# LP10X - Advising $90 Billion in Institutional Capital - Nolan Bean, CIO, FEG Investment Advisors

An episode of [VC10X - Investing, Venture Capital, Asset Management, Family Office, Wealth Management](https://invisiblenetwork.ai/podcast/1632806986), 10 Feb 2026, 39 min.

Audio: https://anchor.fm/s/a453ddd4/podcast/play/115287644/https%3A%2F%2Fd3ctxlq1ktw2nl.cloudfront.net%2Fstaging%2F2026-1-10%2F417812221-44100-2-cf5b47decc6a9.mp3

How do the world’s smartest institutional investors actually allocate capital? In this episode, we sit down with Nolan, a veteran CIO with over two decades of experience allocating capital for endowments, foundations, family offices, and healthcare systems — overseeing more than $90B in assets across public and private markets. We go deep into how institutions think about risk, liquidity, and long-term returns, why venture capital remains a power-law game, and how investors are navigating today’s biggest shifts — from AI and private credit to diversification risks and market cycles. This conversation pulls back the curtain on how capital is really deployed behind closed doors — especially in a world where exits are slower, fundraising is harder, and everyone is asking whether we’re closer to 1997… or 1999. ⭐ Sponsored by Podcast10x - Podcasting agency for VCs - https://podcast10x.com What you’ll learn in this episode: - How institutions decide how much risk they can truly take - Why venture capital allocations haven’t disappeared — but have slowed - Private credit vs venture capital: how LPs actually think about the trade-off - How AI is reshaping portfolios across public and private markets - Why diversification matters more now than during bull markets - What CIOs are watching for as we head into 2026 Whether you’re a fund manager, LP, founder, or just curious about how institutional money really works, this episode offers rare, first-principles insight into long-term capital allocation. (00:00) - Podcast Teaser: Risk, Returns, and Venture Capital (00:48) - Introduction to Nolan Bean and FEG Investment Advisors (02:20) - Nolan's Career Journey: From Associate to CIO (03:16) - What is FEG and the Outsourced CIO (OCIO) Model? (05:18) - The Four Key Risks for Institutional Investors (08:32) - Ranking Institutions by Risk Appetite (10:20) - A Breakdown of Institutional Asset Classes (13:05) - Institutional Openness to New Investment Strategies (15:30) - The Evolving Landscape of Venture Capital (17:36) - Why VC Fundraising Has Slowed Down (19:12) - Venture Capital vs. Private Credit: An Institutional Debate (21:32) - Current Institutional Preferences in VC Funds (Stage & Sector) (24:01) - Evaluating the Risk of an AI Bubble (26:54) - Domestic vs. Global Allocations (29:19) - The Unspoken Need for Diversification (31:29) - Commodities as a Portfolio Hedge (34:29) - Advice for Fund Managers Raising Capital (36:22) - Market Outlook and Expectations for 2026 Connect with Nolan: https://www.linkedin.com/in/nolanbean/ Podcast Links: Prashant Choubey - https://www.linkedin.com/in/choubeysahab Subscribe to VC10X newsletter - https://vc10x.beehiiv.com Subscribe on YouTube - https://youtube.com/@VC10X Subscribe on Apple Podcasts - https://podcasts.apple.com/us/podcast/vc10x-investing-venture-capital-asset-management-private/id1632806986 Subscribe on Spotify - https://open.spotify.com/show/7F7KEhXNhTx1bKTBFgzv3k?si=WgQ4ozMiQJ-6nowj6wBgqQ VC10X website - https://vc10x.com For sponsorship queries, reach out to prashantchoubey3@gmail.com

## Transcript

[0:00] If 2008 repeats in your portfolio is down 20 percent,
[0:03] 30%, does the institution have the ability to withstand?
[0:07] That and if you had to rank all these different types of
[0:10] institutions based on their risk appetite, which type is willing
[0:14] to take the most risk? Family offices, if you consider
[0:16] them institutions are in that subset tend to be some of the
[0:19] higher a higher risk appetite. Do you see that the
[0:22] attractiveness of venture capitalizing asset class has
[0:25] reduced over the past 2-3 years? It is a power law game where
[0:28] you're trying to get a couple of home runs, and that fundamental
[0:31] characteristic hasn't changed. The question that I get asked
[0:34] probably more than any other is, is this 1999 and we're about to
[0:38] have a major correction? I don't think anyone knows the
[0:41] answer to that. Our working thesis is it's
[0:45] probably closer to 97 than it is 99.
[0:49] Hey everyone, this is Prashant and I'll be host of the VC10X
[0:52] podcast. And today we have Nolan being
[0:54] with us. Nolan is a seasoned
[0:56] institutional investor who has spent over 2 decades going from
[0:59] an associate all the way to CIO. And today?
[1:02] Helps allocate capital across more than $90 billion for some
[1:06] of the world's largest institutions.
[1:08] We talk about how endowments, foundations, family offices, and
[1:11] healthcare systems actually think about risk, liquidity, and
[1:15] long term returns, why venture capital is still a power law
[1:18] game even after the last few tough years, and how
[1:21] institutions are balancing AI, private credit, diversification,
[1:25] and the fear of being in another 1999 moment.
[1:29] If you're wondering how the smartest and the largest pools
[1:31] of capital really make decisions behind closed doors, this
[1:34] conversation is for you. So without wasting any time,
[1:36] let's dive straight in. This episode is brought to you
[1:39] by Podcast NX, my podcasting agency for VCs.
