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Jay Ripley

lines on the record: 77
first: 2025-11-10
most recent: 2025-11-10
sittings or episodes: 1
sources: podcast

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“The big thing for me is you can just do things. The world will bend to your will in a way that you wouldn't expect. If you have a viewpoint or if you have a way the world you think should pursue, I think the best example is when it came to Jam, I was like, look, I don't think we should be committing to large funds. We should be chasing independent sponsors. That seemed crazy, to be honest. God bless my partners for agreeing to go along with it. With hindsight, I was that young founder and that I didn't know any better. It just felt like, oh, it seems like what we should do. And I think now seeing how that industry has evolved and grown and there's a lot of interest in it, it's become clear if you have an insight and you think the world should operate different than it is. If you pursue with passion, it will bend to your will. I found it to be really enjoyable and we've grown a lot at jam on the back of that.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was going through my finance degree, and I had some professors that believed in me early, they helped point me in a direction of you should go in finance, here's a path that others have pursued that was successful. When I got into banking, you could see that a lot of people that done it because that was what they were supposed to do, but they didn't really love the game. I remember sitting there thinking, I found my calling. This is exactly what I wanted to do. It's challenging me. It's intellectually interesting. I actually like pressure a lot. It was fun to try to grow and improve. As I look at where I am now versus if you would ask me when I was 16 in Loganville, I am blessed beyond what I could have ever imagined at that time. And I'd feel lucky every day to be able to show up and work with my colleagues.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Turned out dramatically differently than I expected to because we were living in Georgia. There was at the time what was called the Hope Scholarship, the Hope Scholarship was a scholarship that if you had a B average as a high school student in Georgia, you could go tuition free to any in-state institution. I think it's called the Zell Miller Scholarship now. At the time, I was playing hoops. I was not a particularly good engaged student. And I remember my parents said, if you don't get a V average at the Hoop Scholarship, we're not going to pay. We'll pay for your housing if you get it, but if not, you're on your own. You had to have a 3.0 GPA. I graduated high school with a 3.01. I was as unmotivated as you could possibly be while just clearing the bar. I remember when I went to school.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“I had a boss early on who'd said 90% of this business is showing up consistently and investing things go well and it feels great and things go poorly and it feels terrible it feels way worse than when things are great part of it for me has always just been you just got to keep moving forward as my partner Matt says turn the page it's okay getting on to the next one I just try to show up consistently keep a long-term orientation of what we're trying to do and I found that served me well over time and seeing a lot of folks who have had big rises and big falls there's an element of staying in the game and just keep moving forward and doing your best work and don't change your stripes as time goes along that certainly served me well over time”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“The idea that maybe you're the biggest LP and we'll get an allocation okay, I understand that. We back a lot of these emerging managers. I can tell you they are inundated with offers from folks who are saying, I'll give you $100 million for your fund one and I want one-to-one co-invest. What those folks are really saying is I want half off the rack rate and you for you to double your fund size. And obviously as another LP who's looking at that opportunity, I always tell them, well, don't do that because that would make us a lot less interested. I think there are some real ramifications for folks thinking this is the way and trying to pursue it. And we see them distorting parts of markets that are otherwise not good for the industry writ large.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“I hear a lot of what I would describe as lazy heuristics that people will throw out. I think they're informed in many cases by some form of business initiative or some form of third party that's saying, hey, you should do X. And they're like, we're going to do X because that's what we're supposed to do. One I've heard a lot recently is we need to co-invest more. I don't necessarily have a problem with that. There are folks who've had really successful co-invest programs. There could be good logic for that. But I've been surprised in many cases that there's an assumption that it's better, maybe because I sat in the GPC for a while and we had a few Coe-Envests that we farmed out to folks when I was my prior firm. In many cases, if you'd step back and say the typical biote fund has 10 investments in it, if it produces a median return, it's likely that there was a bell curve distribution of deals. We're fine. If it produces an outlier return, it's likely that one deal drove that. If you start from a simple basis, the idea that the one of those 10 was the one you co-invested in is not likely. In many cases, the idea that you're going to get fee savings, okay, I understand that.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Started working when I was 15 and I took two paid jobs. The first was I was a cashier at the local Eckert Drugs, which was, as I learned, a terrible business later bankrupt, but was a real learning experience for me. I also living in rural Georgia was running a little lawn care company as well, where I would mow the lawns. I remember I had one weekend where I worked the morning shift both days at Eckert, and then I was mowing lawns in the afternoon. I got home and I was telling my dad just how tough it was and it was hotter in thin and George at the time. He said, yeah, how'd you feel about that? And I said, yeah, it's just tough. I'm not sure if this is what I'd want to do forever. And he's like, good, get your education. So that was an important lesson for me of, I know what I don't want to do going forward. And that was an important motivator in the future.