Kasper 

Welcome to Balentic Edge. Today we’re joined by Matt Curtolo. Matt is a seasoned private market investor with over 20 years of experience. Today, Matt works as an independent consultant, but previously has held senior roles with Allocate, Met Life, Hirtle Callaghan, and began his career at Hamilton Lane Welcome Matt.

Matt Curtolo 

Thanks Kasper, really appreciate you having me.

Kasper 

Matt, your journey into private market spans over two decades. It starts humbly as an analyst with Hamilton Lane and then to leading roles at Hamilton Lane, MetLife and Allocate. Can you share how these experiences shaped your perspective as an LP?

Matt Curtolo 

Yeah, it’s a good question, right? As I was going through it, I don’t necessarily know if I realized the benefits and the values of working in different size organizations, covering different asset classes across different cycles. So if I look at the journey, Hamilton Lane was a relatively small company when I started. So I got to experience tremendous growth at a time when the asset class alternatives broadly were getting more and more adoption from institutions.

And so I got to serve in roles in the back office, front office, research team, product launches. I really got the breadth of experience.

Matt Curtolo 

It was very much, a startup like experience, even though was a 10 plus year old company, because we really hit an inflection point. And that’s informed a lot of what’s happened in my career. Cause my next stop at at Hirtle Callaghan, we had an existing program, but there was a great opportunity to build from that and augment and help from my experience at Hamilton Lane. My team that was there was fantastic. We had a client base that was ready to adopt.

More and more alternatives. So I got to learn all about education, running a fund of funds, working with LPs. So the way I describe it is just more arrows in the quiver. So those two roles, working with big institutions in a firm that was growing rapidly, working with smaller institutions, but building an internal product effectively and all the functions gave me great experience. This was a covered about 15 years of my career to then go into a role at a place like MetLife where

You become one of the loudest and most influential voices in the room based on the checks that you can write. So that to me was another area where I hadn’t really been at the forefront there. We were managing capital for, I don’t know, a fortune 50 company with one of the most active portfolios. When I joined there in 2019, it was a 30 year old investment portfolio. So we had long standing relationships and a bunch of capacity to do interesting stuff.

So another arrow in the quiver. And then I went to the other direction at, at Allocate, which is a startup focused on bringing, private markets, particularly we started with venture capital to the institutional retail class, the family office, the wealth manager and the individual and doing that in a fully digital way. So if I, I give you my, my whole background in that context, because every incremental point I gained new and different experience, but it built on what was prior as well.

Kasper 

I want to double click on that because you moved on to advising GPs and LPs. What motivates this transition from more traditional institutional roles to entrepreneurial, FinTech space, and now you work as an independent consultant.

Matt Curtolo 

Yeah.

It’s a great question Kasper because I think that’s where I wasn’t quite sure sitting in my chair at MetLife. really had that, that moment of it’s a fantastic job in a great organization with great people. And you can’t argue with the stability of 150 year old life insurer, right? I would venture to say without taking too much risk that MetLife will continue to persist years and years later. It could have been the seat for the rest of my career.

But I had an itch, right? had seen all these organizations and I’d worked with a ton of different GPs at different sizes and points in time. I’d never run a company. I had never been inside of an operating business from that perspective. So the opportunity to join Allocate was this great confluence of I still got to keep my investor hat. 

Cause I was leading our investment process and program manager search and diligence, chairing our IC. So putting a lot of those things in place that I had seen and learned over the years, I got to retain that part of it. But I also got to exercise a different muscle of, know, there isn’t, I think there’s an entrepreneurial bug in most everybody. We just don’t get to express it. So this was an opportunity that I could almost with a little bit of a parachute, cause I could always go back into the investment focused roles, but really seeing how what, when we started, it was a seven or eight, person company to grow that into, a billion dollars of assets dozens of people. 

So it was a really interesting opportunity to do that. That gave me the courage then about a year ago to go out independently because what I saw there are managers, both LPs and GPs who are all going through what I call a zero to one moment. It’s not just the ones who are starting out and going to raise capital from LPs. It’s also LPs who are building a program for a first time. LPs starting out in co-investing or different asset classes, growing transitional capital.

And with GPs, it could be a fund three that now wants to raise from institutions rather than just from individuals or a fund five that has now a body of work where they have to think about how to present their performance, or maybe there’s a generational transition happening or whatever it might be. All these zero to one moments exist. And while I don’t have any novel ideas to create anything on my own, I found my highest and best use to really be an advisor to firms that are going through those points in time and bring 20 years of experience of seeing what’s worked and what hasn’t.