[1:43] We help VC start and run branded podcast that can serve as their
[1:47] entire content engine. Turn the conversations you're
[1:51] already having into a machine 1 recording becomes your presence
[1:55] on LinkedIn, Spotify, YouTube, and e-mail.
[1:58] Don't just build another VC firm, build a firm that can
[2:01] stand out to LP's and one that founders can brag about having
[2:05] you on their cap table. Check out our services at
[2:09] Podcast ten-x.com. I'll put the link in the
[2:11] description below. Now enjoy the episode.
[2:15] Hey Nolan, so good to have you on the VC10 Next podcast.
[2:17] How are you doing? Doing great, thanks for having
[2:19] me. Yeah, it's a pleasure having you
[2:21] on and you've had an amazing career, right?
[2:24] You, you've spent 20 plus years growing from an associate to
[2:28] ACIO now at FEG, right? What key decisions or habits do
[2:33] you think made the biggest difference in your career?
[2:37] I would say there's been a couple of things that that have
[2:40] happened. One would be hard work, second
[2:44] is a little bit of luck, and then third would be when there
[2:48] are opportunities presented to take full advantage.
[2:51] So early days when you're an associate, you're grinding.
[2:55] So working hard every single day.
[2:58] I was fortunate that to have some great mentors and have some
[3:01] good opportunities early on. And when you get presented with
[3:04] those, learn everything you can from those, those mentors, the
[3:07] folks that you're working with and the clients you get to work
[3:10] with. So combination of those three
[3:12] things and it's been it's been a fun ride over the last couple of
[3:14] decades. Absolutely.
[3:16] And tell us a little bit about what you do at FEG, because what
[3:20] I've heard is that it's more than 90 plus billion dollars in
[3:25] assets and advisory and about like 20 plus in assets and the
[3:30] management within that. So give me an insight into what
[3:34] you guys exactly do and how you work with distributional
[3:36] investors. Happy to do it.
[3:39] So, yeah, we're we're asset allocators.
[3:42] So we work primarily with institutions, a lot of
[3:44] nonprofits, foundations and endowments, healthcare systems
[3:49] and work with them to set up a investment program to get the
[3:51] right asset allocation and then implement that, that plan, that
[3:56] strategy with best in class managers or index funds to, to
[4:01] try to beat the market and do better than what the, the
[4:03] market's given us. My, my primary focus is on the,
[4:07] the assets under management side, what, what we call OCIO or
[4:10] outsource CIO. So in, in that situation, we'll,
[4:15] we'll work with the institution to understand risk appetite,
[4:18] return objectives, liquidity needs, codify that with an
[4:21] investment committee and investment policy statement.
[4:23] And then we're off and running. And, and we're responsible for
[4:26] deploying the capital and managing it day in and day out
[4:29] across every single asset class and dealing with markets and how
[4:35] to how to navigate all the, the fun that we get to every single
[4:37] day in markets. Absolutely.
[4:39] That's quite interesting. And we've hosted several CIOs
[4:43] before on the podcast, but we are not part of this outsource
[4:47] CIO think that even these big institutions are outsourcing
[4:51] something just that is as important that asset allocation
[4:53] and management of those assets and growing that over time.
[4:56] So give me an insight into how that works, that transfer of
[5:00] knowledge that happens. How do you align yourself that
[5:02] what is the mandate for the institution, how they want to,
[5:07] you know, allocate their capital, how do you want to grow
[5:11] it, at what pace and so on, how safe they want to play or how
[5:14] risky they want to play in that. So give us an insight into that.
[5:18] Yeah. So at the beginning of any
[5:19] relationship, there's a lot of conversations and dialogues with
[5:23] staff, CFOSCEOS and then boards and investment committee and
[5:29] there's a lot of nuance and details that go into that.
[5:32] We've tried to boil it down into we want to understand four key
[5:34] risks. So the first we call enterprise.
[5:38] Is this a university? What's your spending rate?
[5:41] Are there any other unique characteristics?
[5:43] Do they own real estate outside? Do they have any constraints,
[5:47] healthcare system? Do they issue debt?
[5:49] Are there any debt covenants we need to be aware of?
[5:51] So I understand the enterprise first and foremost.
[5:54] Second, how much market risk are you willing to bear?
[5:57] So try to simplify that into Max Stradam.
[6:01] So if 2008 repeats and your portfolio is down 20 percent,
[6:06] 30%, does the institution have the ability to withstand that?
[6:10] And do all the people around the table have the willingness to
[6:13] withstand that? So how much market risk?
[6:16] The third one is illiquidity. How much can you lock up in
[6:20] private equity, venture other private assets, try to
[6:23] understand what is the illiquidity budget that we can
[6:25] use to drive returns. Then the last one is, is what I
[6:29] call maverick risk. Are there peers or benchmarks
[6:34] that are important to you market, you know how the
[6:36] market's doing and, and how willing are you to look similar
[6:39] or different than others in an effort to, to drive long term
[6:42] returns? So I think if we can get
[6:43] everyone in coalesced and aligned on those four key risks
[6:47] and how much risk we're willing to bear, what are we trying to
[6:49] achieve and we can stick with that plan.
[6:52] We've had pretty good success on on on getting folks where they
[6:55] where they need to be. Absolutely.
