👋 Welcome to the 30 new readers who joins us this week and welcome back to everyone else.
Last week we talked about one of my favorite topics. Today, we’ll be talking about the topic with one of the largest disconnects between what GPs say, and what LPs want to hear.
/ Self-promotion
Want to systematize your private markets approach? FundFrame helps you move from spreadsheets to rigorous, repeatable frameworks.
“Oh no, they are going to talk about their proprietary sourcing”
- Me in most meetings
After sitting through thousands of manager pitches, I can tell you this: the ones who talk about “exclusive access” usually don’t have it. The ones who win have something far better - discipline. They pick a lane, build relationships over years, and keep showing up when others move on.
In this piece, I share:
Why proprietary sourcing is mostly fiction
What “advantaged sourcing” actually looks like day-to-day (and what Steve Young has to do with it)
How LPs can test whether a GP really has a sourcing edge
And what you can learn from this as an LP
It’s not about having unique access. It’s about being one of the 10 PE firms that gets the call when a seller decides to run a limited process.
A sourcing model example I like: GTCR's industry lens
Before diving into how to test sourcing claims, here's a framework that makes the whole exercise more productive: GTCR's model for identifying attractive industries (and no, it is by no means only GTCR doing this).
GTCR summary (generated by ChatGPT)
GTCR is a leading private equity firm based in Chicago, known for its disciplined, thesis-driven investment approach often summarized as “Leaders Strategy™.”
GTCR, founded in 1980 is particularly recognized for identifying and backing proven executives early- often before a specific acquisition is made - and then working with them to pursue strategic acquisitions and organic growth. Over the decades, GTCR has raised more than $35 billion in capital and built a strong reputation for combining operational expertise with deep sector insight.
Most GPs say they have relationships. Few can articulate which industries are worth building relationships in. GTCR's approach is disciplined:
Fragmented markets with consolidation potential
Essential services customers can't skip - predictable, non-cyclical demand
Recurring revenue that compounds trust and visibility over time
Secular tailwinds (demographics, regulation, tech adoption)
Operational improvement opportunities where better management materially moves margins
Technology stability - not betting against disruption risk
Add a sector layer on top, and it is clear: They know where to hunt. Healthcare IT, financial services infrastructure, vertical software.
Note: This is just one of many examples of sourcing models I like.
Why this matters for sourcing
The best GPs don’t chase every “hot deal.” As we’ve seen above, they’re disciplined about where they hunt and build long-term relationships. Track 100 companies in dental roll-ups for five years, and you’ll know which 10 matter. Chase 12 sectors, and you’re just another buyer in the data room.
Some have unique advantages - if you’re HGGC, you’d be crazy not to use Steve Young to get meetings. Who wouldn’t want to meet a Super Bowl MVP? That edge opens doors - but it’s what you do after that counts.
In short, winning GPs don’t wait by the phone. Instead, they:
Maintain live target lists
Check in regularly
Share insights
Make useful introductions
And much more
When a sale process finally opens, they’re not relying on a four-week sprint to trust the numbers - they already trust their inputs because they’ve seen the company execute.
Everyone can build a model; few can fully trust the numbers. The edge is earned years before the data room opens.
Illustration of certainty
The longer a GP has followed a company, the more certain it can be of its numbers. This, by the way, is also the case for LPs who follow a GP for multiple years.
Or put another way - it limits downside risk.
How I test “sourcing edge” as an LP
Note: Not every GP needs to claim a sourcing edge - some funds excel through operational value-add, speed of execution, or sector expertise. But every GP will claim some sourcing edge - here is how I test it.
Let’s start with the red flags, before going to green flags, and what this means for LPs.
Red flags 🚩
If a GP continues to claim proprietary sourcing but is raising a larger fund, I'm worried. This edge is bound to diminish as deals get larger.
Vague platitudes (“strong relationships”) with no system: no CRM, no cadence, no timelines.
Not being able to tell who all the other players in an industry are
Claiming proprietary deals
Having a GTCR like process (many will claim this), but only half the portfolio companies are actually the result of such a process
Green flags ✅
They can narrate 2-3 years of company development pre‑ownership: what worked, what failed, how management responded, where the inflections were.
Candor about process: “Yes, it went to 15 buyers - we’d tracked it for 4 years.”
Visible infrastructure: sector coverage maps, CRM evidence of years of touchpoints.