Kasper 

This is also where you leverage all these arrows that you have in your quiver after those 20 years, right?

Matt Curtolo 

Very much. And I think there’s a key part of all of this is our industry sometimes lacks self-awareness and humility. Where I come in, with both GPs and LPs, they want to run at it themselves. They have pride in ownership, of course, but asking for help, I think that is understanding what you don’t know and then finding folks seeking out advisors and experience. I think that’s something that I’m seeing more and more.

Kasper

Very true.

Matt Curtolo

As the industry becomes more complicated, both from how do I find deals? How do I do proper diligence? How do I cover the landscape?

Kasper 

I want to ask you different question Can I attribute the following to you? Follow your gut, follow your heart, don’t follow the crowd. Who is this for and should it not be follow the data?

Matt Curtolo

Sure.

Mm-hmm.

It’s a good question. see, that’s the beauty of having been an investor in mostly blind pools. The data informs, but ultimately you’re going with your gut, right? You have to make that decision. always say data gives me more questions, not necessarily answers.

Kasper 

That’s what I loved about the job was the challenge of building a 10-year investment hypothesis is akin to trying to stare into a crystal ball.

Matt Curtolo 

Yeah.

It’s very true. So I think that’s where it’s more appealing. I’ve never been a public markets investor. I don’t live in that tick by tick moment. I like to think strategically long-term and where I’ve developed expertise and the experience and the number of reps of seeing what, managers talk, what they look at. The data doesn’t necessarily tell me exactly what I’m buying in the future. It informs and helps guide some of my hypotheses, but at the end of the day, have to really go with, you have to understand what you believe and then you have to build conviction in a way that’s true to yourself.

Kasper 

This is actually a good segue, to another question most LPs want to find and invest in the best managers. But when it comes to generating strong long-term returns, how much focus should the LPs actually spend on finding the best managers, versus building a thoughtful, diversified portfolio?

Matt Curtolo 

I don’t think you can have one without the other Kasper. I think that the reality is we don’t know today who are going to be the top quartile funds in the 2025 vintage. And we won’t know until 2030, 2031, six, seven years later. So having a clear investment process and thesis, understanding what you’re looking for, building a process that is repeatable.

So as an LP, I need the inputs of what are my goals. That’s so I find that to be crazy. Top quartile is a relative number against a universe that’s undefined. Picking a top quartile manager is great, but if my goal, let’s take an insurance company, for example, is lower than what that top quartile is, but it’s what matters. It’s the benchmark internally that we’re managing to. Should I really care where it ranks against a universe that maybe covers 10 or 20 % of the market?

So I think defining your goals upfront, what do I really want to achieve? Aligning a process and a strategy of finding managers that can help you get to that goal. And then moving forward one more step of how do I continue to test and retest? It doesn’t get you off the hook in manager selection, because like we said, this is a blind pool game and you can’t buy an index. There’s no passive way to approach private markets. So you do have to be out there and find efficient ways to find managers that meet your goals. But to use your words the blind pursuit of a top quartile manager. You know, it’s really just walking around in the dark trying to figure out what that is. And the lights aren’t going to get turned on for a while.

Kasper 

In your article, Sourcing, Picking, Winning, Helping and Exiting for LPs, you discussed the importance of LPs being proactive in sourcing managers. But with more than 30,000 GPs out there, how can LPs effectively identify promising firms? We don’t have a database. We don’t have a Bloomberg. We arguably have the worst data set in financial markets full stop.

Matt Curtolo 

It is a hundred percent true. I would say thinking back to when I started the number of firms maybe was 10 or 20 % of what we have active today. So it was a little bit easier to cover. It was still relationship oriented. You can think the tools then were a lot more rudimentary. There weren’t vast databases. You leveraged your own relationships, placement agents, third parties to some degree, but you were limited, It was.

Kasper

Yeah, true.

Matt Curtolo

Where can you go? Where can you fly? Who can you see? Trusting that first degree network. So that was how it started. Many of those things are still the top of the funnel, the generation of new ideas. I can tell you in every role that I’ve had, if I got a warm intro from a trusted colleague, that was going to the top of the heap. So making sure you have all of those relationships in different pockets of the market goes with being a good citizen of doing the same for others.

