Swimming with Allocators · Earnest Sweat, Alexa Binns

Allocating in an AI Era: The Endowment Model Explained

·39 min·2 clips

AI is changing the manager landscape, fund sizes, and the stage of venture investing itself.

Lara Banks arrives by a less tidy allocator route. She began on the direct side, trading locational spreads in power at a hedge fund, then moved into broader private equity and venture work. McKinnick Capital Management oversees private equity with a three billion dollar venture portfolio across 30 relationships. The conversation keeps coming back to cycles. Banks looks at the dot-com era and the global financial crisis as moments when established brands turned over, some franchises kept compounding, and firms like Andreessen and Thrive appeared around that reset. That history gives the AI discussion some discipline. AI is one market shift where early-stage managers may show real research and a believable right to win, not a magic label. Banks says the team, looking toward the second half of 2025, tries to stay consistent instead of changing posture with every market mood. New managers still matter. The bar is grit, hustle, and a clear claim on the opportunity. Secondaries are getting more attention too, along with co-investments into the best companies and LP interests already in the portfolio. Growth equity sits next to that, including companies with two to ten million of ARR, often bootstrapped, away from the usual tech corridors, and growing quickly. The longest horizon may be the most human part of the interview. These are 18-year partnerships, so soft fit counts. The close stays warm: the hosts credit McKinnick with making the Stanford management company model available to others, and Banks sends the respect back to the allocator community.

As heard by us

A focused LP-side look at manager selection, portfolio construction, and durable firms.

This review keeps its focus on how an allocator thinks about manager selection and portfolio construction in a market that keeps moving. Lara Banks, managing director at McKinnick Capital Management, comes through as someone who has lived both sides of the work, from trading…

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Why you'd press play

You want the LP playbook behind manager selection in venture.

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