Privcap / Fundraising & Performance / Hamilton Lane: Picking First-Time Funds
by Tom Stein
April 2, 2013

Hamilton Lane: Picking First-Time Funds

Click for video interviews with Andrea Kramer, Hamilton Lane

BudSo where does Andrea Kramer, managing director at Hamilton Lane and an active investor in private equity, stand on first-time funds? She believes that new funds can deliver the goods—but only if chosen wisely.

“The analysis takes time, particularly so with first-time funds. It’s extremely labor-intensive from our perspective,” she says. “If you put the time and the energy into it, you can find really good investors. But the point is that you have to spend a lot of time with them.”

That’s one reason some LPs simply won’t bother with first-timers. It’s a lot easier to back fund number five, especially if you know the managers inside and have previously backed funds two, three, and four, Kramer notes.

Of course, there are also risks associated with tried-and-true fund managers. Change happens. Maybe a firm has lost some key partners. Maybe its last few funds have underperformed. That’s why it’s important to keep an open mind when presented with a new opportunity, Kramer says.

Once Kramer and Hamilton Lane have done the hard work—sometimes spending up to a year with the new managers before investing a penny—they will commit anywhere between 10 percent and 90 percent of the fund. “It’s one of those things where you can’t just dip your toe in this fund. You’re full-on committed,” she says. “It’s sink or swim once you’ve invested with them.”

According to Kramer, that all-in approach sets Hamilton Lane apart from many other LPs. “We want to make sure that we’re going to generate great returns,” she says. “And you do that by making sure you’ve set it up properly at the front end, not by spreading around the dollars.”

Andrea Kramer of Hamilton Lane discusses how the firm evaluates first-time funds.

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