How I Invest with David Weisburd
E293: Inside GEM: How a $12.5 Billion Platform Selects Outlier Funds
29 Jan 2026
Chapter 1: 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.
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Chapter 2: 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.
You mentioned references. I'm sure you end up doing multiple dozen references per GP, but at which point do you get a really good sense? Let's say you have an 80 or 90% confidence on that manager. Is this reference three, reference eight, reference 12? Give me a sense for how quickly you ascertain whether this is a manager that you really want to double click into.
know if it necessarily boils down to the number of references. What really moves us from a maybe to a high conviction, yes, is the quality of the references. I think the reality is most of the references that LPs do are good, right? If you're going down the list of listed references that a manager has provided a potential LP, all of those references are going to be good.
The craft of doing references comes down to the types of questions you're asking, of course. But also some pattern recognition such that you can differentiate between what's a good reference and what's a glowing reference.
Obviously, references that we do that are off-list, right, where we're leveraging people in our network, people that we trust, people that we think we will get a very candid, truthful response. answer to our questions. Those references carry probably more weight than do others, but founder references are important.
But again, it comes down to, I think, asking the right questions and being able to recognize through doing so many of these over the years, which ones are good and which ones are outstanding. And that's a bit of a nuance and a bit of something that's hard to kind of describe and put into words, but you can recognize what a glowing reference is and not just a
What is that telltale sign? What are you looking for to know that something's a glowing reference versus a good reference? Because there's a game theory to this where no founder wants to speak poorly on the VC. Double click on how you really assess whether it's a glowing reference.
Yeah, I mean, asking for anecdotes and very specific examples, understanding the dynamics of financings and the types of decisions founders make at various points in their capital raising journey to decide which partners to... partner with. Seeing that a reference has made multiple introductions and referrals to whatever VC we're referencing, I think carries a lot of weight.
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Chapter 3: How do LPs assess venture managers in a competitive market?
So, yes, we are obsessed with fun math. We, you know, when we reach a certain stage of diligence with a manager we're excited about, we build our own model, which we call the what you need to believe model. So essentially we've developed some internal metrics and a framework to evaluate what
a fund's size relative to the number of positions in the fund, relative to the ownership targets, and then importantly, the reserve strategy. So how much capital is going in at that first check versus later stages at, of course, higher or what we hope to be higher valuations. We want to see, assuming a realistic range of outcomes, a path to 5X.
And this is, you know, particularly when we're evaluating small early stage funds, object times seed stage funds. We want to see how many single deal outcomes are needed to return the fund. We want to see how much market cap creation is needed to return multiples of the fund. This is so we don't have to have heroic assumptions.
And that's what I meant when I said we don't have to squint to see a realistic path to a 5X fund. It helps us compare small funds that have different strategies and maybe different portfolio constructions of their own. It helps us compare apples to oranges, so to speak, in the industry. And it's important because we assess hundreds of managers every year.
Many of them have similar portfolio construction and philosophies, but there's always nuances and differences. So this gives us a framework to compare different funds against a similar set of metrics.
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Chapter 4: What are the best questions to ask venture managers?
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Check it out for yourself at alpha-sense.com slash how I invest. And one of the things that's perplexed me since for years is this idea that you have to have a certain amount of the company versus having a certain amount of shots on goal. It seems like they should equal out. So five investments of 10 million should equal 10 investments of 5 million.
Does that not just come down to evaluation and entry point? Is that what people are solving around? And why is there this idea that each single check has to return the fund? Where does this theory come from?
If you think of venture, right, you're investing in very young companies and startups. Not all of them are going to become winners, right? Like venture is an asset class of many losses and fewer wins. So we expect a relative high loss ratio in venture funds. We track graduation rates as an interim predictor of performance.
But at the end of the day, we care less about the loss ratios and more about portfolio exposure to those outsized winners. VC is obviously driven by power laws, right? Only a few companies each year drive returns in the industry and in our portfolio. So it's our job to pick the managers that we think can identify and lean into those outliers.
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Chapter 5: What is the significance of differentiation in venture investing?