I found a great manager. Let me introduce it to you, Kasper, because I think you’re going to really be interested in it. That helps facilitate some of that flow. And then I do think databases are coming along a little bit, but it is really difficult to get real-time information for, let’s call them the hot funds. So if you have groups that use a spin out from a big brand name firm as an example, by the time you’ve heard about it, if you’re using traditional sources or databases or things like that, more than likely that’s going to be spoken for.

So it goes back to really being proactive out in the market with the network, continuing to build those relationships, not just with other LPs, but with your GPs as well.

Kasper

How do you get to be proactive? Because again, you got 30,000 GPs out there.

Matt Curtolo 

I think you have to one pick your spots, It’s impossible to go to every conference and every meeting. I think it goes back to your goals, right? If you can tailor what you’re looking for and take that 30,000 down to 10, Where’s my sweet spot? Where do I have an advantage or an edge? Think of it from a systems perspective of just applying a simple filter of many LPs say, really just want to invest in sub-billion dollar funds. What?

That is still the majority of the universe, but maybe you have another layer where you continue to pull that down. So I think starting with a goal, giving yourself less landmass to cover and then doing it in the targeted way. would say using placement agents is a great resource. They are incentivized by the GP community to come and find you. So I always thought of placement agents as folks who are working for me for free. So if they know what I’m looking for.

Kasper 

Yeah. I agree. I would agree.

Matt Curtolo 

and they bring me something that benefits everybody in the ecosystem. Excuse me. And I’d say too, as an individual, you really have to position yourself. I’ve been a big advocate for thinking in public, Put your thoughts out there, tell people what you’re looking for, because that is an element of pro-activity where if you have that out in the ecosystem, people will pay attention, I think every manager, fundraising is harder and harder than it’s ever been, particularly with emerging managers in the last two years, it’s been tough. So if you can find LPs who are vocal, who are public about what they’re looking for, that’s, I think, a way to generate some of that top of funnel without knocking on every door.

Kasper 

Yeah, I think you’re right. But I think a lot of LPs also still construct very large portfolios. They cover multiple stages. They cover all the regions. They cover all the strategies. And this leads to another problem that I’ve seen more and more. LPs receive hundreds of emails from fund managers on a weekly basis. How can they manage this?

Is this even manageable? What’s the recommendation there for an LP?

Matt Curtolo

Yeah. The top of funnel, if I think of the sources of top of funnel, we just talked about warm outreach to people who are in your network, things that flow back towards you. 80 % of top of funnel comes from cold inbound or not warm inbound, It may be, I’ve read your post, it’s something like that. It’s hard to filter through a lot of that stuff. So I think it goes back to having a nose of what you’re looking for.

And I say the blunt instrument from top of funnel to second tier is where you really have to spend your time. I think with the advent of a lot of tools now where you can put in some of those filters and some of the criteria that you’re looking for, that’ll give you a leg up in terms of being more efficient with your time. Because you’re never going to see everything. that is the first thing you have to become comfortable with.

You will miss things the same way every portfolio manager has deals that they lost or didn’t see. You’re going to do that as an allocator, as an LP. But that doesn’t mean you can’t construct a really thoughtful portfolio based on the things that you’re looking for. So I bring it all back to not just the performance goals of what you’re building, but what are the areas that you think are most attractive and then how do I identify those? How do I build some kind of infrastructure within my organization, whether that be with tooling or with headcount or whatever it might be to get that top of funnel to a much more narrow second stage of the process to let you spend the time with a 30 minute meeting with managers. I can tell you the last year at Allocate, I met with 600 managers in the year, that’s a lot of time spent. We maybe made commitments to, you know, two, three, 4 % of that.

So it’s the typical funnel, but it does require still a lot of horsepower, a lot of personal time. So shortcutting that as often and as quickly as you can is certainly something you want to try and do.

Kasper 

So we are out there, whether we like it or not, looking for top tier funds They are often access constraints. But firstly, how do you define top tier and given what you say, is it even relevant to be chasing top tier? Not least given that the correlation that was there maybe 20, 30 years ago between the performance of a predecessor and a successor fund, that doesn’t exist anymore.

