In this episode of the EUVC podcast, Andreas talks with Carmen Alfonso Rico, a self-described VC turned angel at Cocoa Ventures. and Evan Finkel, Head of Venture Capital Investments at Integra Global Advisors.
Evan outlines a framework for how LP expectations evolve across different fund stages, highlighting key criteria like thesis clarity, team credibility, track record, and consistency of execution. Carmen shares her experience raising Cocoa Fund I during a peak market and the challenges of navigating a very different environment for Fund II. Together, they explore practical strategies for targeting the right LPs, understanding different LP profiles, and managing long-term relationships.
Here’s what’s covered:
11:36 Challenges in the European LP Ecosystem
29:51 Long-term Commitment and Strategy
38:46 Evaluating the Product: Key Considerations
39:54 Importance of Historical Track Record
41:22 Decision-Making Process in Investments
54:14 The Role of LPs in Fund Management
01:02:15 Challenges of Being a Fund Manager
Watch it here or add it to your episodes on Apple or Spotify 🎧, with chapters for easy navigation available on the Spotify/Apple episode.
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✍️ Show notes
How LPs Build Conviction Across Fund Lifecycles
Limited Partners (LPs) evaluate venture funds differently based on the fund’s maturity. In Fund 1, LPs focus on the GP’s investment thesis, team coherence, proprietary deal flow, and alignment with market trends. They often assess "proof of concept" through angel investments or track record analogies. LPs understand that hard metrics may be limited at this early stage, so they rely more on qualitative judgment. Key expectations include consistency in vision and signs of investment discipline.
By Fund 2, LPs begin evaluating whether the GP has executed on the promises made in Fund 1. This includes examining the quality of follow-on deals, reputation in the ecosystem, and early performance metrics. There's also a greater expectation for improved LP communications and reporting processes. Fund 3 represents a shift toward institutional readiness, where LPs expect a solid track record, performance continuity, and organizational growth. The firm is expected to be capable of managing larger capital pools and engaging more sophisticated investors.
Fundraising Strategy
Effective fundraising requires targeted outreach and time management. GPs must be "ruthlessly self-aware" of which LPs are a genuine fit and prioritize those whose strategies and check sizes align with their goals. Carmen described how raising COCOA Fund 1 during the market's peak led to a reactive and opportunistic LP base. When market conditions changed, she had to rebuild with a more thoughtful and long-term set of investors.
Geographic strategy also plays a significant role. Carmen noted how she specifically shifted her focus to US LPs in Fund 2 after not engaging them in Fund 1, adjusting her outreach based on fit and capital availability. The key takeaway is that LP outreach must be structured, strategic, and adapted to both market timing and the specific characteristics of each LP segment. This reduces wasted effort and increases the likelihood of long-term alignment.
European vs. US LP Ecosystem
The European and US venture ecosystems differ significantly in maturity, LP base, and institutional dynamics. According to Evan, the US has a numerical and structural advantage: a deeper base of LPs, more seasoned fund cycles, and greater familiarity with venture investing. This results in more LPs who can underwrite early-stage funds confidently and repeatedly. Conversely, Europe has fewer LPs who understand the nuances of early-stage venture, leading to capital gaps for emerging managers.
Carmen and Andreas pointed out that public institutions like EIF, KFW, and BBB play a dominant role in Europe. These anchors are essential but also introduce distortions—many LPs use them as a "rubber stamp" without doing their diligence. While these public entities are important for ecosystem development, their presence can crowd out more flexible or long-term-oriented private LPs. The consensus is that Europe needs more independent, knowledgeable LPs to support the next generation of fund managers.
Dangers of Over-Reliance on Markups
One of the key concerns discussed is the overemphasis by some LPs, particularly in Europe, on markups as a measure of success. Carmen described a situation where she presented two strong portfolio companies with no markups but progressing exceptionally well in ARR and team execution. An LP’s surprise at the lack of markups illustrated a misalignment in expectations and a narrow view of early-stage success.
The group argued that markups are a flawed proxy for value, particularly in the current market environment where skipping rounds or reducing dilution can benefit the founder and early investors more than flashy up-rounds. Andreas noted that some LPs have mistakenly turned venture into a game of markups rather than focusing on true value creation and DPI (Distributed to Paid-In capital). LPs who understand the long-term nature of venture returns are more aligned with GPs building enduring value.
Track Record & Pattern Recognition
Historical performance, even from angel investments or prior firms, is valuable input when assessing emerging managers. Evan emphasized looking for evidence of judgment, consistency, and relevance to the GP’s new fund thesis. He values not just outcomes but the decision-making process behind past investments. This includes sourcing logic, diligence steps, and how investments are aligned with the proposed strategy.
Carmen and Andreas discussed the importance of understanding how a GP’s experience informs their current focus. A thesis change isn’t necessarily a red flag, but LPs will probe how a GP’s past builds credibility for their present strategy. For example, switching from crypto to European resilience requires a clear narrative showing how one area informed the other. LPs want to see experience, an evolving thought process, and strategic clarity.
LP-GP Relationship & Communication
LPs can play a critical role beyond capital by serving as sounding boards and strategic advisors. Carmen described the GP journey as “lonely,” particularly for solo GPs navigating decisions for the first time. LPs who understand the asset class and are actively engaged can provide guidance during crucial moments, such as when to sell, follow on, or hold firm to strategy.
The role of LPACs (Limited Partner Advisory Committees) was discussed as a mechanism for this relationship. Evan advocated for a mix of the largest check writers and the most value-add LPs on LPACs. He also believes LPs should intervene selectively, saving input for major strategic or existential issues. This support builds stronger GP-LP relationships and better fund outcomes when done thoughtfully.
Being a Fund Manager vs. Being an Investor
A major takeaway from the conversation is the clear distinction between good investors and effective fund managers. Evan noted that many emerging managers are prepared for dealmaking but not for running a fund's operational, legal, and fundraising responsibilities. Fund management can overwhelm even experienced investors if they are unprepared for its complexity and time demands.
Carmen added that tools like AngelList have simplified fund setup, but broader industry support is needed. LPs can help reduce barriers by offering education, mentorship, and transparency about their decision-making processes. Making fund management accessible (though not easier) can unlock new talent and diversify the GP landscape, particularly in ecosystems like Europe, where institutional knowledge is still developing.
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