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Or 17 different strategies at one time is that you can focus on the things that you think you do well and where you have an edge. And the beauty, going back to the founders of Gem, they have turned the equity over in a way that we don't have to seek an outside partner, which is a powerful differentiator relative to basically everybody else in the market. That allows us to grow at our pace in markets where we think we can do the best work with people that we can treat fairly and compensate well and offer a path to the future. Going back to my Stone Point days, many of the firms that I admired the most were groups that stuck to their knitting. And it could be in a variety. It could be HFF within real estate brokerage or benchmark with inventory. Pick your firm. They weren't constantly trying to become something that they weren't previously at GEM. We have a real opportunity. Hopefully we'll be larger. We can grow over time our assets. But my hope is that in 15 or 20 years, people still think of us in the same way they do today, which is a group that when the globe has its standpoint on something, you feel like the work quality is really high. And there was a lot of critical thought.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you look at the original class of OCIAs that was created, most have either pivoted their model to something else, sold themselves, or both. Going back to when I first joined Jem, I felt like an independent boutique, research-focused investment operation where you were focused on excellence and having a small number of clients redelivered high quality service would be an enduring firm that would always have a role in any market. We have broadened it over time from, I'm a fully discretionary OCIO for small and mid-sized endowments and foundations to I might be a partner just on parts of the private portfolio to a $10 billion foundation or to a family office. So we widen the aperture of how an institution can engage with our research and work with and partner with us. We've added to staff to do that in a way that meets our expectations. I don't know that much needs to change for us. The beauty of not having a private equity overlord or a large asset manager that's pushing you to launch an interval fund.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ownership and agency has been more fulfilling than I could have managed. To be clear, it comes with a lot of pressure. This is a competitive market. There are all sorts of crosswinds. Obviously, you've talked to other guests about retails coming in to parts of our market and consultants doing this. There's all sorts of stuff going on that we have to think about and evaluate and deliver the best service at the lowest cost to our clients, just like any other business. We're constantly evaluating that and how to do that, but it's been rewarding to be able to lead and steward it alongside Stephanie and my other colleagues.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's been as rewarding as I anticipated. We have over 80 people at Jem, and I feel a great sense of duty to help build and grow the firm so they can be stewards of it in the future. That intrinsic motivation has been as exciting and motivating as I would have anticipated. I have strong views on things and tend to move fast on ideas when we want to pursue them. I like the agency of being able to say, hey, this is a new opportunity that we should pursue. And let's go do that. The beauty of having a small independently own partnership is that we can quickly come to consensus that it's either a good or bad idea. When we do, you have a lot of agency to then go and pursue that. If you step back, in this role, you get to own and run a firm, talk to the smartest people in the world, work with smart colleagues you talk to every day. I can't imagine a better job, honestly. I know I said, I thought I was at the peak when I was my second year at Stunpoint. And I loved my role there. I've been somehow even happier in my role at JEM because that sense of”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Love to circle back to something we talked about early on, which is the owner-operator mentality. That you've been in this seat and involved in running the business, you reflect back on that initial mission, where has being an OR operator met your expectations and what you wanted to do with your life?”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“whatever my middle market portfolio, I want to do smaller stuff. Once something has presented itself to the market and become obvious, it's late for us. And so we have to be early and we have to be fast. And that requires us to have the right tools and systems and people to see those opportunities, evaluate them, qualify them, and then move quickly when they come in front of us. We're spending a lot of time right now on because it would seem that there should be helpful software and AI enhancements to get us there. I've been a little disappointed. Feels like the promise has outkicked the solved problem. I've always joked. I'll feel like AI is here when I can get on a call with you. And AI note taker can get on, take notes, tag on the CRM properly. And No Human was involved. And currently it requires a whole army people. My hope is that one day we'll be able to process these things even more systematically.