Given the uncertain nature of future claims, insurance companies tend to take a conservative investment approach–often concentrating their portfolios on relatively safe and liquid investments (e.g., bonds, cash, public stocks). Insurance companies manage significant inflows (e.g., premiums) and outflows (e.g., claims and underwriting) like pensions. Insurance companies are in the business of uncertainty. Above all else, George is focused on short-term liquidity.

Despite Susan’s pleas, George purchases the cheap envelopes, which turn out to be toxic, and Susan dies from licking the envelopes. One of George’s most memorable moments is buying cheap, old envelopes for his wedding invitations. Even when living with his parents, George is often focused on the short-term financial consequences of a particular action. Of course, we can't forget George, a complex and neurotic character constantly struggling to keep his job and girlfriend. Endowments and pensions look for fund managers with a consistent track record of generating returns, and may be less likely to be bet an emerging fund manager. However, like Jerry, their risk allocation is calculated and process-oriented. Pensions and endowments are not afraid to make large bets on venture. For instance, Yale’s endowment dedicates around 30% of its portfolio to private equity. However, endowments have made significant investments in venture. Similarly, university endowments manage significant in-flows (e.g., tuition) and out-flows of capital (e.g., faculty salaries), so they take a balanced investment approach. So, pension funds aim for a balanced portfolio of liquid and illiquid assets with the goal of generating long-term and stable returns. Employee and employer contributions fund pensions. Pension funds, the largest contributors in the venture ecosystem, tend to be risk-averse. In many ways, Jerry’s risk tolerance and decision-making process are similar to pensions and endowments.

When the reward is a delicious soup, following a “Soup Nazi’s” protocol is more important than sustaining a relationship with his latest fling. His desire for order and stability most notably defines Jerry. Jerry’s success as a stand-up comedian allows him to spend his days acting as the voice of reason for his eccentric group of friends. The good news is LPs tend to have common characteristics and goals based on their organizational structure. Understanding the nature of your LPs can determine the success or failure of your fund. The LPs in a venture fund comprise pensions, insurance companies, high-net-worth individuals, sovereign wealth funds, family offices, and university endowments. So, for a VC, pitching and landing LPs is a prerequisite. Without limited partners, we wouldn't have venture funds without venture funds, we wouldn’t have nearly as much innovation. LPs are the lifeblood of venture capital.

You may be surprised to hear how these characters are not so different from the limited partners ('LPs') in a venture fund. Seinfeld's four main characters: Jerry Seinfeld, George Costanza, Elaine Benes, and Cosmo Kramer are renowned for talking about nothing and challenging the norms of society.

Kramer master of my domain