Matt Curtolo

Yeah. It’s a good point. Cause I think a lot of people chase that for a while, the persistence of returns. And I think there’s some that, right? think particularly in venture capital, where you build a network and an aura, I think it’s more statistically significant, but it’s not, you know, the only thing that you can look for. So, when I think about what defines a top tier manager, I used some of these words before, but it’s, you have a process that’s systematic?

Kasper 

Absolutely.

Matt Curtolo 

That’s repeatable and that’s durable. Those are things that you may have caught, you may have gotten lucky in one of your funds. You might’ve caught lightning in a bottle and had a great outcome. It’s why performance is really a red herring. The performance is the scoreboard. But what I really want to know is how did you score those runs? How did you get that return? What were the building blocks? Because what I can bank on for the future is the people in the process. So if that process is in place, so as an LP, I tell everyone dig into how do they source, how do they pick, how do they win, all of those pieces. As you look across strategies, there are different areas that matter more or less, The value add component when you’re talking about operating businesses, that’s real, You can really have a change versus an early stage company where it may be a little less obvious where value add can happen. But all of those components, that’s what I spend the majority of my time with. And the people piece, the people, 

I used to use this hashtag people first, that’s the thing that in both business, in both our business, in terms of underwriting managers, we don’t have a lot of data to go by initially. So we are underwriting the people in the process. And if we can get comfortable with both of those things on a nuclear level, Of like, I’m really thinking about what makes this person tick? What are the intangibles? Do they have the motivation to persevere in tough times? So you get a little bit of a behavioral finance or a psychological review of what people are doing. So those are the two things I would really focus on. And not to say you throw performance out because it does have to materialize into performance, but there are a lot of inputs and performance that you don’t have control over.

Kasper 

Yeah, no, no. And I think on the performance again, that’s part of your analysis that gives you the questions you want to ask when you move into due diligence.

Matt Curtolo 

Exactly, exactly. Data gives you more questions than answers.

Kasper 

Yeah, yeah. What would you then say to all LPs out there? And there are quite a few in my experience who are chasing, the fund with the highest IRR.

Matt Curtolo

Yeah. Be careful what you wish for. Because that is a number that IRR aside, I think chasing performance, you have some incentives that come with that, right? If you crystallize a great fund, do you have the same motivation as a manager? do you have a different level of grit and tenacity to go out and find that? And I’m not saying because you were successful, you’re going to rest on your laurels, but that’s something you have to take into consideration.

Kasper 

Hahaha!

Matt Curtolo 

If you are successful, oftentimes you want to raise more dollars. So that changes the value proposition of your fund, which could in effect make me as an LP. I’m going to look elsewhere now. You did what you said you were going to do, but you’ve now migrated into a space where I feel less comfortable.

I don’t think it makes them a bad manager. I don’t think it’s necessarily a negative, but chasing performance means you’re buying the past, not the future. And that’s not what we’re doing in this industry. So even if you think about a seeded portfolio or a secondary, you still have to have some perspective on what the future looks like, which is why I think people who are optimists like myself and people who look into the future, that’s where we gravitate towards.

Kasper 

Yeah. Changing tech a little bit. What are the challenges and how do they differ between large institutional LPs and smaller institutional LPs?

Matt Curtolo

Yeah, I’ve had the good fortune of working with both over my career. And as a smaller institution, you just don’t have the resources. We talked about coverage of the market. You don’t necessarily even have the bandwidth to look at multiple asset classes, let alone go deep on manager selection in one area. So I think you then organize yourself in more of an asset allocation top-down perspective.

And you use external consultants, That’s a place where having worked at an OCIO, it’s a best fit model for a midsize institution with no full-time staff. And the asset base warrants having institutional access and coverage, but you really don’t have the asset base to be able to go out and hire a full-time team. So that’s one of those pieces. You get the benefit of what the larger institutions have by pooling assets within an organization.

With the larger institutions and what I’ve found, if you are deploying multiple billion dollars a year, you think you could be more creative with it, but there’s an efficiency of capital component that plays into this. So you tend to just look more upstream rather than downstream. So you lose some of that opportunity set that is embedded within the emerging managers, the small funds. Because if my minimum check size is 20 or $25 million and I can’t be more than 10 or 20 % of a fund, there’s a whole lot of the universe that I can’t invest in. It then goes into making sure as a big organization, you’re incentivized in an appropriate way. 

You have the right guardrails in place where from governance perspective, there tends to be a lot more in terms of committees and governance and things you can and can’t do, making sure that you built your infrastructure in a way that allows you to be successful rather than be bogged down by multiple steps.

