If you're raising your first venture fund, understanding what LPs look for in fund managers is the difference between a raise that compounds and one that stalls. In a recent VC Lab session hosted by Kelly Schricker of Decile Group, two active limited partners, David Shefler and Gary Gitelson, explained exactly how they evaluate first-time and specialist managers, from the first conversation through fund two. This article summarizes their playbook for emerging managers who want to build LP relationships that last a decade or more.
Watch the full session here:
What LPs Look for in Fund Managers Starts With the Person
Both LPs agreed that backing a first-time manager looks a lot like backing a founder. "Their track record is unproven," Gary said, "so you're betting on them." He looks for someone with a perspective, an expertise, and a network, something that makes them genuinely interesting and unique. David, an operator with 40 years across six startups and four exits, put it in relationship terms: a fund is a 10 to 15 year journey, and if funds two, three, and four follow, it can become a lifetime relationship.
Here's the part many managers miss: LPs develop their own theses. Gary's thesis includes being actively involved, so a manager who wants a check and silence isn't aligned with him, no matter how strong the deck is. David invests in impact areas like climate, water, healthcare, and food, so mission alignment comes first. Neither approach is universal, and that's the lesson. Part of what LPs look for in fund managers is fit with their own investing thesis, which means you won't convert everyone, and you shouldn't try.
Check Size, Valuation, and Fundraising Velocity
The conversation got concrete on numbers. David asks about fundraising velocity, especially when a fund is around a year into a raise that typically runs 24 months from start to close. It doesn't have to be at the halfway mark, but it needs to show momentum. He also probes check size discipline: what's your check, and at what valuation? A $100,000 or $200,000 check into a $50 million valuation doesn't work for him in most cases, because the ownership math breaks down. There needs to be a correlation between check size and valuation.
Gary took a slightly different angle. He's less bothered by the specific example if the company can genuinely become enormous, because he thinks in return multiples and wants investments that can return 40, 50, or 100x. If the business is so large that a $50 million entry is rational, fine. If it isn't, the math doesn't make sense. Either way, both LPs are running the same test: does this manager actually understand the mechanics of how their fund produces returns?
Referrals Round Out a Raise, They Don't Build It
Managers constantly ask how to get LPs to bring in other LPs, and both guests have done it. David described being a multiplier: because he was mission aligned and convinced, roughly ten more people followed him into funds he'd joined. Gary confirmed that nearly every GP asks "who else can you bring in?" right after he commits.
But Gary set expectations with a hiring analogy from his years building engineering teams at Cisco, Google, VMware, and Broadcom. "I didn't hire one person and then ask them to refer 20. I hired 20 and then asked each one of them to refer one or two more." His friends who've never invested in funds typically come in toward the end of a raise, when they can see actual portfolio companies and get excited about them. So he assumes referrals make up 20 or 30 percent of a fund's investors, not 90 percent. You still have to do the work of building your own LP base.
He also offered a gut check that doubles as an ethics test: "If the answer is, I'd be afraid to tell somebody about this, I shouldn't be in it."
Thesis Discipline: What LPs Look for in Fund Managers Over Time
The sharpest warning of the session was about drift. Gary said he expects managers to state a thesis and stick to it. If you say you invest at pre-seed, target 2 percent ownership, and focus on one industry, then suddenly chase an unrelated hot AI startup, you've diluted his faith that you have real conviction. "If you said X, you should do X."
That doesn't mean opportunistic deals are off the table. David is in a high-valuation company that came through a GP as an SPV, outside the fund's thesis, and he was happy to have the access. The difference is communication. Gary said going off thesis is even more reason to explain why the deal is exceptional, and framing it as an SPV or side opportunity can even read as a favor to your LPs. What kills trust is surprise. Gary was blunt about the manager who takes a check, disappears for two years, and reappears raising fund two: "The answer is no."
Communication, Curiosity, and "I Was Just Thinking of You"
Communication style sits near the top of what LPs look for in fund managers, and David called it one of his first assessments of any GP. Do you send monthly or quarterly updates? Do you invite LPs to quarterly meetings and the annual meeting? Who speaks there? Gary added that his favorite updates go beyond portfolio numbers to include the manager's take on the industry, even news about companies they didn't back. One practice he now pushes on every fund he joins: a webinar with the founders of each new portfolio company and all the LPs, so investors understand the business and can ask how to help.
Both LPs drew a hard line between relationship building and transactions. Gary described GPs whose funds he hasn't joined yet who still grab coffee, share deals, and make intros. Reaching out to say "I thought of you for this thing" signals you're the kind of person who does that for everyone, including your founders. Disagreement helps too. An honest intellectual argument you can walk away from as friends is a preview of how you'll work together for 15 years.
When they meet a new manager, their questions dig at character. David asks for the GP's life story, because the struggles behind the journey reveal the why. Gary asks about failures: what did you say no to and regret, what did you say yes to that went wrong, and what did you learn? He's testing for intellectual curiosity and introspection. Much of what LPs look for in fund managers maps to the framework taught in Decile Group's LP Institute: why you as the manager, why me as the LP, and why now.
Their parting advice was simple. Gary: give more than you receive, and stay curious, because generosity "will come back in the weirdest ways." David: it will get harder before it gets better, so know your north star and keep getting up in the morning. The people who can do that are the ones who become successful.
Frequently Asked Questions
How long do LPs take to decide on a fund investment? It varies by LP. Gary usually knows a manager for two to six months before investing. David made his first commitment after a few months of conversations, and his process has grown more rigorous with each fund as his own LP thesis develops.
Do LPs prefer specialist or generalist fund managers? Both. Gary reduces it to two questions: can this person figure out which deals are best, and can they get into them? David works in specialist areas like water and women's health, but notes no GP can cover a whole domain alone, which is why a differentiated ecosystem of advisors matters.
How do first-time managers get LP referrals? By earning them, not asking for them upfront. Referrals tend to arrive later in a raise, once prospective LPs can see real portfolio companies. Expect referrals to round out 20 to 30 percent of your LP base, not build 90 percent of it.
What questions should a new manager expect from LPs? Beyond check size, valuation, and fundraising velocity, what LPs look for in fund managers gets personal: your life story, the conviction behind your fund, and what you learned from deals that went wrong or deals you missed.
Take the Next Step With VC Lab
If this session resonated, VC Lab runs free programs for every stage of the journey, from Venture Institute for newcomers to VC Lab for first-time fund managers, Emerging Institute for funds two through four, and LP Institute for aspiring limited partners. Applications are open for all programs and reviewed on a rolling basis. Explore the full programs overview and bet on yourself by applying to the next cohort.
Watch the full session here: https://www.youtube.com/watch?v=-ybvY9N2Jz8