E293: Inside GEM: How a $12.5 Billion Platform Selects Outlier Funds
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What is GEM and its role in venture investing?
So, Kate, you recently joined GEM, which is a $12.5 billion AUM platform to lead the venture effort. For those not familiar with GEM, tell me about the platform.
GEM was founded in 2007, initially with the name Global Endowment Management. And its initial business and really still the core business today is as a leading, fully discretionary outsource chief investment officer, OCIO. Today, on that side of the business, we work with about 40 endowments and foundations and other small nonprofits. In more recent years, we've been partnering with a wider variety of LPs who want to leverage our research and our managerial selection in more targeted ways across alternatives. And by that, I mean in fund or fund-to-fund formats.
I want to get into some of your venture thesis in a bit. But first, you joined the UNC Endowment immediately after undergrad. What did you learn at the UNC Endowment? How does that translate to how you invest today as a venture manager?
That first job opened up a career path that I didn't know existed, but came to really enjoy. I certainly didn't set out to become a career LP. Not sure if anyone really does. The truth is, I did not know what I wanted to do professionally after college. I had a lot of interests. I enjoyed a wide variety of subjects. I did well in all of them. I really took advantage of. a true kind of liberal arts education. And I loved it. I was a generalist, if you will. So the investment office at UNC took a chance on hiring me. I was a history major. I was a clean slate when it came to finance and investing. So I did have a steep and long learning curve, and I was lucky to have a supportive mentor. I learned a lot about allocating capital, taking kind of that 30,000-foot view of the world.
But I did work primarily on a team that was managing the endowment's private investment. A couple of things stuck with me throughout my career that I initially learned there. One was the importance of asking good questions, both of the managers we met and, frankly, with my own mentor for learning purposes. This is a job that requires continuous learning. I also learned the importance of professional relationships and network, right? They build over time, they build off of each other and last a long time. It's really hard to place a value on that in the beginning, but it absolutely becomes an asset over time. After the endowment, I worked for two different fund of funds. And I think it was at those firms that I really learned what a good institutional due diligence process looks like, particularly the art of conducting reference calls.
And I learned, importantly, how important and hard it can be to raise capital before you even go on to invest that capital.
I think a lot of people will be surprised to hear UNC is arguably one of the most underrated endowments. I think they achieved a 12.6% return in 2024. Being at the UNC endowment, you mentioned asking the right questions. What's the one or two best questions that you ask today from managers that helps you really focus your time on managers that could end up being interesting?
I'm going to use the word that's probably one of the... overused words in the industry and that is differentiation, but it really does come down to figuring out Why, in the land of venture, why a particular founder wants to partner with a venture investor? Well, founders have a lot of choice in today's market. There's no shortage of capital.
What lessons did Kate learn from her time at the UNC Endowment?
There's no shortage of venture capitalists. And founders are very, very savvy, probably much more savvy today than they were a couple of decades ago. So they have a lot of choice. So it's incumbent upon the VC to decide. sell themselves on why they should be the right partner for a venture investor. And then it's incumbent on the LPs to understand that dynamic and understand who the best founders are gravitating towards as their capital partners. So it does come down to differentiation, and that can take a lot of different forms. It comes down to that value add capability and what venture investors can bring to the table to help founders build their business.
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Chapters
7 chapters
1
What is GEM and its role in venture investing?
0:00–3:11
2
What lessons did Kate learn from her time at the UNC Endowment?
3:11–10:00
3
How do LPs assess venture managers in a competitive market?
10:00–12:35
4
What are the best questions to ask venture managers?
12:35–14:14
5
What is the significance of differentiation in venture investing?
14:14–18:02
6
How important are reference checks in venture capital?
18:02–18:47
7
What advice does Kate have for aspiring LPs in venture capital?
18:47–41:13
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