the decision-making. Then I went to MetLife after that and MetLife for a big life insurer. We had a pretty substantial venture portfolio. So there were a lot of brand names in there.

Those brand name firms like having a. Big check in there, stable asset base. We had a phenomenal innovation team. So you got input from the organization.

We were more than an insurance company, stable capital. were a strategic partner. had the who's who on the roster. I got experience with adventure in a lot of different ways, but more from a larger context.

It wasn't until I left MetLife and joined a startup called Alliky where we started with a blank sheet of paper and I was looking at more emerging managers. It was venture exclusive, so I got to be immersed in it. Going from multi-asset to venture only made me realize I was looking at a fraction of the market because if you're an LP who has to commit $25 million to a fund, almost the entire landscape of emerging managers is off limits. My time at Allocate opened my eyes to different flavors of venture emerging managers.

And that's where I realized there's a level of optimism. that you get when you interact with the venture landscape, the folks who are launching emerging funds, whether it be a fund two or a little bit further down the line, they are putting it all out there, right? They're giving up what would be an amazing career doing whatever they're doing to start this. So the level of alignment, the level of passion, I gravitated towards that.

I've never been a public markets investor. I'm not sure I have the intestinal fortitude to live tick by tick and make those decisions. I like being a bit further removed from the public markets and what's going on in the macro. I always say you have to be macro aware, but I struggle to have those inputs determine what I do on a day-to-day basis.

Investing in innovation is not market dependent. It's always happening and you can have a crazy idea, get funded and it's still going to be five, seven, 10 plus years before that really is being impacted by what's going on in the public markets. I had met a bunch of great emerging managers too that opened my eyes even further. So that was when I fell in love with it.

So probably about six years ago in terms of really being immersed in venture and thinking of that as my primary, I still work with other groups outside of venture, but it's taken a big piece of my heart now for sure. Seeing through the lines, it seems like you were looking for something smaller, more intimate, less structured than Hamilton Lane and the bigger companies you were with prior. Am I seeing that right? What were you thinking about when making such a move?

I find myself now even today, it speaks to my affinity for emerging managers. I gravitate towards smaller, leaner, more nimble teams, folks who have really strong independent thought processes. I don't care where you came from. I care that you have independent thoughts and you're willing to stand behind that.

I joke, I'm probably not the world's best employee because I have a lot of those. Thoughts leaving allocate, we grew from seven to 60 people. And I felt like I had a lot more fun when we were seven than we were 60. Now working by myself, working as an advisor and a consultant with groups, I gravitate towards smaller groups, whether it be merging GPs or emerging LPs.

And thinking back now, think we're some early indicators that pointed to the emerging managers. We always tell our GPs to stay small and just keep it. to them because they're the ones who are building the product and they're the ones that the LPs are underwriting. I think there's a lot of ambition that's tied to a bigger fund, not in terms of AOM, but also in terms of adding more GPs.

So I'm curious how you saw that in larger companies and how you see that in emerging managers now as well. Yeah. My own experience is, I'm not sure I was fully aware of it while it was happening. What I was aware of is...

a concentration of responsibilities, a silo effect. We went from a team that did everything, who knew all the different corners and angles of what was going on in the business to you have a functional role and you're doing this and then you hand it off to somebody else. I think with GPs, that also is the case. I advocate for grow responsibly.

That's not to say you can't grow or shouldn't grow. MetLife, we thought a small fund was $500 million. If you are doing things, that support what you're building. I think a GP should know every aspect of what's going on in their business.

There's a natural capacity limitation in terms of what you can handle. So do you need to grow to be able to bring somebody on, which still preserves the essence of the strategy, but doesn't necessarily indicate that you want to go and raise multiples and multiples of what you're doing. So I look at it as a consistency and all of it comes from conversation with them. In a lot of cases, We worked with managers who said, we'll never be more than a billion dollar fund.

They're at $10 billion now. The allure of management fees and larger organizations, especially for founders, the economics are pretty dramatic when you start to scale up a firm. Putting the LP hat on, it's definitely a different dynamic when a firm goes from 25 million to a hundred million and adds two GPs. And now wants to lead rounds or have more reserves to follow on.

