Origins - Inside Venture Capital, Hosted by a GP and an LP · OpenLP from Sapphire Partners

Franchise Funds: Is Being a VC Franchise the Ultimate Goal with Thomas Kristensen

·43 min·2 clips

Thomas frames franchise VC as a rolling three-fund relationship that should reach roughly three and a half to four times net money.

1. Origins - Inside Venture Capital, Hosted by a GP and an LP focuses on Thomas Kristensen and Beezer Clarkson's discussion of franchise funds in venture capital. 2. Beezer Clarkson is the LP co-host from Sapphire Partners, and Thomas Kristensen is a partner and investment committee member at LGT Capital Partners in Zurich. 3. The episode asks what a "franchise fund" means, how LPs judge it, and whether becoming one should even be the goal. 4. Thomas says the phrase "franchise" suggests something "established maybe to the point of being a bit stale," which shapes his skepticism. 5. He gives a rough estimate that the universally recognized top tier is probably 25 to 30 venture firms. 6. Thomas says LPs often assess managers by looking at past returns because it is "very difficult to look into the future." 7. He warns that a firm can look strong on the surface while problems are still developing "behind the surface." 8. Thomas says getting to know a GP takes time, and there is no secret formula for doing it quickly. 9. He says transparency helps LPs reach conclusions, but he does not think transparency and performance are directly correlated. 10. Thomas says he has taken around 10,000 GP meetings over 20 years, which he uses as evidence for why experience matters. 11. He argues that many venture funds are pulled down by fundamentally bad vintages, especially in 2020, when prices were high and outcomes may not match expectations. 12. Thomas says LPs should use relative benchmarks as well as absolute hurdles when the market is distorted. 13. He describes a stable base case for strong firms as roughly 2.5x to 3.5x net money, with occasional funds reaching 5x to 10x when one company works out. 14. For him, the better test is a rolling three-fund relationship that lands around 3.5x to 4x-plus over time. 15. Thomas says some firms earn loyal LPs by being honest about bad vintages and taking ownership when results disappoint. 16. He contrasts that with the frustration of hearing "everything is fine" when LPs can see something is wrong. 17. Thomas says the best firms stay "continuously paranoid" and keep asking what their "reason to win" is. 18. Beezer and Thomas discuss the episode in an interview format, with long back-and-forth answers and practical LP examples. 19. Investors who follow early-stage venture firm selection and LP due diligence would likely value this discussion. 20. Casual listeners looking for a broad venture overview without LP-side detail may skip it.

As heard by us

A quiet, practical look at what makes a VC firm feel durable.

Franchise funds are often treated like venture’s blue-chip badge, but this conversation stays with the tougher question of what still matters after early wins, market swings, and polished narratives wear off.

Read the full review in PlayNext →

Why you'd press play

You want a clear-eyed test for when a VC firm stops feeling like a gamble.

Read the full recommendation in PlayNext →

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from Origins - Inside Venture Capital, Hosted by a GP and an LP