"There are currently 86 dental roll-ups in the US. Company A, B and C, owned by X, Y and Z are doing great, while company D, E and F are plagued by poor execution".
A healthcare GP once mentioned this. We asked for a few examples, he not only listed firms and GPs, he also mentioned entry multiples, how they were doing etc. He clearly knew the sector.
Questions that reveal the truth
“Walk me through how you sourced deal [x, y and z] that you pick - from first contact to signed LOI.”
“How many companies do you actively track in your core sectors?”
“Show me a company you followed for years but didn’t buy. Why?”
This is also true for LPs
As an LP, I also relied on years of relationship-building to evaluate GPs.
The parallel is exact: just like GPs build trust with portfolio companies over time, LPs build trust with GPs by watching them deliver - or fail to deliver - on their promises.
Proprietary access? No.
Advantageous insight from years of observation? Absolutely.
And getting invited to invest in a $2 billion with $5 billion of demand…?
… I hope so.
// Self promotion - FundFrame CRM for LPs
This is exactly why built the FundFrame Investment CRM - it offers and out-of-the-box and simple way for LPs to keep track of every GP meeting, note, and impression over time. If you’d like to learn more, you can click the button below.
Some LPs validate sourcing claims by doing reference calls with portfolio companies: “How did the GP first show up? Were they around years before the sale?”
This didn’t work for me. Once a company is in the portfolio, management has every reason to cast the GP in a good light. The story is often polished. I found it far more revealing to push the GP directly - on their sourcing process, timelines, and industry coverage - than to rely on a CEO now financially tied to them.
If someone has found a good formula and has good experience with this, please let me know - always eager to learn!
The bottom line
Don’t ask, “Do you have proprietary deal flow?” Ask, “Can you show evidence of systematic relationship‑building that gets you invited early and gives you superior information?”
That’s not proprietary - it’s earned. And it’s the closest thing to a defensible edge in today’s market.
How did you like today's post?
🔖 Interesting reads
Here are a few articles I found share-worthy this week.
‘Crazy, Right?’: More PE Funds Than McDonald’s in the US: This Bloomberg piece made the round this week. A funny angle, but a PE Fund is not a GP, so not that surprising.
Treat Your LPAC as People, Not Just as Investors: I've sat on many LPACs that were treated as a marketing exercise. This article clearly explains why that's not the best idea.
Anchor LPs & Angel LPs: The Catalysts Behind Emerging Fund Success: "Do I wait for an anchor or just aggregate the small checks first?" The answer is, not surprisingly, yes to both". Quote from Matt Curtolo.
💰 A quick intel snapshot of recently raised funds
Brookfield Global Transition Fund II: $20bn (energy transition/renewable power, global)
Bain Capital Fund XIV: $14bn (flagship global private equity, global)
CVC European Direct Lending Fund IV (EUDL IV): €10.4bn (direct lending/private credit, Europe)
Manulife Infrastructure Fund III: $5.5bn (core-plus infrastructure, North America)
Ares Infrastructure Secondaries Fund III: $5.3bn (infrastructure Secondaries)
Meridiam MINA IV: $1.8bn (infrastructure, North America)
Energy Impact Partners Flagship Fund III: $1.36bn (growth-stage energy & climate VC, sector-focused)
TCGX Fund III: $1.3bn (venture capital - biotech & life sciences, global)
Radical Ventures: US$650m (early-stage AI, North America)
August Equity Fund VI: £350m (lower‑mid‑market buyout, UK; sector-focused: technology, compliance, education, healthcare).
Blue Sage Strategic Credit Fund: $287m (strategic credit - debt & equity, lower‑middle‑market SBIC, US: Texas/Southwest & Midwest)
Better Tomorrow Ventures Fund III: $140m (fintech, early-stage venture, US)
Notion Capital Opportunities III SCSp: €114m (growth - AI-driven B2B software & FinTech, Europe/UK)
One final thing…
If you enjoyed this newsletter, I’d appreciate it if you would forward it to a colleague or friend. If you’re that friend, welcome!
Written by
Steffen Risager
This newsletter is written by Steffen Risager, the founder of FundFrame, a platform for LPs to manage their private markets investments.
Before that, Steffen was CIO at Advantage Investment Partners, a Danish Fund-of-Funds.
Steffen has a decade of experience as an LP, and has made commitments totaling approx. $6bn across fund- and co-investments.