[6:58] And since you work with all these different types of
[7:00] institutions, how similar or dissimilar are they in how they
[7:05] do their allocations and what asset classes they prefer or not
[7:08] prefer? Yeah, The big picture, a lot of
[7:12] the endowments and foundations have a lot of similarities,
[7:15] whether it's a university, a private foundation, a Community
[7:18] Foundation, there are some nuances within that.
[7:23] I think some of it's just cultural.
[7:27] Universities have been early adopters of a lot of
[7:29] alternatives. They tend to be a little bit
[7:31] more comfortable. But then there are some other
[7:33] institutions like healthcare where it's balance sheet assets,
[7:36] they're issuing debt where it, it's a very, very different type
[7:41] of risk return profile where if you're issuing debt and, and
[7:45] your balance sheet draws down, bad things can happen.
[7:49] So it, it's some pools of capital have the luxury of being
[7:52] a little bit longer term than others and then the Shades of
[7:55] Grey in between. But making sure you have the
[7:58] right strategy is paramount because there are, there are
[8:00] some nuances that are absolutely real for the enterprise and what
[8:03] you're trying to achieve. And you make sure we need to
[8:06] make sure we have that that button down at the outset.
[8:09] Absolutely. And if you had to rank all these
[8:11] different types of institutions based on their risk appetite,
[8:14] which type is willing to take the most risk and go into
[8:17] alternatives and into different asset classes like even venture
[8:20] capital, let's say, what would we do is and if we rank them
[8:25] based on the order of the highest being the first one all
[8:29] the way down to the one that's playing the most safe?
[8:32] I would say on on average we tend to see family offices if we
[8:35] consider them. Institutions in that subset tend
[8:38] to be some of the higher higher risk appetite.
[8:41] After them, I would say higher education and university
[8:45] endowments tend tend to be next. Some of the other nonprofits
[8:49] would be third. So be a community foundations,
[8:51] private foundations and the like.
[8:53] And then once you get into pension plans, you know,
[8:56] healthcare systems, and again, there's exceptions to every
[9:00] rule, they tend to be some of the more conservative just
[9:02] because of the mandate and the needs of the capital.
[9:05] Absolutely. And with that ranking also look
[9:07] similar when we talk about short term liquidity versus long term
[9:12] needs for liquidity, you know the top being obviously the need
[9:16] the going for long term investments like assets like
[9:19] gravity provincial capital with 10 year cycles etcetera.
[9:22] So would the ranking look the same in that those terms as well
[9:25] or would that be different? It would be exact same rankings.
[9:29] You're you're absolutely right. Those that that have that risk
[9:31] appetite have less need for short term liquidity have that
[9:35] the luxury of that long term time horizon.
[9:37] I often joke that most nonprofits defy the two
[9:40] certainties in life, death and taxes.
[9:43] Our tax could slightly change that joke.
[9:45] So it's there's a little asterisk now where some have to
[9:47] pay a few taxes. So they they have that luxury
[9:49] and and don't need a lot of liquidity.
[9:51] And those that have more liabilities or short term needs,
[9:55] you tend to see more, more in those shorter term safe assets
[9:58] and less than longer term illiquids, private equity and
[10:01] venture. Absolutely.
[10:03] And give us a view into what are the different asset classes all
[10:07] these different types of institutions dabble into,
[10:10] whether it's public equities, private equity, bonds, debt,
[10:14] etcetera. So give us a view into that and
[10:16] one of the different asset classes they dabble into.
[10:20] Yeah. So it is, it has grown a lot
[10:23] over the last two decades that I that I've been doing this.
[10:27] Everyone defines asset classes a little bit differently.
[10:29] How we think about it and and bucket them is public equity
[10:34] tends to be the largest for our for almost every long term pool
[10:37] of capital. So they tend to have a lot of of
[10:39] equity risk, most of it in public equity, increasingly in
[10:44] private equity and and that will include venture leveraged
[10:48] buyouts and growth equity fixed income that's both public and
[10:53] private. So private debt or private
[10:55] credit has been growing. So that would be the 22 flavors
[10:58] of of debt related instruments broadly and there's different
[11:02] flavors within that where they've really brought in the
[11:04] aperture of you know, direct lending, mezzanine, CLO equity,
[11:08] you name it. Within the third bucket for us
[11:11] would be real assets. So both public, so think REITs,
[11:16] infrastructure, commodities, things of that nature, private
[11:19] real assets, so real estate, other resource related
[11:23] infrastructure, metals and mining, oil and gas, things of
[11:26] that nature, renewables. And then last is what we call
[11:29] diversifying strategies, which would be both hedge funds as
[11:32] well as private assets that aren't correlated to what's
[11:37] going on with interest rates in the stock market.
[11:38] So that's been an area of growth for a lot of institutions.
[11:42] Think things like litigation, finance, pharmaceutical
[11:45] royalties, things of that nature where you can capture return
[11:48] stream that isn't dependent on the defect cut, cut rates or or
[11:52] raise rates. And was the S&P up 2% or down
[11:55] for two 2%? Absolutely.
[11:57] That's quite interesting. And you mentioned about the rate
[12:01] movements, right. How significantly does that
[12:04] impact asset allocation at these institutions?
[12:08] Do they carefully watch that and you know, change their asset
[12:13] allocation strategies at all by looking at the rate curves and
[12:15] what's expected in future or are they more, you know, have a set
[12:19] mandate and try to follow that as much as possible?
[12:22] I think the ones that have been successful generally stick to
[12:26] the plan and change incrementally versus making
[12:28] major shifts on rates going up or down 50 basis points or, or
[12:34] their view of where where inflation is going to be.