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so we're updating our views over time as we learn more about what's working and what's not. What's on the Edge of your new initiatives in manager. Big thing is just looking at how we can identify and assess the talent sooner. One of the problems we have is that as we've done this longer and developed more of a reputation, we are inundated with inbounds. It's been a combination of we've become really well known for this. We have an incredible number of referral sources, but also they're more spinouts now and they're coming to us fast and furious. We're thinking hard right now about how we can have an even more prepared mind because we're at a point where we're seeing three or four spinouts a week that people, hey, I'm leaving good firm Max. I'd love to talk to you, et cetera. Historically, that was a good flow, but it was at a pace where you were able to digest that more. Caroline Dallas leads our sourcing has been looking at different AI tools so she can surveil and understand signals of when someone might spin out so we can prepare ourselves even sooner. We've been adding to that team with a view that we need to be able to research and map the market ahead of these folks coming to us, trying to get in front of these things sooner will allow us to move faster because there's a lot of money chasing them. There is big money that has said, look, I'm not satisfied with my”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Things like crypto, we have a couple people that do that, but there's not meaningful changes in the industry structure within absolute return, within real estate, and even within buyout, those views can be more tactical and can evolve over time based on what's going on on the ground. That planning process, which we do annually, is a really important input for us to then say, we want making this up 25% of the bioportfolio in healthcare, which has been a rich vein of returns over time. You might have that broad portfolio goal, and then you'll look at your portfolio and say, okay, I've got four managers doing that today on my current run rate of pacing and calls. We're going to be at 21. So we've got room to add versus if we have seven managers and it's at 40%, it's like, we need to trim a couple of these. So there are some portfolio actions that will come out of having those top-down views. We don't take that lightly. We think hard about it. We try not to swing the book around wildly. But there are certain areas, especially in real estate and absolute return, having a little bit more tactical views is incredibly helpful. And even within buyout, we were adding software for a long time. We've been doing a little less than that very recently.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Endowment model Thought about How Influences where you go on manage yourself. We have a process internally called our area of interest process where we look at within each portfolio first trying to set some top-down parameters less around, hey, we want to commit to 10 managers in this exact dollar amount and more. This is an area we should try to have exposure to. That's going to be informed by, in many cases, there has been success in that area. And we think that success will continue when we're looking at our real estate portfolio. If you looked at public markets to make this a simple comparison, The decision to invest in data centers over retail real estate was dramatically more impactful than the decision of which REIT you bought within that structure. In each of these areas, we have to then start with, broadly speaking, how do we want the portfolio to be erased? And the venture portfolio, it's pretty easy. We're roughly 80% technology, 20% life sciences. That's moved a little bit over time, but not much. Occasionally, we debate consumer, occasionally we debate.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“As the house, relative to a lot of other folks who tend to be, I think this person is wonderful, trained well, very smart, especially in private equity. You meet a lot of folks who look good in the blue suit. We're trained to buy A-plus assets and A plus auctions at very high prices with a lot of leverage. And that shows to a committee. People like that. It feels good. A lot of high fives, but they're also trained to earn 2X gross. That's just not worth it in the scheme of things.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Where my views tend to be more out of consensus with smart industry peers. I probably cover 25 or 30 that I talk to on a regular basis and say when there's a big source of difference, I tend to await the quality of the game the manager's playing more heavily than most do. Mostly endowments I talk to tend to say we're looking for the best people and the quality of what they're trying to do or how hard it is or the base rates around whether others have had success is maybe of a secondary importance to them look we want the best people we want to back the best bet all that is still true. I would say part of my algorithm of decide whether a firm is an attractive investment opportunity is if you're pursuing something like corporate carve-outs which over time has been a very rich gold mine for a number of private equity firms, that's a great starting point for generating strong returns. If you're pursuing oil field services, that's been tough. I place a strong weight on the neighborhood as my”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are a lot of committees that say, okay, you're targeting 100 or 200 points above global stocks within your long-only actively managed portfolio. But that might mean you're 300 ahead or 400 ahead or 300 behind. Maybe it's just not worth it. The institution doesn't need that. My personal view is that's a mistake over time, a well-curated portfolio of long-only managers can and should be able to outperform global stocks. Over the archetype in most parts of history, the largest companies didn't compound in the way they do today. And I don't know that they will in the future, to be clear. We're at a point in time now where there's a particularly short fuse for committees to accept any sort of variance on the long-only side in a way that, video long short, is there's no directly comparable benchmark to look at. You can look at some heuristics, 60, 40, 70, 30, what have you, but you've got more wiggle room within private equity you're comparing to that investable opportunity set.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“If there is a directly comparable fully liquid benchmark that produces strong returns over time, there's not a lot of tolerance for being behind it. In many cases, there are, I don't know, a couple thousand stocks within Acqui, maybe more. And most of the long-only managers that we invest with are going to have a fairly concentrated portfolio of fundamentally driven investment decisions. Call it maybe as low as five or six and up to maybe 20 or 25 kind of thing. In most cases, they have very wide tracking error versus that index, which is by design. the nature of their structure is such that we're looking for excess returns. It also means in many cases that they will often not look like the index. And I think during periods where the index is delivering an absolute level of return that people are satisfied with, there isn't a lot of tolerance for any meaningful variance from that. If you go back in history and look at the 2000s when there were more of these launches out there, equities were probably just as volatile then as they are now. But like it certainly wasn't the 15-year march up every year of equities producing a strong return. In a lot of room.