Podcast Summary

Podcast: How I Invest with David Weisburd

Episode: E249: How LPs Unlock Liquidity Without Selling
Date: November 25, 2025
Guest: Founder of Liquid LP
Main Theme:
Exploring how limited partners (LPs) in private funds can unlock liquidity from their illiquid fund positions through NAV (Net Asset Value) loans, as an alternative to secondary sales. The episode digs into the mechanics, use cases, risks, current market trends, and behavioral insights around this evolving niche, featuring in-depth discussion with the CEO of Liquid LP, a platform specializing in bespoke NAV lending.

Overview of Main Themes

• Unlocking Liquidity for LPs: Alternatives to selling private fund positions, with a focus on NAV loans.
• Bespoke Lending Solutions: How Liquid LP addresses unique needs for high-net-worth individuals and smaller institutions.
• Comparison to Secondaries and Traditional Lenders: Advantages, challenges, and market opportunities.
• Risk & Underwriting: Diligence, loan-to-value (LTV), and factors influencing rates and recourse.
• Ecosystem Shifts: Standby lending arrangements with funds and the impact on fundraising narratives.
• Personal and Behavioral Insights: Motivations of borrowers, advisory board dynamics, and the broader purpose-led approach to finance.

Key Discussion Points & Insights

1. How NAV Loans Unlock Liquidity

What are NAV loans and how do they work?

• Liquid LP structures loans against LP interests in private funds.
• Loans provide liquidity without forcing LPs to sell at a discount (a risk with secondary sales).
• Underwriting is based on the underlying asset portfolio, with modeling of cash flows and strict diligence around ownership and possible existing credit lines.
  “We assess the underlying portfolio, we model the expected cash flows and structure credit facility or term loan against that. And this is essentially just a way to unlock liquidity without forcing a sale.”
  — Founder of Liquid LP (00:08)

Why use a loan versus a secondary sale?

• With secondaries, the sale is permanent and typically at a discount, forfeiting future upside.
• Loans allow retention of upside while getting needed liquidity.
  “With a secondary it’s permanent so you’re exiting at a discount and losing the future upside. Whereas a loan allows the LPs or potentially the GPs to… still retain ownership.”
  — Founder of Liquid LP (00:44)

2. Market Focus and Early Adopters

Who are the primary users?

• Early adopters include ultra high net worth (UHNW) family offices and smaller institutions.
• Growing demand emerging from wealth management channels.
  “Our platform is designed mainly to scale for the needs of ultra high net worth family offices, small institutions… Massive demand through the wealth management channels.”
  — Founder of Liquid LP (01:16)

3. Loan Sizes, Rates, and Terms

Scale and terms:

• Loan sizes range from a few million up to $50 million (some cases up to $75 million).
• Interest rates: high single digits to mid-teens, largely based on underlying asset quality and risk.
• LTV (Loan to Value) generally between 20–40%, with flexibility for bespoke cases and risk reduction.
  “Rates generally fall on high single digits to low to mid teens depending on the quality. Your blue chip type funds will be on the lower side… venture type assets... low to mid teens.”
  — Founder of Liquid LP (01:59)
  “Anything between 20 up to 40% [LTV]... for certain cases we can lower the LTV... to build the risk.”
  — Founder of Liquid LP (04:40, 12:56)

Example:

• $10M in assets could support a $2–$4M loan, subject to strict diligence.

4. Comparing Institutional and Individual Use Cases

Differences in motivation:

• UHNW individuals most often use loans for personal liquidity reasons (tax, purchases, emergencies).
• Institutions (pension funds, endowments, large FOs) use it for portfolio management—supporting capital calls, rebalancing, or arbitrage between positions.
  “Ultra high net worths are using it more like personal tax, etc. And then the large institutions... restructuring, optimizing the portfolio, potentially finding an arbitrage... and to reinvest it elsewhere.”
  — Founder of Liquid LP (02:32)

5. Liquid LP’s Differentiation: Bespoke, Speed, and Relationship-Driven

Compared to banks (J.P. Morgan, Goldman Sachs):

• Banks focus on clients already on their platform, and loans are bundled within broader banking services.
• Liquid LP offers faster onboarding, flexibility, and deals solely focused on lending.
• Ability to accommodate unique, bespoke needs, including speed.
  “Our main focus is the lending relationship. We’re not trying to get into the wealth management space… we get a lot of bespoke requests… especially with speed.”
  — Founder of Liquid LP (03:20)

