When we had drinks last, Megan and I were discussing how today, more and more LPs view growth-stage (and sometimes even early-stage) investing as a team sport. Why the change?

This trend began around a decade ago, when the sovereign wealth funds and extremely large/institutional family offices began to build out full venture desks. They hired away partners at Tier 1 venture firms, and built muscles for judgment, diligence, and access.

This stemmed from a desire for more control in portfolio construction, from second- and third-generation principals wanting to have more of a say in their family’s legacy, and of course, direct investing being much lower in fees.

Now, it’s permeating the entire LP landscape, from HNW/UHNW individuals all the way up to family offices of every size. Even RIAs are beginning to jump on the bandwagon. Instead of traditional funds, most LPs are preferring to invest their capital on a deal-by-deal basis.

As an LP, here are three things to think about as you build your strategy:

First, every GP and broker has realized this trend, and so every plausible allocator is being pitched 24/7. This is why you’re seeing a TON of deals in your inbox. And most of these deals aren’t actually good, they’re just being syndicated.

Second, you have to align yourself with GPs you trust. Coinvestment deals directly from GPs you know >>> brokered deals because you’re also signing on with someone who has skin in the game, who is bringing you a deal they’re investing in themselves.

Third, there’s never been a greater need for communities: GPs and LPs who invest together, pressure test ideas, figure out which deals fit which investment thesis, and share research and perspectives.

If you want to invest as a team sport, building a strong team around yourself is the only winning strategy.