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Looking for. Once we've screened that out, then we're getting into the Thornier issues in some form or fashion? What's their temperament look like? Those tend to be the things that make or break who we ultimately hire. I'm curious, given the challenges of the public markets and hedge funds being the epitome of active management, which is”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“To another era now where meme stocks are going to the moon, and so the more short of the stock, the more it's being put up on Reddit and Robin Hood and places like that, that game has gotten a lot harder over time. And so we're looking for folks that are trying to generate alpha on the short side and not just pursuing closet beta in that area. We've seen where for a long time managers had a view that I'm not being paid to own Apple. I simply cannot do that. That was NVIDIA or pick your big cap stock. The view of many of the managers until they gotten much larger and had no choice. That was out of their sweet spot, not something they could pursue. More recently, we've seen a willingness to look across the spectrum. We're looking for any new long short talent. We're first screening it based on strategy, opportunity set, and then terms. We might say, for example, we don't need more biotech right now. We don't do discretionary macro. We really like the strategy, but it has a five-year locket. It wouldn't work for us. We're mostly hunting. We don't take a lot of inbound ideas. We generally start with what we're doing.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Games where technology and systems and access are more important. Anything that's a five billion pod launch, that's not an emerging manager. That's just a PM who is somewhere else now being on their own. When we say day one launches on the hedge fund sign, we're principally talking about long short stock pickers who generally are running concentrated portfolios and have a fundamental perspective on things, sometimes have an activism angle to them. That's going to be the main hunting ground for us on that area. It is usually true that on the absolute return side of the equation, it's one of the few areas where scale is the friend of returns. It's actually a positive. We are supporting groups in that area where there is a lot of proof history and we have confidence in their results. In a world last 10, 15 years where the public market indexes have been so strong, how have you continued to refresh and re-underwrite different hedge fund strategies, particularly long short? The first thing is we're looking for folks that are doing work on the short side. That has gotten harder and harder over time.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“An apprenticeship business where you've trained at a good firm, you've been shown what looks like from a research perspective. Most importantly, from a portfolio management perspective, some of the portfolio management guidelines, thinking about risk, how to manage your emotions, those are things where usually you have to learn those through observational inputs by working with a PM. I would say it works very similar to buyout in that loosely track and in many cases invest with a number of successful public firms that over time produce spinouts. And if you look at a lot of the day one launches that we've backed, a lot of them are folks who have come out of firms that we had supported previously where we have some perspective on the now new PM in many cases what the pros and cons of that person look like. Within the broad brush of hedge funds, are there particular strategies you found productive in the emerging manager space more than others? We do a lot more with day one hedge funds on the long short side versus many parts of what I would describe as the absolute return side, some of the pods don't really lend themselves to emerging managers. They're really scalable.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was clear that the endowments have a long history of going early, but the real superpower of these endowments has been that by seeing people early, they can then identify and add capital to the best ones over time. There tends to be a power law in terms of who they add capital to and who drives those results. Any good endowment style investing starts with a good emerging manager program, including on the public side. The hedge fund market in particular has gotten much more concentrated in pod shops. It's just at fee insensitive. They're able to pay talented managers in their style quite a lot of money. Where have you found the emerging hedge fund managers that you wanted to back? It looks a lot like buyout. We will occasionally see the person who is so passionate about investing that the doctor who managed money on their own and then found outside capital. That will happen on occasion. We've backed some talent to people who look like that. In almost all the cases, though,”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“We've got to be early to shape that conversation, otherwise, it can get away from us. We work hard to make sure that we have a voice at the table, can be a meaningful investor, and can shape that. Having direct access to the portfolio manager over time is an important ingredient that allows us to have conviction as to when you want to add capital. Nobody forgets who backs you early on. We find that as these managers grow, they hire and hire a person, suddenly you're being intermediated, you're not getting the same perspective. You're not able to read the temperament of the manager, understand what they're thinking about. It becomes more difficult to add capital the less information you have by going early, you're able to see that and benefit from that. The last thing is it's the optimal point in the cycle. This is same as buyout and venture at that early stage. They are most hungry to produce results, good early returns will allow you to raise money for a long time. The key thing with backing any emerging manager, public or private, is that you want to start with a more modest, reasonable check size, and then you can add money over time. When I was doing my original LP study, I was reading all the sum.