Tom Duffy

Success begins with having a long-term tenure team with what we feel needs to be at least eight to 10 team members who all have the ability to source sponsors and at the same time evaluate each underlying deal and then build long-term relationships with what we feel are exceptional investors.

And at TIFF, we've been able to check all of those boxes as one of the earliest institutional investors in this space.

And we're continually looking to improve and adapt moving forward to the marketplace.

The avenue of every sponsor out there is totally different.

So it's hard to paint a broad picture here.

We've invested alongside several sponsors who have stayed as independent sponsors for a long time.

So let's talk about what drives that decision for someone to remain a sponsor instead of going on to raise a fund.

Clearly, there are some benefits of this space.

First and foremost, you have way more flexibility in the sponsor model.

So you don't have to build out the infrastructure of a full firm.

You don't have to build an entire team, and you don't have to go through certain industry registrations depending on your size.

Second, the economics of the sponsor model can really be very attractive.

You can earn carry on a deal-by-deal basis instead of cross-collateralizing carry seen in a typical PE fund model.

And third, you can really be as thoughtful and selective as you'd like to be because you're not on the clock with committed capital from LPs like you would be with a blind pool fund.

Now, with all of that said, for everything that I just listed as a benefit, those can also be viewed as negatives over time, pros versus cons.

As you start to make more and more investments, at some point, you might eventually like the idea of hiring more team members so you're not in the weeds on every single deal model and presentation.

And if you want to hire a team, most people want to see a future and a career path that can best be illustrated and brought to life through the vision of launching a fund in a real platform.

Talk to me about...

So one of the key benefits of investing alongside independent sponsors is that there's a great opportunity for aligned economics and fee structures.

And here's what I mean by that.