Kasper 

Among our listeners, we have quite a few smaller LPs. is there a way where they can leverage their size, make agility an advantage?

Matt Curtolo

Absolutely. That is one of the things, and I failed to mention when we talked institutional small and institutional large, this other part in the emerging part of the market now is institutional retail, I would call. And that’s anyone who is an accredited investor and up. Anyone who can make an investment into a fund in SPV. There are tons of platforms and resources where the individual can make a decision independently. And agility is a huge piece of this.

If you think about a large public pension fund where you get 12 meetings a year, and if you’re a GP, you have to slot into one of those meetings. And if there’s not a slot available, that gets pushed and pushed and pushed. So you’re at the whim of those types of LPs it tends to come with bigger dollars. But if you go out and target smaller LPs, I think you, the smaller LPs are becoming a more attractive way. We certainly saw this at Allocate for a GP to aggregate some capital into what

Ultimately is an institutional size check, but the constituents are made up from a lot smaller dollars. So going through a platform where you can leverage institutional diligence, you get the access that you would as a much larger investor. think that model carries through both at the institutional retail level, the small institutional level, and even some of the larger institutions thinking about fund of funds in niche areas. People need to think who can support what we’re doing, but all of these aspects of the market are super active, interesting, and if you’re a GP who’s looking to target a diverse LP base, you shouldn’t discount any of these.

Kasper

How do you think AI will impact LPs? We talk a lot about how it impacts GPs, but what’s it actually going to do to the LP side

Matt Curtolo 

it, I think it’s, it’s still premature to know the actual implementation, but I would say in almost every conversation, I was at an LP round table dinner, two weeks ago, and that was one of the, are you using? How are you implementing this? So I think people are kicking the tires. I think initially it’ll be an efficiency gain, Both from production of investment committee memos, going through, taking some of those rote tasks out of what has been a very manual process.

It seems obvious, but even things like pulling down documents, extracting data, being able to save one or two or three steps in an investment reporting process. I think that’s where AI from an LP perspective will really be in there. So efficiency gain first, and then we’ll see if we can do kind of second and third order calculations beyond

Kasper 

Yeah. Matt, we have time for a couple of lightning round questions. What’s the one most common mistake that LPs make when evaluating emerging managers?

Matt Curtolo 

Looking too heavily on performance. Emerging managers aren’t there yet, right? That’s why they’re emerging. So anchoring to performance numbers that are in a short run, not a good idea.

Kasper

So, what’s the hardest part about making a commitment as an LP?

Matt Curtolo

I think just taking that leap, right? You know, this is going to be a 10, 12 year process. So you can only do so much work. You can never have all the answers. So just being able to develop enough conviction where you can make that commitment. then, you you can certainly change it, but it’s much difficult to unwind rather than jump into. just, I’d say getting to that point where you, know, when enough work is enough to get to that point where you can pull the trigger.

Kasper

Sure.

What’s a misconception about LPs that you’d like to debug?

Matt Curtolo

Hmm. That’s an interesting one. I don’t know if it’s a misconception, but you hear this phrase of dumb money, right? And I think certain, certain groups will talk about different pools of capital in, that camp. Oftentimes it’s, it’s put into the largest pools of capital. I just think it’s an unfair terminology where everybody’s going by their own playbook. Everybody’s trying to achieve their own goals.

Kasper 

Yeah, true.

Matt Curtolo 

I don’t think it’s dumb or not or what signals some LP investing in your fund shows versus another. I think people have always revered certain types of LPs versus others. So I think getting rid of that moniker, say every LP is doing this for a reason of their own. And guess what? I can call all of them and understand why.

Kasper 

Yeah, I’d also add to that that GPs underestimate the LPs at their own peril. We talk to each other. We probably see more managers than many of them will ever see. We know their peers, their competitors, where they worked before,

Matt Curtolo 

The connectivity is definitely there,

Kasper

Matt, thank you for sharing your insights and experiences with us today. Your perspectives on sourcing, relationship building, navigating private markets has been really insightful.

Matt Curtolo

Thanks, Kasper, this was awesome. Really appreciated it.

Kasper 

And for listeners if you want to hear more from Matt I highly recommend following him and his thoughtful posts on LinkedIn. Ping me if you can’t find him. Thank you very much for joining us on this episode of Balentic Edge.