Conflict on thesis with LPs
What should I do if an LP encourages an investment which doesn't align with the investment thesis of the fund?
Limited Partners are 'limited' on purpose. The limitations protect the LP, GP and the fund. If a limited partner were to make an investment decision for the fund, they would loose their limited partner protections.
To answer your question directly, you can say something like this in your own words: " Thank you so much for suggesting this investment. We will review it via our process." Then, if the if the investment is way off thesis and does not fit the return profile for the fund, just pass on the investment as normal.
To answer your question directly, you can say something like this in your own words: " Thank you so much for suggesting this investment. We will review it via our process." Then, if the if the investment is way off thesis and does not fit the return profile for the fund, just pass on the investment as normal.
I agree with Mike that LPs are "limited" on purpose. Thankfully though, you ultimately share the same end goal - to have a high-performing fund. Most likely, simply acknowledging their opinion should do the trick. If not and they persist, I would communicate clearly what areas are off-thesis and provide clear feedback to the startup team so they can choose to adjust or seek additional funding.