Podcast · Media coverage
Thomas Kristensen discusses franchise funds in the Origins podcast
In the latest episode of Sapphire Partners’ Origins podcast, Thomas Kristensen, Partner at LGT Capital Partners, shares his views on how and when venture capital (VC) firms can achieve franchise fund status. Which factors should be considered when selecting the GPs you work with and the funds you invest in? And how important is consistency of returns and transparency in a GP-LP relationship? Thomas has all the answers.
According to Thomas, there are currently around 25 to 30 franchise funds or top-decile VC firms. However, he cautions that these may not necessarily turn out to be the best investments in 10 years’ time, as they may have already peaked. He emphasizes the necessity for LPs to understand how returns are created by their GPs, their processes and decision-making processes as well as team cohesion.
Having worked in VC for more than two decades, Thomas has had around 10,000 GP meetings and has a wealth of experience to draw on when meeting new managers. He believes that VC firms change for two reasons: people or markets. In this context, he stresses the importance of succession planning for VC firms, as a smooth successful transition can take close to 10 years.
Success in VC requires a diverse range of skills. Building a complementary team is crucial, says Thomas. The best firms consistently generate top quartile returns. With "shoot the lights out" investments every few years, these firms enter the top decile and coveted franchise fund status.
Listen/watch the video podcast here.