Limited partners are fed up. They are sick of spending time negotiating fund size reductions and exercising clawback clauses with their venture fund partners. Bring together a group of top level LPs in one place, as did the International Business Forum recently at its annual conference in San Francisco, and the result is some pretty tough talk.
Charles Froland, a managing director with General Motors Investment Management, set the tone for discussion by urging fellow limited partners to revisit their allocation to private equity funds – specifically the risk vs. return of venture funds. “There are a variety of opportunities for LPs in the high-risk arena, other than venture capital,” he said. It was not quite a threat, but it was certainly threatening.