[12:37] But the overarching trend that you've seen really a, a, a
[12:40] fairly significant increase in, in alternatives.
[12:42] But I think the ones that figure out how much risk they can take,
[12:45] how much illiquidity they can take and then tweak
[12:48] incrementally tend to be more successful.
[12:51] Otherwise, I think you run the risk of, of whipsigning yourself
[12:53] and, and it can be really challenging to make these big
[12:56] macro calls. So I think being humble, think a
[13:00] lot move incrementally tends to be the best game plan for for
[13:04] longer term pools of capital. Absolutely.
[13:08] And are institutions open to newer strategies of investing,
[13:12] let's say 1 can be going direct into, let's say, growth stage
[13:16] companies that's doing very well and you have an opportunity to
[13:19] invest in that or let's say making an infrastructure bet,
[13:22] investing in data centres, right?
[13:24] Or something like investing into secondaries of companies that
[13:27] are doing well. So are institutions open to
[13:29] that, or do they try to avoid them or not be too interested in
[13:34] that? I would say generally they are
[13:36] open to it. And I think where it where it
[13:38] works the best or for some of the larger institutions that
[13:41] have an internal investment office or folks that have used
[13:44] an OCIO where they can, they can set the mandate and then let an
[13:47] investment office or an OCIO executes take advantage of those
[13:51] opportunities. So really over the last five to
[13:55] 10 years you've seen folks increasingly in our seed and and
[13:58] we're not immune to this or we're not dissimilar.
[14:01] We've we've been doing as well investing increasingly directly
[14:05] in private companies, typically through relationship with a
[14:08] general partner as there is additional capital needs another
[14:11] financing round on on the venture side or a a levered
[14:15] buyout where they just need some extra capital to ensure they
[14:18] have diversification within their within their overall fund.
[14:22] So I think that's a great way to try to drive some additional
[14:24] alpha and when opportunities digital infrastructure, data
[14:28] centers, you name them, these new opportunities arise if you
[14:31] if you can be nimble and you have the right team and process
[14:34] in place. Secondary, as you mentioned,
[14:37] we've seen some interesting opportunities over the last
[14:38] couple of years as as many folks got over allocated to privates.
[14:43] So if you have the right governance and the right team
[14:46] and process in place, having the right over our all process and
[14:50] strategy and asset allocation, but then building some
[14:53] flexibility in the into the process to be nimble to take
[14:56] advantage of those opportunities, that makes a good
[14:58] way to drive some incremental return.
[15:00] Absolutely. And on this podcast, we talk
[15:02] about venture capital asset class especially a lot, right.
[15:06] So when you look at venture capital asset class right now
[15:09] and how it's performing and based on how the interest rates
[15:12] are moving, how do you look at it?
[15:15] Do you see that? OK.
[15:17] The attractiveness of venture capital as an asset class has
[15:20] reduced over the past 2-3 years. Or do you see that, OK, the
[15:25] allocations are still flowing as they were before and it's more
[15:28] or less the same still? I think it's been a lot of
[15:32] change in venture capital just over the last three or four
[15:35] years. So I think just if you look at
[15:37] the the players on the field today, a lot of them have
[15:40] evolved. You have many of these big brand
[15:43] name firms that have have grown explosively and are now
[15:47] supermarkets for any flavored venture capital that you would
[15:50] want. And they have early stage, mid
[15:51] stage, late stage, life sciences, tech, you name it.
[15:55] And that's just a very different risk return profile versus 20 or
[15:59] 30 years ago, what many of them were investing out of 200,
[16:02] three, $100 million funds. Now they're raising multibillion
[16:05] dollar funds so that, but they built a brand, an amazing
[16:09] flywheel. So that's, that's one dynamic
[16:11] that's changed it venture was all the rage and there was a lot
[16:16] of capital being raised 2020-2021.
[16:19] The last couple of years it's been a little bit harder to
[16:22] raise capital. You've seen more newer firms
[16:25] trying to do seed more folks looking at can I do how early
[16:28] can I go to capture more of the ownership of some of these
[16:30] entrepreneurial businesses? And I don't remember the exact
[16:34] numbers, but the the most recent change is just AII mean.
[16:36] It's the vast majority of the capital raises entrepreneurs
[16:39] building new businesses around AI.
[16:42] And that's been a a massive shift in in the types of
[16:49] companies that are being financed today out of venture.
[16:52] I think it's still incredibly hard.
[16:54] It is a power law game where you're you're trying to get a
[16:57] couple of home runs and and and that fundamental character is
[16:59] hasn't changed. So finding the right, right
[17:02] people that can build their relationships with the
[17:04] entrepreneurs to get in with some of the the best in class
[17:08] companies, that's the one thing that I think stayed true and
[17:11] really hasn't changed at all. And that's that's really the
[17:14] name of the game to capture a couple of those big winners.
[17:17] Absolutely. And so you mean the allegations
[17:19] are still flowing as they were before because the fundraising
[17:22] part has, as we see has become more difficult and it's harder
[17:25] and it takes longer to raise a fund.
[17:28] So I'm just trying to understand why is that?
[17:30] Is that because you know the LP's are deploying into these
[17:32] funds have sort of slowed down or reduced the size of
[17:35] allocation? I think it's slowed down because
[17:38] many of the long time investors and venture are not seeing a lot
[17:42] of distributions. So their allocations have grown
[17:46] because they're not getting distributions.
