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Grove Street Advisors Summary 1

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FINS3623
Venture Capital
Week 3 Tutorial
Grove Street Advisors

Facts
Who are the Grove Street Advisors (GSA)?



Who the key personnel?



What is the issue at hand here for GSA?



What roles do CalPERS, NIB and Oregon play?



How has the “intermediation” industry evolved in the past 30 years?




2

Fund of funds


Fund of funds - what is it and why do they exist?
 Intermediaries between LPs (ultimate investors) and individual PE funds

Values added:








Investing on behalf of LPs
Providing access to PE funds
Scaling down investments
Scaling up investments
Reducing LPs’ costs and staffing levels
Diversification across time, industry sector and geography
Shares of PE pool rose from 1% (1985) to 6% (1989) to over 20% (2000)




3

Fund of funds
Which institutions have the best PE returns?









Public pension funds
Corporate pension funds
Uni endowments
Advisors (F of Fs)
Insurance cos
Banks
Other investors
Overall

12%
-3%
24%
20%
6%
-0.1%
7%
12%

(Source Lerner, Schoar and Wong 2009)

Prepared by Ping Du 2013



4

Fund of funds
Typical Fees &
Incentives

Required LP
Staffing

Required LP
Knowledge

LP Access

Direct Investing

N/A

Very high

Very high

Extremely high

Fund investing without advisor

2% + carry

High

High

Very high

Fund investing with advisor

2% + carry + fixed
fee

High

Med

High

Dedicated program

2% + carry + .75%
fee + incentive

Med/low

Low

Med

Fund-of-funds

2% + carry + 1% +
8% carry

Low/nil

Nil

Nil


Method of investing

5


Fund of funds

6


Fund of funds

7

Question 1
How does GSA propose to create value for its investors?




8

Question 1


How does GSA propose to create value for its investors?



Access and knowledge





Buffering for both ends





For the VCs
They...

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