Happy Thursday - let’s dive in.

LPs almost universally treat a large GP commitment as an unambiguous positive.

More skin in the game. Better alignment. Simple.

And to be clear: that instinct is right.

But it’s incomplete.

I was reminded of this recently while being interviewed for a research paper on GP-LP alignment - one topic kept coming up: GP commitment, and what it actually does.

On the margin, a GP with a large personal commitment behaves slightly differently.
Not dramatically - but directionally.

You see it in edge cases - deals slightly outside strategy, or dependent on a few assumptions going right.

Those get passed on a bit more often.

Most discussions of alignment focus on the upside. But that’s not where the real work is being done.

Carry already handles the upside.

Getting ~20% of the gains while investing ~2% of the capital is a powerful incentive. In a successful fund, alignment is not the problem.

The real test is the downside scenario - a fund that won’t get into carry.

That’s where incentives change.

If a fund isn’t going to clear the hurdle, most of the reputational outcome is already set. Whether the GP delivers 4% or 7%, it’s still seen as a bad fund.

Which creates a problem:

The marginal effort required to improve outcomes -
the hard portfolio work, the difficult decisions, the extra push on exits -
has limited impact on how the fund is ultimately perceived.

So what keeps the GP fully engaged?

There are real forces: Fiduciary responsibility, franchise value, personal pride - they're real, but they vary across managers and are almost impossible to underwrite.

The only incentive with real, immediate economic impact is:

Personal capital they don’t want to lose.

I'd rather rely on that than hope personal pride does the job.

A large GP commitment is a positive. But its value is not evenly distributed.

So the role of GP commitment isn’t primarily to drive outperformance.

It’s to prevent underperformance from getting worse.

It’s tempting to treat GP commitment as a lever for higher returns. It’s not.

You shouldn’t expect a fund with a higher GP commitment to outperform purely because of that.

But that doesn’t make it less important - quite the opposite.

GP commitment is a risk/return driver.

It shapes behavior:

And that’s ultimately what LPs are optimizing for.

Not just maximum upside.

But how the full distribution behaves - especially the left tail.

We tend to think about GP commitment as alignment.

That’s true - but incomplete.

A more precise framing is this:

So when you score a large GP commitment positively in diligence, you’re right.

Just be clear about what you’re actually buying.

Not more upside.

Better behavior across the full risk/return profile - and more protection when things don’t go to plan.

We signed our biggest contract to date last Friday.

Strangely, it didn't feel like a big moment.

The deal had been done for weeks. The business case was clear, the pilot had gone well, and we had already shaken hands on it. What remained was the legal work. Mostly non-blocking clean-up.

By the time the signatures went through, it felt more like confirming something than achieving something.

Which, in a way, is exactly how you want it.

You'd think signing the largest contract in your company's history would feel like a clear before and after. Instead, it felt like the outcome had already been decided.

Because it had.

The pilot is what mattered. That's where we proved the hard part: that we can pull together capital account data, financial statements, and underlying company data - revenue, EBITDA, the full picture - across a large, complex private markets portfolio.

And not just collect it. Structure it. Validate it. Connect it. Make it usable for both front- and back-office.

Not as a one-off export, but as a living data layer.

That's the part I'm proud of. Not the signature.

The contract just made it official.

Now we build from here.

- Steffen