[17:48] So that would be the other change just the the private for
[17:51] longer phenomenon. So given the lack lack of exit
[17:54] activity in DPI or distributions paid in capital that has
[17:59] moderated the flow of future commitments.
[18:02] So if we can see a reopening of the IPO window in in 26 and
[18:07] folks get some liquidity that will allow more institutions to
[18:10] redeploy capital. So it's been the allocations
[18:13] haven't changed a lot. It's just been the pace of of
[18:16] new commitments have slowed because a lot of a lot of LP's
[18:20] aren't getting distribution. So they're they're sitting with
[18:23] a very large venture book and have their fingers crossed so
[18:26] they can get a few distributions so they can redeploy capital in
[18:29] the new ideas in the venture capital space.
[18:32] Absolutely. Quite interesting.
[18:34] And our LP's or institutions also evaluating the viableness
[18:40] of VC as an asset class versus let's say private credit, which
[18:44] is also gaining popularity because if that is also giving
[18:48] you consistent returns and there's more liquidity versus
[18:52] waiting 1010 plus years mostly to get your liquidity and
[18:57] returns in venture capital. So is that debate also there
[19:00] within institutions that should be also allocate more towards
[19:03] private credit and move away from venture capital, especially
[19:07] when it's not performing as well as everyone expects it to?
[19:12] A lot of discussion and, and conversation around private
[19:17] credit. And I would say there's, you're
[19:19] kind of seeing people start to bifurcate.
[19:21] It really started growing a handful of years ago and folks
[19:23] may have dabbled and you've seen kind of two, two schools of
[19:28] thought. 1 is this is an opportunity to get those more
[19:31] consistent returns, get a higher yield than what's available in
[19:34] the public markets. And, and some institutions that
[19:36] build out meaningful allocations, meaningful think
[19:39] 1015% of their portfolio, they like the cash flow, they like
[19:42] the steady returns. They're willing to forgo the
[19:45] opportunity for higher returns to have that consistent return.
[19:49] The other camp is if we're giving up liquidity, we want the
[19:53] opportunity for really outsized returns and and the juice isn't
[19:56] worth the squeeze. So I'm going to lock up capital
[19:58] even if it's a 578 year fund to get eight, 1012% and we're just
[20:04] going to focus our illiquidity budget on higher returning asset
[20:07] classes. So when you when you blend it
[20:09] all together, a lot of institutions on average might
[20:11] have 345 percent of private credit, but that's the average
[20:15] of some zeros and some 10 and 15% allocations.
[20:18] And I think a lot of that just ties back to our earlier
[20:20] conversation of what is the risk appetite of the institution.
[20:25] Those that have a higher ability to take more risks and to focus
[20:28] more in private equity and venture capital, those that need
[20:32] a little bit more consistency, pension plans, insurance
[20:35] companies and the like you've seen increase in gravitate
[20:38] towards private credit to get those consistent returns, but
[20:40] but try to get a little bit higher than what's getting what
[20:42] you can get out of traditional fixed income.
[20:46] Absolutely. And when we talk about venture
[20:48] capital, since you have a bird's eye view of the institutional
[20:51] market and how they're thinking, how are they looking at funds
[20:56] for pitching them and what do they really prefer right now?
[20:59] Is it are, are they trying to go for let's say growth stage funds
[21:03] of funds that are focused on the growth stage to try to shorten
[21:07] that liquidity cycle that OK, they can get liquidity within
[21:10] let's say 7 to 8 years or lesser if possible versus going into
[21:14] early stage funds where the liquidity like we know can go
[21:17] much beyond 10 years as well. And any preference in terms of
[21:22] sectors which we've mentioned, AI is their age right now, but
[21:25] any other sector there is that institutions are looking at very
[21:31] carefully. Yep, Meg, it's, it's different
[21:34] courses for, for different horses.
[21:36] Those that have more modest sized portfolios where they're
[21:41] not trying to deploy as much in capital.
[21:43] I think the general consensus is earlier stage, you have a little
[21:46] bit higher return potential. And if you have that ability to,
[21:49] to accept that risk and and you're, you're trying to commit
[21:54] five, ten, $15 million to a fund, those folks tend to
[21:58] gravitate earlier stage. Some of the bigger pools of
[22:00] capital. Just recognize I need to write a
[22:03] 30, forty, $50 million check if I want to capture the growth and
[22:06] innovation that that's going on within the tech sector, that the
[22:11] the more growth stage is a better risk reward and kind of
[22:15] return on time for the diligence.
[22:18] So you tend to see a blend of both.
[22:20] For folks, those that that don't need to write as big a checks
[22:23] have a higher risk appetite, that early stage makes a lot of
[22:26] sense for them. Those that that have bigger
[22:29] pools of capital, but still on exposure tend to gravitate later
[22:32] stage AI all the rage for sure. For us, an interesting sector
[22:40] has been biotechnology and life sciences, which is now colliding
[22:43] a little bit with AI. What's less less of the industry
[22:47] and aggregate, but there's some really interesting opportunities
[22:50] there as well for for folks that have the expertise.
[22:52] So that's an area that I'd highlight that we think is
[22:54] pretty interesting today and, and has been was overcapitalized
[22:59] in 2020 and 2021. You saw a lot of Spacs.
[23:02] The last four or five years have been kind of rough.
[23:03] It's starting to to reinvigorate and just the innovation and, and
[23:09] the science as well as being able to use technology and AI
[23:13] from from an Rd. perspective is pretty interesting.
