13 Learnings from 13 Years in Private Markets
with Patrick Strittmatter
Patrick Strittmatter
Investment Manager
1. Private Markets are Not a One-Time Investment, but a Long-Term Program
Many investors devote significant attention to their first fund commitment and far less to the ten that follow. Yet long-term success rarely comes from a single fund. Instead, it is achieved through the systematic construction of a portfolio over many years. Investors who commit capital regularly, diversify across vintages, and remain disciplined through challenging market environments create a stronger foundation for a resilient private markets portfolio.
2. Diversification Does Not Happen by Itself
Many investors believe they are diversified because they are invested in several funds. In reality, a portfolio can still be heavily exposed to the same markets, strategies, or even the same underlying companies. True diversification requires deliberate investments across vintages, regions, strategies, managers, and company sizes.
3. Manager Selection Is the Greatest Driver of Returns
In public markets, many investors simply follow an index. In private markets, that approach does not work. The performance gap between top-performing and weaker fund managers is far more pronounced than in many liquid asset classes. Access alone is therefore not enough. The key lies in understanding a manager’s quality, repeatability and investment discipline.
4
Every Track Record Has a Story Behind It
High returns alone reveal surprisingly little. What matters is understanding how those returns were generated. Was value created through operational improvements, profitable growth, a buy-and-build strategy or primarily through favorable market conditions, leverage, or rising valuations? A track record is only truly compelling when the value creation process is understandable and appears repeatable.
5
Leverage Can Enhance Returns, but It Cannot Replace Value Creation
Leverage can look impressive during favorable market conditions. More challenging periods reveal whether a manager genuinely creates value or has simply benefited from market tailwinds. The strongest teams increase company value through operational improvements, strategic development and sustainable growth, rather than relying solely on financial engineering.
6. Ultimately, We Invest in People
Every fund has a strategy. What truly matters is who executes it. Over the years, I have learned that team stability, succession planning, decision-making processes and corporate culture are often more important than the perfect presentation. A particular concern arises when too much responsibility depends on a single individual or a so-called rainmaker.
7
The Best Structure Is Worth Little if Incentives Are Misaligned
Incentive systems shape decision-making. When fund managers, investment teams and investors pursue the same long-term goals, the conditions for sustainable success are usually strongest. This is why I pay attention not only to the size of the GP commitment, but also to how incentives are distributed within the team and whether key individuals are incentivized to remain for the long term.
8
The Devil Is in the Details
The most exciting discussions often revolve around market opportunities, deal flow and value creation potential. Equally important, however, are governance provisions, fee structures, conflicts of interest, key-person clauses, fund term extensions and co-investment allocation policies. In illiquid asset classes, these details can become critically important over time.
“Over the years, I’ve learned that team stability, succession planning, decision-making processes and corporate culture are often more important than a perfect presentation.”
Patrick Strittmatter.
Patrick Strittmatter
Investment Manager
9. Not Every Shortcut Leads to the Destination Faster
Secondaries and co-investments can be valuable tools. They can accelerate portfolio construction, reduce the J-curve effect, optimize fees, or provide targeted portfolio exposure. However, an attractive price or favorable fee structure never replaces thorough due diligence.
10. Liquidity Is Often Overestimated, While Liquidity Planning Is Underestimated
In private markets, committed capital is rarely invested all at once. Capital calls and distributions take place over many years. Investors who understand and actively plan for this dynamic create the foundation for a sustainable long-term portfolio. Aligning commitments, capital calls, distributions and recommitments is essential.
11. While Market Timing Is Tempting, Consistency Is Usually More Successful
Every investor would like to invest at the perfect moment. In my experience, however, the perfect entry point is usually only visible in hindsight. Building exposure steadily over several years reduces the risk of allocating too much capital to the wrong market environment.
12. Exclusive Access Is Not a Seal of Quality
Investors often talk about highly sought-after funds and hard-to-access managers. Yet exclusivity alone does not guarantee future performance. Strategies, teams, fund sizes and markets change. Even established managers therefore deserve rigorous evaluation each time they raise a new fund.
13.Transparency Is Often Appreciated Only Once It Is Missing
Private markets are complex and illiquid. For this reason, clear reporting, understandable value drivers and open communication are essential. Investors should always understand what is happening within the portfolio, where value is being created, what risks exist, and how capital calls, distributions, and valuations are evolving.
Conclusion
These 13 learnings are based on countless manager meetings, due diligence processes, fund analyses, and investment decisions over the past 13 years.
The good news is that you do not need to wait 13 years to benefit from these experiences yourself.
Through Verium Private Markets Solutions, we help investors identify suitable managers, construct tailored portfolios, and access private markets with an institutional standard of professionalism. Would you like to build your private markets portfolio alongside an experienced partner? Get in touch with Patrick Strittmatter for an informal conversation.