It presents a new proposition. So I look for their commitment to the strategy and how they talk about it versus a long-term idea of, you say empire building. Let's get into what you're working on with managers now. When did you make that leap and how did you know you wanted to do the solo consulting practice?

Yeah, I had no. real vision of doing this. just happened after I left allocate, did a little soul searching of what do I want to do next? And I started doing some consulting projects to keep myself active, to keep myself in the market.

I was doing office hours with GPs to keep the flow going. I found I really liked that any conversation that a GP wanted to have. Sometimes that turns into a therapy session, but it was really nice to have that connectivity. After about six months of doing that.

I was doing it for free. One of the GPs offered to pay. So this is really good. Let's formalize this.

I said, that's great. I reached out to about a dozen other emerging managers that I knew and seven of them took me up on it. So very quickly I'm like, well, this could be a real thing. One thing led to another where I started formalizing how I could be helpful.

The way I talk about it is I was an LP in so many different places across cycles, investing across asset classes. leading teams, representing different LPs. So what I can provide is the voice of the LP, right? I can tell you if you're putting your data room together in a certain way or how your deck is put together or how you talk about your pitch.

You think this is unique. This is really generic relative to, which any LP who's seeing hundreds of deals a year can do. There's just very limited incentive for sitting LPs to provide very candid feedback. Right.

It either closes the door and burns a bridge, or you sort of keep them around when you really do want to just move on. Of the groups that I worked with over 40 last year, did an informal survey. 80 % of them said, get zero or minimal feedback after a meeting from LPs. It's shocking when you hear that number, but it's actually not surprising when you think about the incentive structure.

So as it evolved, you realize that being an objective truth teller is where GPs need some of that. And there are some great LPs out there that do deliver feedback, but more feedback is necessary and transparency into the process. So I'm finding that there's certainly a need in the market. I think if I were to try to do this in 2021, when capital was widely available and fundraising was easy, there wouldn't be as much of a need, but I think we're in a difficult market, but I think this is closer to normal than what we saw in 21.

I index towards groups that are self-aware and humble. You're always going to be learning. The industry is evolving. The firm you're building is evolving.

The role that you play in the market is evolving. The entire technology landscape evolving. So there's always opportunities to learn and those tend to be the groups that I gravitate towards. So that's the GPs that serendipitously got started into it, but now I've found a really high demand for this service that I'm offering.

And then with LPs, LPs are looking to get started into the market. They may not have the resources. say emerging LPs sometimes it's just newer to the asset class. Could be private wealth, RIAs and multifamily offices, single family office who are newly into all of them are interested, but not necessarily have the capability to build.

So being an informal Sherpa for them, like here's a process that you can build. I've been fortunate to be able to build processes from scratch and also break up processes that I could rebuild. So I have good insight that I can provide them on what should a memo look like? Who are you talking to here?

Here's the type of questions you want to ask a GP. So I live in the middle between GPs and LPs because what I'm fairly explicit about is I'm not going to fundraise for GPs. There's a view on fundraisers and placement agents and things like that, that it's a signal for lower quality. If it's being offered through a third party, what I want to be is the opposite of that.

Like the GPs I work with, get to go really deep. And if I send one of those to an LP, I want them to take that seriously, but I'm not going to flood that. I want to know what they're looking for. I'm seeing 500 plus things a year.

So if I can be some of this connective tissue that the market lacks all for it. So it's this independent role. I'm excited about what I'm doing, but it, wasn't on the initial plan. And what's your sweet spot with.

your managers in terms of character. What type of managers are you looking for? Typical manager profile. What stage do you notice that you can be the most help design your prototypical manager that you work with?

Obviously it varies, but if you can. things on that, characteristics, self-awareness, humility, ability to communicate, receptiveness to feedback. If you don't have those, it's not going to be a great relationship. And I'm probably.

I say any GP I talk to within 30 minutes, there's probably something I can help you with, but it's up to you. I'm not hard selling anybody on this. This is an opt-in versus a hard sell. Two thirds to 70 % of the groups I work with are emerging managers.