[23:15] And that's an area that that we think's pretty compelling as we
[23:18] look over the the next couple of years.
[23:21] Absolutely. I completely agree.
[23:22] And my bet is that biotechnology will be the next, next thing
[23:27] that we generate the kind of returns AI has generated for
[23:29] investors. But we'll see.
[23:31] And when you're investing into, let's say AI funds or going
[23:35] directly into AI companies or infrastructure bets etcetera,
[23:39] how are you evaluating the risk profile?
[23:41] Because there is also a perception that there can be a
[23:44] massive bubble also right now that is forming.
[23:47] So when you're investing into these assets which might just
[23:50] already be overpriced and there may be a crash or not in future.
[23:56] So how are you diligence in that that that does not happen?
[24:00] Yeah, I, I think every institutional investor needs to
[24:04] be spending a lot of time on AI because it's everywhere.
[24:10] It's it's venture capital within your leveraged buyout portfolio.
[24:15] Even if it's an industrial company, are they infusing AI
[24:18] into their processes? If you look at the public equity
[24:22] market and what's going on with the hyperscalers and the Meg 7,
[24:26] then you look at your real assets portfolio and its data
[24:28] centers and its utilities and its natural gas production
[24:33] plants that are then fueling that.
[24:35] So it's it's everywhere in your portfolio.
[24:37] So you need to understand it. You need to understand where,
[24:41] where, where do you want to place your bets and also ensure
[24:44] you have some level of diversification so that your
[24:46] whole portfolio is just a bet on AI.
[24:48] As we look at it on on the venture side that as you
[24:50] mentioned, trying to get arms around what, what does that
[24:54] business model look like and who are the winners and losers?
[24:57] So, so typically it's kind of the innovator's dilemma where
[24:59] it's the new startups that that figure out how to do it and the
[25:01] incumbents have a hard time changing.
[25:03] So can some of the traditional SAS investors pivot and
[25:09] understand that? Can they integrate AI into those
[25:12] companies? And then how durable are the
[25:14] business models? I think it's still something
[25:16] that's that's yet to be seen. We've seen some of the the
[25:18] fastest growth in history of startups going from zero to 100
[25:22] million in revenue. But is that revenue sticky?
[25:24] Will it will revert right back down to 0 or is it sticky and
[25:28] will it will it continue to return and have that recurring
[25:32] revenue feature that was so nice about SAS and and and enterprise
[25:36] software? I don't think anyone really
[25:40] knows the answer. It does appear to us that the
[25:46] free cash flow and operating margins of many of those AI
[25:50] native companies may not be as high as we was on the SAS
[25:54] companies that maybe 7080%, maybe it's closer to 30 and 40%.
[25:59] But can the gross profit dollars be big enough for those that are
[26:02] the winners? They're still wonderful
[26:03] companies that you want to own. They just take a little bit more
[26:06] reinvestment and a little bit more infrastructure around those
[26:10] companies to really capture the growth and build a a durable
[26:13] business model. So that's kind of how we're
[26:16] thinking about it. And then who are the folks that
[26:18] are understanding that adapting quickly and can pivot and change
[26:21] because the the technology is so dynamic, it's, it's so rapidly
[26:25] changing. You need folks that are
[26:26] intellectually curious in the flow of what's going on that can
[26:29] pivot, change quickly. Know the right entrepreneurs to
[26:33] to capture some of those opportunities.
[26:36] Absolutely. And with the talks of tariffs
[26:39] and all that flying around, are institution choosing to put
[26:44] their allocations domestic only or are they still looking at,
[26:47] you know, other markets geographically and seeing where
[26:52] there is more alpha for them to invest?
[26:55] I would say most institutions are still looking globally.
[26:59] It does seem like the epicenter of much of the innovation is in
[27:03] the US. So it tends to be and we work
[27:05] predominantly with US based investors, majority of the
[27:09] capital in the US, but still looking globally, there's
[27:12] wonderful companies, wonderful entrepreneurs, wonderful
[27:14] investors across the globe. So I think it behooves folks to
[27:18] look anywhere and everywhere to find great opportunities, great
[27:20] ideas, great investors, but it tends to be majority in the US.
[27:26] But but I think global was incredibly dominant in the 2000
[27:34] tens or the 2000s, two thousand 10s.
[27:36] You saw a little bit more of a gravitation towards the US.
[27:38] We'll see if that cycle ebbs and flows with tariffs.
[27:41] So it, it, it gave some folks pause, but I think most
[27:43] investors are still looking globally and and that's been our
[27:46] approach as well. Absolutely.
[27:48] And with that lens, what geographies or trends in the
[27:52] world or areas in the world do you think are promising right
[27:56] now that institutional investors are looking at carefully?
[28:02] I would say right now a couple that have been more interesting.
[28:07] India has been has been pretty interesting both on the on the
[28:12] public and private side. Japan is getting more interest
[28:16] after a kind of wandering in the desert for a couple of decades.
[28:20] Seems to be some pockets of opportunity.
[28:21] There be a public equity. We've seen some, you know, more
[28:25] activist types approach a little bit of a of a lever buyout kind
[28:29] of universe being created there. So there's been a couple of
[28:32] interesting opportunities there. Europe's been tough, but in the
[28:37] public markets you've seen a bit of a rally at some of the
[28:39] defense stocks and others. So I think it's picking your
[28:41] spots, being selective and trying to understand where's the
[28:43] ecosystem where they companies have a competitive advantage in
[28:47] some of those regions where you can try to capture some of the
[28:50] best in class managers and in different sectors and
[28:53] understanding where is that ecosystem within different
[28:56] countries and different geographies.
