EUVC Podcast: What LPs look at apart from track record

Thomas Kristensen has a simple test for a venture manager. A founder starting a company in the manager's field asks ten friends which three VC firms to call. If eight of the ten name the firm, it is a good VC. Thomas, a partner at LGT Capital Partners, told Andreas Munk Holm on the EUVC Podcast that a strong track record gets a manager into LGT's process. The commitment goes to people with a view of their market sharp enough to put them on those lists, and the discipline not to overpay while AI lifts prices.

Andreas raised the common belief that an investor of LGT's size backs managers on track record alone. Thomas disagreed. "We invest in the people. The track record is the backward-looking evidence that the people are onto something," Thomas said. LGT still needs that evidence, typically five to seven years of picking good investments, because it cannot hold 2,000 three-hour conversations a year with emerging managers. But LPs that commit because a record looks good are somewhat naive, in Thomas's view. What made a good record ten years ago may not repeat once the people have gone or the strategy has changed.

The record also has to fit a realistic plan. An early-stage fund that owns 10% of a company at entry may be diluted to 5% by exit. If the base-case exit is 100 million, the fund gets 5 million back, which is not good for a fund of 50 million. DPI is the wrong yardstick for a fund five to seven years old, and no manager should tell an LP they are top decile three or four years in.

Most of all, LGT wants managers who have thought about their market differently. "It's too easy to just say climate or energy transition. You need something smarter, quite frankly," Thomas said. A new manager should find a niche, use it as a wedge and expand from there. Having sold a company to Adobe and then spent a decade angel investing is not enough. Andreas offered Point Nine, which LGT has backed since its first institutional fund, as a case study. Known for SaaS, the firm told Andreas it had always been a frontier investor, and SaaS was the frontier when it started.

We invest in the people. The track record is the backward-looking evidence that the people are onto something

Climate is not a category at LGT, Thomas said, and its cleantech investments around 2010 left scars. A metal part made at half Siemens' price means little when Siemens makes the 17 parts around it, for a customer on thin margins who just needs the product to work. Physical products still bring thin margins and long design-in times. More capital, materials development sped up partly by AI, and customer pressure on carbon are improving the odds. LGT has some capital for sustainability and takes a little more risk with it, but it cannot be a financial drag. In climate too, Thomas wants managers who are disciplined about price and do not think their next carbon accounting company can be the next Anthropic.

That discipline is scarce in venture now. Some large firms raise funds that need several exits of $50bn to $100bn to deliver the returns LPs expect, and prices rise with them. A founder who sees a peer fresh from OpenAI raise at ten times the price will ask why they should not raise 10 million at 50 million post-money. Thomas said managers outside the franchise firms should not follow. They should take a view on realistic exits and invest slower, since many founders are funded at silly valuations that will not bring a good return even from a decent exit. Asked whether LGT's own managers are doing this, Thomas said very few are.

One example of restraint came from further away. When Chinese venture fell off a cliff, many of the most highly rated Chinese GPs stopped investing entirely and told their LPs they would not deploy for a while. Thomas has been very impressed by how disciplined LGT's Chinese GPs have been in the last few years. There is no need to rush, the LGT partner said, least of all for an emerging manager.

Recorded live at The Drop 2026 for the EUVC Podcast, hosted by Andreas Munk Holm, with Thomas Kristensen.