Probably more than half of those are fund ones because they're for a podcast like yours, resources that are out there. Folks still need one-to-one confidence building on here's how you go to market. Here's how you think about this. It's a lonely road to be a solo GP, emerging fund one, especially in this market.

say everybody's going through a zero to one moment. It doesn't matter if you're a fund one or a fund 13 now. So everybody's going through some of that. I worked with a fund three where they had a departure and they were thinking about how do we display our performance in a little different way without throwing somebody under the bus.

There's a lot of nuance to this. A lot of it comes directly from the GP. Okay, we're having this problem. Can you help?

And after doing this for 18 months, fortunately, they know where to reach out so I can have those conversations. There's definitely no single archetype, but I'd say that opt-in, humility, ability, desire to learn and grow is where I've had the best relationships. These can range from regular calls to I'm a strategic advisor to the fund and the firm, and they want me around for a long time. What do you think after all this time and all this capital that you've allocated or committed?

is the one common thing that all the great managers have in common. I was just on a panel this week and we talked about the four P's of diligence that LPs do. People, process, performance, philosophy. Some people throw a portfolio in there, but I think that those first four, almost everybody publicly will say performance matters.

You ask people in private, people is the number one, universally. And that's such a subjective thing. People have the no assholes policy. It's like, well, What does that really mean?

Is that something that are they difficult to work with, but are a great investor? That can be your measuring stick and you go a different direction. Doesn't inherently mean there's something off there or they're a bad person. It's just maybe their business style.

So I think you have to go deeper than are they nice and easy to work with? One of the frameworks I've always spoken about is this GP thesis fit idea. Are you the right people doing the right thing? So that seems to be where there's a connection between the backgrounds of the individuals, not just the professional histories, but is there a tie to a manager or a tie to the strategy?

You don't have as much control over the right time, but right person, right thing is where I'd say the thread for all the managers. There's a clear connection point between those two things. They're doing the thing that maybe not they're the only one that can do it, but after you talk to them, it makes so much sense. And.

You get the intangible piece, right? The four P's that I gave you are one piece of it. The intangible four P's are things like passion and perseverance. That's something you can assess, but passion to me is one of those things that I want to hear from managers.

This is not a straight lineup for 99 % of these groups. So you really need to be focused on it. So people always number one, but then even more so the connection to their strategy. The test on that too is ultimately talking to the founders, right?

Everybody's got money. But capital is not the differentiator in this market. Founders who are building incredible companies have their choice of who to partner with. So that's the ultimate litmus test.

You and I can look at managers over and over again, and you develop a view and a perspective on what makes them different. But the folks who chose them, that's really what I want to hear from. And that's where it really becomes real. I say this all the time with performance, but you're investing in the future, not the past.

I'm using these data points to inform. what I think is sustainable and durable for the manager strategy going forward. Yeah, absolutely. And as we come closer to an end, this has been a wonderful conversation, Matt.

Thank you for bringing such great takes, but I want this to be your hottest take. If you could change one thing about how the industry evaluates emerging managers, what would it be? Or what's something that a lot of LPs misunderstand about emerging managers? I have written a lot about this and it's a frustrating point for me, having been an LP and having done some of these practices.

Emerging managers is super hard for them to go out and pre-qualify every LP lead, have an initial conversation. And then a lot of LPs, this concept of inertia, they're not doing anything. They're not providing feedback. It's incredibly frustrating for the emerging manager to sit there.

So one of the things that I spoke about, sort of the role that I want to play now is a lot more about. pushing LPs to just say what they're thinking. You don't have to go into gory detail about why you're passing on things, but don't be the person who says, ⁓ we have to push this back because of our process. GPs are hanging on that, right?

Their mid funnel is growing and growing and growing from people who we always say to have happy years. So I think the biggest thing is removing the opacity first between what an LP says and what their actions would indicate. I'd say it's the what, when frame. As a GP, you should ask an LP, what, what do you need to see and when do you need to see it?

So it could be, we need the first close. We need a first deal. need other LPs, whatever it might be. And then as a GP, you hold them at their word, but the LP has to deliver that feedback.