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ongoing basis that we anticipate re upping with it's a similar amount on the venture side. I'd love to turn the lens over to the public markets. Have you approached that thought process of investing in earlier managers similarly differently in the public markets than the private markets? Jem has a long history of being a day one investor in particular on the hedge fund side on the long only side as well, but especially in the hedge fund side. There are good reasons for that why we've pursued that over time. Some of the benefits that we see one is you're generally going to get better economics, so there's going to be some form of founder class shares that you can participate in whether it's a fee or a carry discount or both. Both of those are available. Generally, you're going to be able to shape the conversation on liquidity, which is an important piece to it. You can usually get more favorable liquidity in some form or fashion. If you go early, my partner, Sal jokes that were caught between the pods who don't seem to care about fees and the endowments who don't seem to care about liquidity. We care about both.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's meant to be bottom up driven. We generally believe that forcing co-invests unnaturally is not a great starting point as a general rule. If you look at most funds, if they have strong results, it's almost always driven by one company. And so the likelihood that one of the ten was the co-investors, in my opinion, not very likely statistically. In general, we will do co-invest when they make a lot of sense to do, but we're not hunting for those or forcing those unnaturally within our portfolio. How many different managers or maybe continuing managers will you have on the emerging side in both buyouts and venture? We've got 15 approved infinite sponsors today. We hope and expect all of those groups will graduate to raise a fund one day. We'll probably back half to two-thirds in the fund. In many cases, the reason we won't invest is we've already got two industrial managers. We've already got two healthcare and we simply can't add more to our portfolio. We always maintain a robust pipeline of approved independent sponsors. On the fund manager side, if you think about groups that we've re-upped with, we're generally going to have 15 to 20 managers on kind of a”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Small buyouts, so that would be those fun one, two, three. The more emerging manager type situations, you're looking for excess returns in that market. That's the sweet spot of that investor's career when they 38 and they spun out and they've done independent sponsor and then fund one, fun two. We always joke. You can raise money for a long time on good early results. You're never more aligned with a sponsor than you are. And that fun one era, they want to have that stamp. Our portfolios are going to be a mix of mid and large cap, small buyouts, and then some independent sponsors as well. We have some loose targets that we use, but part of our model is we don't want to be so prescriptive that we turn off a manager's gotten a little larger, but we think it's better than a new independent sponsor. There is a selection process where we sit down and say, this manager has continued to compound over time. On the venture side, we target what we would call core brands, so those megacap groups. We've got a number of groups we work with in that area. And then we have our early stage portfolio. In both those portfolios, we also have a target for co-invest in secondaries. It's loosely 20%.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a recognition that we certainly think we have an edge in both those areas, liquidity and venture has been shorter over time or longer over time. And in buyout, the results have been more predictable. I think are a great starting point for building an equity portfolio. How do you put together the manager roster in both? We're lifecycle investors. We love doing fun ones. We love doing fun twos. We last year committed to a fund three from one of our early independent sponsors, so we've now got data points of going for a long period of time. That was a fund that was north of a billion dollars. So they're getting up there in size. We have some broad categories that we use within the portfolio. So within buyout or private equity, maybe to start there, you've got middle market and large cap, which is going to be higher leverage, higher prices, higher quality companies, more pro-cyclical. I might argue more liquid in the sense that if you ever needed to sell those positions, they're more known flow names that you could get out of. I think they have a role in the portfolio and certainly have done well over time for most portfolios. They've beaten public stocks and generated some form of excess return. You have a weekly”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“We tend to have a strong pro-cyclical return stream and distribution stream to it. We do believe that venture has an innovation beta that is somewhat correlated with buyout, but really not that correlated with it might argue that today they actually are a bit at odds with one another. You could argue that AI is a much greater threat to the average small business relative to most previous technological innovations. We see a new AI roll up every week where someone's a tech operator, an adventure person, and a crusty bio person are going to buy up some legacy industry and then infuse AI. And those may or may not work. I don't have a strong opinion on those, but I will say you can see now where they're more directly going head-to-head in a way that they wouldn't have historically. When Matt and Mike and I are talking about where we want to allocate capital, our starting point is always everything in moderation. We want to make sure that we don't have strident views that it's zero or one. In most portfolios for our clients, we're 60% buyout, 40% venture, roughly speaking.