To capture those outliers is a non-negotiable for larger funds in order to produce strong returns. But the reality is not every VC is going to have a power law company in its portfolio. That's just a reality given the the relatively small number of power law companies there are relative to the number of venture funds and capital being deployed in venture.
So if your fund is not sized appropriately, if your ownership targets are not appropriate for that size, you run the risk of underperforming. And that's why venture funds have this really broad skew of returns. And then there's always this luck factor, right? There's always a little bit of good luck that accompanies the best portfolio construction and the good skill of any manager.
can a fund get to a 5X without a power law outcome? And is that what you're looking for, which is if this fund manager is not lucky, can he or she get to a 5X?
I think a 5X... is achievable without one of these power law companies in your portfolio. If you're a small fund, it's much harder. It's much harder to do that with a multi-billion dollar fund. And that, you know, maybe that is leading us into a discussion about this bifurcation we've, we've seen in the industry. I'm happy to talk more about that.
Yeah. Let's talk about that. You look at venture almost as two different asset classes, which is the small funds and these multi-stage funds. One is, when did you start looking at venture in that manner and how do you see it today?
In our last conversation, I think we talked about this idea that there's two games on the field today. There's the access game in venture. There's the discovery game in venture. I think there's been an element of that dichotomy all along, but it was really in sort of the 2018, 19, 20, 21 period when we saw fund sizes escalate, when we saw this trend
distinction in the market between sort of the haves and the haves not. So the market in more recent years has clearly bifurcated with more established multi-stage brands at one end and a seemingly endless number of smaller, newer, early stage managers at the other. Our view is there will continue to be firms in that first group that will have a structural and competitive advantage going forward.
Those advantages, I think, are in place because of the firm's reputations, their platforms, and really their scale. It's not rocket science, though, to know who these firms are. The challenge is access. Gem is privileged to work with, and we include a number of these firms in our portfolio. But these funds are larger. They are multi-stage.
And they may not have the right tail skew that LPs want to see in their venture portfolios. Maybe they will if this idea that we're having trillion-dollar private companies, if that is a new norm, maybe those larger multi-stage funds will have that potential for right tail skew. But if LPs want smaller, early-stage funds in the portfolio, that opportunity is large, right? They're
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Chapter 6: How important are reference checks in venture capital?
Tell me about the function of that and what should somebody that wants to build a sourcing team, what's some best practices? Yeah.
So today we have a three-person sourcing team, which we think is absolutely differentiated and a competitive advantage. I've referenced that the market is crowded and it does feel that way. So good information helps us to cut through the noise quickly. So the sourcing team,
I mean, their mandate is to know about which funds are raising when, which VC is spinning out or leaving to set up their own firm, which firms other LPs think highly of. And look, at JAN, we like to back managers early. That's kind of been part of our DNA and part of our track record across asset classes since the beginning.
Chapter 7: What advice does Kate have for aspiring LPs in venture capital?
We like... those emerging type of managers because earlier in their life cycle, because they're hungry, they're motivated, they're aligned with LPs, they're managing smaller pools of capital. We are eager and comfortable discovering those managers before other LPs maybe realize their potential and before it's maybe obvious to the broader market. But that takes a lot of hunting.
It takes a lot of screening. And in order to have a good picture of the market opportunity, we like to know and see everything in the market. But that takes time. It takes resources. It takes people. And we have invested in those people in order to make sure that we are seeing anything and everything and to help us make the best decisions.
You evaluate your GPs on sourcing, picking, and winning. As an LP, what is the one part of sourcing, picking, and winning that is most important to being an elite investor?
It's hard to boil it down, but I will say, you know, before you can pick, before you can win, you need to see the opportunities you need to source. So one enables the other two. Sourcing, again, it's one of these easy questions to ask and easy questions to answer, but really unpacking how a VC is meeting founders and what are their network nodes?
How are those network nodes different from other investors? Why are founders coming to them first or early? Like it's, you know, You develop this picture, this narrative around sourcing. And I think it truly is something that can set apart a good investor from a great investor.
Again, just play devil's advocate. I would argue that GPs have to win hyper-competitive deals. Oftentimes they're the lead or the second position. There's only so many investors in a round. In LP, it seems like there's room for multiple winners.
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