So it's being very clear about next steps. It saves. GPs so much time in terms of, want to reach out to these folks. Let me give them something new that they haven't seen.

Let me write a blog post. Maybe I'll get their attention. It's incredibly inefficient. And so clearing up some of that smoke between LPs and GPs and the communication, but I'd say also the opacity upfront.

So who's going to invest in a $20 million first time fund? It's largely individuals and families and a handful of fund of funds. Most GPs can navigate the space of the fund of funds that are publicly out there that are investing. But for folks who are Looking to invest in these strategies.

I've made a couple calls to action. If you're a potential anchor for a fund, raise your hand, right? Just identify yourself. Maybe that's by design.

They don't want a huge inflow, but what they are really doing, it's a power position right now. So as an LP who's interested in emerging managers who may anchor, who may be a decent size check, who may be under the radar. It's incredibly hard for GPs to find them, those individuals and families. So.

almost self-identifying to allow yourself to do the thing that you want to do. It's removing the opacity upfront, folks who invest in the space. You can fill the top of funnel. You have a leverage.

You can build relationships, do that upfront. And then once you're in conversations, and this is institutional and family office and private wealth alike, be clear and be more transparent. That was a long answer. One thing that grinds my gears in terms of how the ecosystem operates, any feedback is good feedback.

let people know where you're at. That saves a lot of time and energy. One of the things that I really find frustrating is when LPs ask a fund to like, where's the DPI in fund one or how's the IRR looking, especially a Cedar early stage fund. The age of these companies is the average age of the portfolio, 12, 18, 24 months.

It's a fundamental mismatch. So I find LPs ask the wrong questions about that. When you're investing in a fund one, it's about the story. It's not about the performance.

Yeah. I want to see that there's some traction fundamentally at these companies. Did they add a logo? Did they hire more folks?

Is there revenue? If I invested pre-revenue, is the revenue growing? I should not be investing in the space because those fund level metrics take five to seven years to even materialize your quartile rankings, which is a whole nother topic that I think is a difficult thing for GPs to control and something that LPs put a lot of weight on that they shouldn't. But the focus around performance and fund level performance way too early is another thing that I think LPs get wrong.

Spend more time with the people, understand fund two is execution. Did you do what you said you were going to do in fund one? I don't care if one company has been written up three times. That's a wonderful thing.

So tell me the things that you can control back to investing in the future. LPs should be focused on what is a GP building? What did they learn in fund one? What is the lessons that they've things that they thought they were going to do that they didn't, that they're going to change going forward.

I wish people would focus more on that than just using numbers as a screen for taking a meeting. Matt, I think it would be amazing for the GPs that you work with to have you as an LP. Why didn't you build a fund or is that in the future? When I left Allocate, my initial thought was I really liked being at the early stage and with smaller companies.

I'm not technical. I was not going to create a company and build something. I also thought about the fund of funds are out, but I know what the challenges that come with that are. I would absolutely love to have a pool of capital to invest behind.

I have a very unique lens into the emerging manager space, but I feel like I could do more good being in the seat that I'm in now than raising external capital. And it changes the nature of the conversation. So again, it's not something off the table in my head. do a joke.

have my personal checkbook, not the same as when I was at a fortune 50 life insurer, but it is something that I look at GPs now. And if I can help them be most confident, put their best foot forward and hopefully raise their capital without having to incur costs or do anything crazy when I could be a supporter and cheerleader and really help build them up that pays dividends even beyond what a management fee and a fund of funds would be. I love this small town energy that you're bringing into this corner of our market.

And we're very lucky to have someone as kind as you working with emerging managers and other investors alike. Thank you again for joining us. Thank you. was awesome.

You've just listened to yet another episode of the Slice podcast where we uncover the stories of fresh emerging managers across the early stage venture landscape. Next, we're joined by a duo. Based in SF, running a special program for placing the best talent from Latin America to San Francisco and building a firm in the midst of the age of AI. Make sure you're a subscriber to our podcast on slice.

fund forward slash podcast, Spotify, Apple or wherever you get your podcasts these days and we'll see you soon.