[28:58] Absolutely. And are there any trends or
[29:02] let's say investment areas that are not talked about enough
[29:06] right now or under the radar that are, that are very much on
[29:11] the radar of these institutional investors or maybe yourself that
[29:14] you're tracking closely and you think can be a good place to
[29:18] invest? I think it's every, it's kind of
[29:21] been an everything rally this year.
[29:22] So everything's, it's been hard not to make money.
[29:26] I think it's going to be harder going forward.
[29:28] And, and the one thing that we're spending a lot of time
[29:30] thinking about, which I, I alluded to briefly earlier is
[29:35] ensuring you still have diversification because it seems
[29:37] like every asset class in some way is tied to AI, which is
[29:42] great. But none of us are smarter
[29:45] enough to know the one thing that's going to work and just
[29:47] want to put all our cap on that. So ensuring you still have
[29:50] diversification, I don't think it's talked about enough.
[29:53] We've seen allocations to equities grow, allocations to
[29:57] private equity, venture capital, public equity.
[29:59] And so why would I own anything else?
[30:02] We're on the edge of likely another 20% type of return for
[30:06] the third year in a row out of public equity.
[30:08] So don't forget about diversification.
[30:12] Hedge funds haven't been as cool the last handful of years, but
[30:15] if you can make eight, 1012% out of a hedge fund strategy, that's
[30:21] not taking a lot of equity risk and not just to bet on AI or
[30:25] data centers. I think that's a a helpful
[30:28] return stream because we will have a correction at some point.
[30:31] I don't know if it's next year or two years or next week, but
[30:35] don't forget about diversification.
[30:36] I think it's the one area that I would highlight that that some
[30:38] folks may have forgotten about a little bit, but it it is your
[30:42] friend and it helps weather out some of those bumpier spots in
[30:47] the road when things get a little, a little choppy.
[30:50] Absolutely. I completely agree.
[30:51] And you correctly mentioned almost everything went up and to
[30:55] the right this year, right. Even we saw that in commodities
[30:59] as well, gold and silver, especially silver, which is not
[31:03] something that moves at at such a base in just One Direction.
[31:07] So this year we saw it short of about 100% or more than that in
[31:12] just a year. And now prices are I think
[31:14] around $65 an ounce at the time of recording, right?
[31:18] Can change. But yeah, how do you look at
[31:21] that? Our institutional investors also
[31:23] allocating into commodities like silver to try to also hedge
[31:27] against the dollar as well. It's been an amazing rally.
[31:31] I would say we haven't seen a lot of folks make a, a specific
[31:36] bet on silver. But the commodities broadly, be
[31:42] it through futures market, public equities or there are a
[31:45] handful of, of private managers that focus on, on metals and
[31:49] mining that have the ability to look at what, where are the
[31:52] opportunities, be it silver, be it gold, some of the other rare
[31:55] earths needed for battery technology, copper and lithium.
[31:59] And that's been an area of of interest of of ours and, and
[32:02] we've we've played it in some broader themes where we don't
[32:05] have to an expert on one specific commodity, but find
[32:08] folks that understand the commodity complex and have the
[32:11] ability to, to invest and be nimble across a handful of them.
[32:16] I think that's an interesting area, again, both public and
[32:19] private. And that's been that's been
[32:21] pretty fruitful for us over the last couple of years.
[32:24] I think it's an area that that's interesting.
[32:26] And to your other .1 of the one of the risks out there is are we
[32:30] entering a AD dollarization type of phase where physical,
[32:36] physical assets like like silver and gold can be a potential
[32:39] hedge against, against that risk.
[32:41] So I think within within a diversified portfolio looking
[32:45] for some opportunities there makes some sense to us in size
[32:48] because it will be volatile. So you don't have to deploy a
[32:50] lot of capital for it to be meaningful contributor just
[32:55] given given that the type of volatility that you will see
[32:58] absolutely and. What is the biggest challenge
[33:01] you see for institutional investors trying to adopt new
[33:04] asset classes like let's say alternatives or private markets
[33:07] etcetera or let's say commodities if they were not
[33:09] already allocated to that? Yeah, I mean I.
[33:12] Think there's a couple. One is none of this works
[33:15] without the right government structure.
[33:17] So getting, getting clear roles and responsibility of, of what
[33:21] is board committee staff and then internal CIOOCIO.
[33:27] So you got to get that right. Ensure there's sufficient
[33:32] knowledge from the governance level, from the, the an
[33:36] investment committee or board of, of what we're owning, why,
[33:39] how it should perform. So that's foundational.
[33:42] If you don't have that, folks typically won't stick with the,
[33:44] with the program. And then you need a, a staff
[33:48] that's doing the diligence, going out and finding the
[33:51] opportunities that has expertise in that space because it is
[33:53] there's some assembly required. So you need the people, you need
[33:56] the relationships, you need the resources to go out and find
[33:58] those opportunities. So if you don't have all those
[34:01] components, it's really hard to build a a successful long term
[34:04] program. Absolutely.
[34:07] And we are right now at a time when a lot of managers, fund
[34:11] managers are trying to raise their fund and talking in terms
[34:14] of private equity and capital, and it's very hard for them,
[34:17] right? So what advice would you have
[34:19] from someone who's on the other side of the table?