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is starting as they naturally do to grow a larger fund size, but maybe their edge or their networks haven't kept up with that, we can then look at the next fund one opportunity and say maybe that's more compelling. And we do that across buyout and across venture. How if you put these together, say both the venture side and the buyout side into the context of a portfolio or a subportfolio for your clients? Both of them fall under the broad equity bucket so we can get our equity from stocks. We can get it from actively managed equities, from hedge funds, and then from private equity. We view them as to some degree distinct betas. Are you generally buying control of mature companies where there's a leverage aspect, but they tend to be more predictable over time if a company's been around for 30 years, probably around for the next 30 years? If you look at the array of results, if you select well, returns in both have been attractive over time, but buyout has had a much more consistent duration to it in terms of you tend to have a four and a half to six year duration on average, whereas inventure like 21, you're getting distributions every day, and the last two years it's been crickets. And so.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you see a lot of folks do is they write a small check to a fun one, they do a little more in fun two, fun one turns out to be a 15x and they had a little bit of money. Well, by fun three, they're like, this is the best thing ever. And they 10X their commitment to the fund. Then that third fund, in a lot of cases, it's not going to replicate what Fund1 did. And so you end up with a blended return that doesn't look nearly as exciting as what you would have thought on paper. We try to be consistent in how we size these opportunities, recognizing that we don't know which ones will be the best opportunities. We'd want to make sure that they're set up for success. That they're ownership to fund size is reasonable, that their hustle and networks continue to be top-notch. We're trying to evaluate all of those factors. And then we're benchmarking and scorecarding that against all the other opportunities that are out there. Part of our advantage of trying to say we want to be the first stop for the best talent just in general across alternative investments by having that sourcing team in a robust pipeline is when someone's had early success.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“The right to win? Why are they going to see things early? And why do they have a right to exist? In that power law business, if you look at those two cohorts of the different origins of the firms that you backed, because of the power law, you don't necessarily expect the type of persistence and performance that you would in buyouts, or at least the consistency of it. What have you found in terms of your ability to triangulate ahead of time and how that's played out with future success? When I entered the industry, I think with Steve Kaplan, who had the seminal paper showing the adventure was the most persistent asset class, that if you were top quartile in a previous vintage, you were likely to be so in the next one. I don't know if this is statistically still true, but anecdotally, I think that the large cap space, that's probably still true. If you're one of the best firms, you're likely to continue to be. In the seed micro realm, I don't think there's a lot of persistence. There is more idiosyncratic lottery ticket type risk in some of these cases, depending on what groups to produce spinouts and where you were at that time.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Two times money, and you're like, okay, great. Where do I sign up? Today you meet a lot of folks where they're like, I've done 12 deals and I've done a 2.1x gross. And that's pretty good relative to the industry writ large over that comparable time period, but it doesn't feel as exciting as it does when you in that old time period. Well, you can evaluate the nature of their networks and how they're going to win. There's less proof than there was historically. And so you're trying to dig further to understand what will make them special, what will differentiate them. And then in many cases, the people who spin out from the larger firms tend to raise larger funds as well. They tend to be more 150 to 400 type range versus the operators tend to do kind of sub 150. At that size, you're also now competing with the megacap people who are coming down market and they have an army of scouts. They'll do a $10 million check on 100, not because they care about the 10, but because they want to write to put a billion dollars in the company later. They can price these things with an algorithm doesn't make sense for a two or three or a million dollar fund. We're trying to understand what's”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“With who can more consistently benchmark these venture managers and allow us to see, we're evaluating closely as we look at these groups what is their ownership relative to their fund size look like? Are they willing and able to chase ownership and to buy meaningful ownership in each of the companies? That's a major problem we see that they want a bigger fund size but they don't want to buy more ownership. And that's like saying, hey, I want to start paying 15 times EBITDA for companies, but this company will grow really large and so it'll be okay. At some point that math will break down. We're trying to study that very closely. This is about the centrality of the network and making sure that we think that they are going to be positioned to see the Vestiles. For the second group, for the folks who spun out of investment firms, those are more straightforward. They tend to come with a broader, more durable network. What's been tricky about that group is that since 2018, Venture of Vintages have been more pedestrian in nature. Returns have not been what they were in the preceding years. For a while, I remember in 2016 and 17, every person you met with was like, I was in the serious seat of Uber and my track record is 42.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“That first group where someone has worked at well known company, the general thesis is usually that, hey, I worked at Airbnb and I think Airbnb will be a big startup factory going forward and therefore everybody spends out of there or my all my colleagues, I'm going to be able to back them. And that's my angle. That's a great angle. That has worked well over time and very fruitful for a lot of venture investors. The issue and the trick for the folks in our seat is it's got a three-fun shelf life. By the time you finish fund three, everybody you know at Airbnb has left. By Fund four, you're talking to strangers. So at that point, we're trying to evaluate how these folks build their networks over time such that they can become an enduring firm versus a firm that was centered on some trade or expertise that they had. We're evaluating a number of those folks. Inventure, as I mentioned earlier, you have a lot more perspective from others in the industry on the venture investor his or herself. We have more perspective from talking to downstream growth investors, to other investors in the precede round, to the founders themselves, to LPs they work.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Audacious company and the 22 year old doesn't know any better. So you tend to see these disruptive companies started by young people if you look at who funds them. It's people who look like them. So a lot of venture managers are in their late 20s, 30s, early 40s. We had a manager recently that we had invested with for over 10 years, a lot of success, very talented individual. And he retired at 45 is that everybody within my network is no longer relevant to starting new companies. Just hung his cleats up. You would never see a buy investor say, I'm 45. I'm not relevant anymore. But it's just a very different mindset and ecosystem. Within venture, though, if I separate those two groups, almost all the new venture launches are going to be early stage focused either on pre-seed or seed strategy.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“They are cousins on the asset allocators spreadsheet. They are vastly different industries in terms of how they operate. It's PowerLaw Business, 80-ish percent of the gains come from 15% of the funds. I find that since I started in the industry in 2014, the industry is really bifurcated now into these mega funds that are playing a very different game than the rest of the veteran industry is. And so I'm just going to put those to the side for a minute as a separate issue in terms of backing emerging managers and venture. Most of the folks we see are coming from one of two places. They have been operators themselves working at a well-known tech company or they are spinning out of some sort of existing investment firm and pursuing the model. If you look over the architect time, folks coming out of either of those situations have been successful. We will certainly look at and evaluate both. It's worth observing in venture that it looks very different from a lifecycle perspective than in buyout because these young people are starting these companies because I think it was Paul Graham who said the 35-year-old knows too much to ever launch the big hair.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Don't control because it's very hard to know when to add capital in those cases because you don't know if that trend will continue. But as an exogenous factor, you don't know they don't have control of it.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“We always approach this from a place of empathy. We know these folks have put their heart and soul, and it took a lot of courage to leave your prior firm. It was hard to find the deal that you ultimately transacted on. If you're working with someone like us, there was a lot of diligence involved. And so usually we're friendly. We try to be supportive and a thought partner for them. It would be a real red flag for us if they were calling us and saying, hey, my company is struggling. I'm not sure how to handle that. We try to be eyes wide open about the risks they're taking and not letting them shift the narrative on us over time. There are situations where companies underperforming, they'll bring you an add-on, and we're going to top up some equity because our leverage is not where we want it to be. We want them to be transparent and thoughtful with us about that. And then we want to add capital into situations where that makes sense. How much of what's gone on is driven by industry factors versus factors that are underwritable or in your control. In a lot of ways, if it says you're in your control and you've messed them up to some degree, those are much more fixable by definition. It's harder when an unforeseen third party issue arises that was a known risk, but one”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Curious about the situations where you back someone who does have the partnership mindset, personally they seem like they'd be a good long-term partner and fit, but maybe either their first deal wasn't that good, or there were some things you saw in their investment acumen as opposed to how they behaved that you didn't want to continue on. What happens in those conversations given that this deal is their livelihood at the time?”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“What game you're trying to play as an LP? Are you somebody who is a direct investor, who is putting a press release out, a Ko GP on the deal, or are you somebody who simply wants exposure to an inefficient part of the market and eventually to build a relationship? That's a very important fork on the road. You need to decide up front.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Wrong, we've had deals that haven't been successful. It's looked like a private equity fund situation. They bought a business, earnings went down, they had to rectify that and then sell it and in some cases realized a loss. But from our perspective, other than having a front row seat to that and having a discussion with them, it didn't feel any different than if a fund two we backed had had an issue. There have been a lot of new entrants in the space, and I tell all of them, you've got to be careful because you have to identify the nature of the sponsor you're working with, because when we originally launched this program in 2014, there were a number groups that were trafficking in this area. in a few cases it was a family office and they'd done a deal with an independent sponsor and the sponsor viewed the carry as sort of a levered option once it became clear that the levered option was not going to be in the money they said here are the keys you can run the factory now