[34:22] What should they be doing to better position themselves to
[34:25] attract institutional capital today?
[34:29] It is incredibly difficult fundraising side because a lot
[34:32] of folks have not seen a lot of distributions and and are having
[34:36] to slow down their pace. So I think a couple of things
[34:38] that I would encourage any newer managers trying to raise a fund
[34:42] to do 1 would be do some work on the front end to understand what
[34:46] are the strategies of these investors?
[34:49] Who's who's a potential good fit that some folks like Coke, some
[34:52] like Pepsi, some like emerging managers, some like established
[34:56] managers. So you're not going to sell
[34:58] something they don't want. So understand what do they who
[35:01] are the folks that are a likely buyer of your strategy?
[35:04] And then once you've identified the subset of folks that that
[35:07] will invest in the type of, of strategy you're raising, try to
[35:11] establish a, a relationship early.
[35:15] There are, there's a lot of investment opportunities out
[35:17] there. So coming to someone where
[35:18] you're saying, Hey, I'm going to wrap it up, my fundraise is
[35:22] going to close in the next month.
[35:23] Would you like to invest? That doesn't work.
[35:25] So trying to do it earlier and off cycle so you can start to
[35:28] build a rapport, a relationship. People have time to, to
[35:31] understand who you are, how you invest.
[35:35] So, so that early diligence, taking the time to build a
[35:38] relationship with folks that you like and, and would like to be a
[35:41] partner with that you think would be a good LP.
[35:43] And I think the third piece is, is thinking long, hard, like
[35:45] what's your right to win? What's your edge?
[35:47] And, and being able to clearly and simply communicate that so
[35:51] that folks understand, you know, what is your competitive
[35:54] advantage and, and why should you be able to drive outside
[35:58] returns in, in whatever area it is that you're investing in?
[36:01] Absolutely. That's quite helpful.
[36:03] Leading into 2026, the reception matter actually go out in 2026.
[36:08] So what are your expectations for 2026?
[36:11] How do you see it shaping up in terms of markets?
[36:13] What are the asset classes that you think are the most promising
[36:17] that you'll be looking at in 2026?
[36:21] It's going to be. An interesting year.
[36:22] So we've had a great run that the question that I get asked
[36:26] more probably more than any other is, is this 1999 and we're
[36:31] about to have a major correction.
[36:33] I don't think anyone knows the answer to that.
[36:35] Our, our working thesis is it's probably closer to 97 than it is
[36:40] 99, meaning we've had a great run.
[36:43] AI has captured the imagination of everyone.
[36:45] We're seeing a lot of capital flowing in.
[36:48] But it it appears to us there's probably a little bit more room
[36:51] to run. If you look at classic signs of
[36:54] more bubblish type of activity, a lot of it tends to be debt
[36:59] financed and a lot of the investment in AI, at least
[37:01] initially, was free cash flow from the hyperscalers.
[37:04] We're starting to see debt being used.
[37:06] So that's something that we're watching.
[37:09] You tend to see the beneficiaries of whatever areas
[37:12] is growing quickly. Management of those companies
[37:16] are dumb. They tend to be net issuers of
[37:18] their stock because they think their stock is overvalued.
[37:21] Most of the Meg 7 have actually been net buyers versus issuers.
[37:24] So management hasn't signaled that yet.
[37:26] So we're watching for the signs that things are getting
[37:29] stretched. But we think it should be a
[37:31] decent year, probably lower returns than what we've
[37:34] experienced the last handful of years, which would be more
[37:36] normal. So I think it's going to be a a
[37:39] decent year, expect lower returns, but it's not time to to
[37:42] run for the hills, but watch for those signs of things getting a
[37:46] little bumpy. We're hopeful, not counting the
[37:51] table hopeful that we'll see a bit of a broadening of markets
[37:54] within public equities. It really has been dominated
[37:56] with a handful of some of the largest companies in the world
[37:59] really occurring most of the return.
[38:01] So thinking I'll cast a little bit wider net and I do think
[38:06] you'll see a bit of a reopening of of capital markets, a little
[38:11] bit more exit activity, which would be a a healthy clearing
[38:14] after a handful of slower years of of distribution.
[38:17] So I think should see a little bit more capital coming back
[38:21] both from the buyout and the venture side, which then gives
[38:24] you an opportunity to redeploy capital.
[38:25] So that's a manager selection game, find the right folks to to
[38:29] deploy capital in and stick to the plan and then adjust as
[38:33] markets those curveballs. Absolutely.
[38:37] Those are a good bunch of great points that everyone should
[38:41] remember leading into 2026 and how you should deploy capital.
[38:46] And I think the bottom bottom line here again is custom wider
[38:48] net and don't have your assets all focused on just one asset
[38:53] class, especially if you see that every and not even if it's
[38:57] in different asset class, see if they're not all because of AI
[39:00] that they are all going up and you're all invested in.
[39:03] Very happy we're seeing the returns because if AI goes down
[39:06] and all of it suffers. So make sure you're diversifying
[39:09] also in the correct way. Thanks so much for doing this
[39:11] with us, Nolan. I really wanted to have you on
[39:14] and I wish you happy allocating in 2026.
[39:17] Thank you. Appreciate you having me on.
[39:19] Enjoyed the conversation?

Shows are listed from Apple Podcasts' charts and directory, and Podcast Index where it is used. Every show and episode belongs to its publisher and plays from the publisher's own feed; this site hosts none of them.