i'm going to go on to my next thing you have to understand what the risks are within this model and make sure that who you work with and who you partner with really critical the model is not that different than in a private equity fund context it's about the sponsor selection process understand”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Within the independent sponsor market, I would bifurcate things into two different groups. There are sponsors who have trained at good firms, intend to dedicate their career to being a private equity sponsor, hopefully will raise a fun one day and view their counterparties as LPs and long-term partners. And so those are the folks that we work with. We're trying to work with the very best independent sponsors, and they see us as someone that they want to have a multi-decade relationship with and treat us accordingly. That's going to be a minority of independent sponsors. The majority of independent sponsors are more transactional in nature and quasi-deal finders. They've locked up a deal under LOI. They'd know how to get a deal closed, but they don't know how to run and operate a business. They would be much more likely to partner with another private equity fund or maybe a junior capital provider that provides the debt and the equity and brings some operational chops as well. Or maybe a family office. You have to bifurcate those too because if you look at our portfolio, when things have gone”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“And what I always tell them is I would go the other way, I'd go narrow to start, and nobody's preventing you on your Fund 3 from investing in some other adjacent market. But out of the gate, there are thousands of you out there. You've got to have some way that you can differentiate yourself, attract capital, find good deals by picking a couple of narrower swim lanes and really focusing on those first. It allows you to get some early deals done, add some fees to the equation, and add additional teammates, which allows you to build toward a fund one as you earn permission over time to widen your box versus starting with a wider box and saying, I might do consumer or industrials or services. In those cases, they do themselves a real disservice because one, it turns folks like us off who say, now I don't know how to define you. And two, it makes the job a lot harder because then you're trying to cover four or five massive markets instead of one.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“More and more these days, private equity has become increasingly balkanized. We used to see a lot of folks who are like, I do services or I do industrials. And now someone will often say, I do buy and builds of blue-collar services or it's a transaction type and an industry type as well. They usually are owning some form of swim lane where they think they have”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Looks compelling relative to what a coastal firm could probably get for that asset. We see a lot of deals like that where the sponsor has some sort of industry nexus. They have some real expertise within a contained vertical. Most of the independent sponsors we back are paired up with an operator they worked with previously. They often will call us and say, hey, I have a new deal and operator X is also going to be supporting us on that deal. And by the way, he's best friends with the owner of this business and knows all about it. There's usually more actionable information that they have relative to you get a William Blair auction book and you get a fireside chat and you've got GLG doing calls for you. I would argue independent sponsors know a lot more about their companies than the traditional large sponsor does about an asset that they have to move quickly in an auction. They're playing different games in a lot of ways.”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“Auction book with a Bain report and stapled financing, let's just quarterback this to the finish line. That's a very different game. That's much more driven by the direction of interest rates, the direction of equity markets. Industry selection is very important, whether you got whatever the long-term secular trend was correct. All of the easy stuff has been handled by the prior sponsor. The independent sponsors do themselves a favor, which is that they're focusing on a part of the market which is hard to secure deals, but once you secure them, they're more straightforward in terms of how you're going to drive value. They, in most cases, don't compete with the larger sponsors unless it's via some form of the larger sponsor as a platform that's doing add-on acquisitions and can tuck that specific business in. In most cases, independent sponsors are investing in what I would call story deal. The classic archetype would be a high quality company in the Midwest with a baby boomer owner. Kids have moved to the coast. They don't want to own this thing. And the independent sponsor becomes the son that the founder never had. And they transact at a price that...”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say for starters, they are targeting a segment of the market where the value creation plan is a little more straightforward. If I go back to my time in private equity, the deals we did in the lower middle market, I was being asked to go to conferences, source deals off market, buy from founder owners for mid single digit EBITDA multiples. And we found there was a lot they hadn't done to grow the business when he got into it. They never looked at buying their nearest competitor. They never looked at expanding capacity, whatever that might mean in their industry. They never looked at pushing a price increase. They never really hired A players within their field. There were a lot of things you could do that would drive value long term that as the senior professional working on the deal, you felt like you had a lot of agency over generating that return outcome. And then if it had never had an outside owner and you were able to buy it low and grow earnings, you could then sell it to a middle market firm at a very attractive price. The game is more straightforward in a lot of ways in that area. Is you get larger and get into the multi-billion dollar fund sizes?”
2025-11-10 · Capital Allocators · Jay Ripley – Emerging Manager Selection at GEM (EP.470) · IDENTIFIED FROM THE TRANSCRIPT · source