6. Risk, Underwriting, and Recourse

Diligence Factors:

• Review underlying portfolio, but no exhaustive deep-dives into every single asset.
• Focus on documentation, personal balance sheets, and detection of existing pledges or liabilities.
• Behavior and past track record of borrowers considered (not consumer credit scores, but financial statements/history).
• Can reserve part of loan for interest to ease payback stress.
  “We have to have a look if they’ve got existing pledges or other credits liabilities… just to make sure we can retain the funds, the principal interest over time.”
  — Founder of Liquid LP (05:28)

Recourse Spectrum:

• Non-recourse for blue-chip, highly trusted assets.
• May require personal guarantees for riskier, smaller, or less diversified positions.
  “...extremely comfortable [assets], they’ll form on the non-recourse side… for certain assets, limited recourse to a full personal guarantee.”
  — Founder of Liquid LP (08:21)

7. Purpose of Loans and Behavioral Impact

Why people borrow against LP positions:

• Tax, liquidity "standby," making timely investments, capital calls, or emergencies.
• Often seen as an "insurance policy"—increases risk tolerance and decreases fragility since liquidity can be accessed even in illiquid markets.

Notable Quote:
“Knowing that you could always borrow maybe at a higher rate than you would like, but you could always borrow some standby loans if something happens, if you have a capital call unexpectedly… it makes investing less fragile.”
— Alex (10:22)

8. Standby NAV Lending and Fund Partnerships

Trend: Partnering with funds as a built-in liquidity facility

• Liquid LP is increasingly working with PE/VC funds to "pre-underwrite" NAV loans, allowing LPs in those funds to access liquidity quickly if needed; seen as a possible boost to fundraising narratives.
• Especially attractive for evergreen or long-duration funds.

Notable Quote:
“It kind of sends a certain indication to the investors that it makes it a little bit more evergreen… helps… on the fundraising process because then investors know that the fund can be leveraged, it’s been pre screened and it could potentially help them raise more.”
— Founder of Liquid LP (17:12)

9. Risks and Tail Events

Key operational risks:

• Potential double-pledging of assets (illegal, but possible).
• Opaque collateral or undisclosed liabilities.
• Importance of strong diligence and contracts; market still evolving toward more secure mechanisms (possibly via blockchain in the future).
  “We’ve had a few cases… only after stronger due diligence we found out that there was other assets that they didn’t disclose… double pledging which is of course illegal, but that takes certain due diligence.”
  — Founder of Liquid LP (22:09)

10. Advisory Board: Building and Leveraging Impact

Value of advisors & lessons learned:

• Bring in advisors for credibility, network access, and strategic support.
• Important to meet advisors where they are—don’t overcommit or misalign time/impact expectations.
• Some value comes from commercial/transactional interest; others are missionary, mentoring for legacy/impact.
• Make introductions early to ensure cultural fit within the group.
  “Try and meet them where they’re at as much as possible or just manage expectations… we knew that we had to get to a certain level and that’s where they became more effective.”
  — Founder of Liquid LP (23:44, 24:57)

11. Purpose, Motivation, and the Broader Role of Finance

Staying motivated:

• Helping investors access capital can be a foundational, positive force in enabling entrepreneurship and economic growth.
• Intention behind actions matters—infusing business with purpose adds drive and sixth gear beyond what’s on the spreadsheets.
• Value of good company and relationships on the journey is as important as financial success.

Notable Exchange:
“There is that question... okay, we lending money to wealthy people or privileged people, but what is the impact there? ...if you can just send a good vibe, a good vibration to them... that’s been quite special... it’s the company you keep on the journey.”
— Founder of Liquid LP (29:22–31:31)

“There’s a cathedral parable... the first says, I’m laying bricks. The second says, I’m building a wall. The third says, I’m building a cathedral... most people in finance will say that’s not in the spreadsheets. That’s woo woo stuff that doesn’t matter. And yet it adds a sixth gear to people’s motivation.”
— Alex (34:09)

Timestamps of Key Segments

• [00:08] — How NAV loans work, underlying mechanics
• [00:44] — Loan vs. secondaries, preserving upside
• [01:16] — Early adopters, focus on UHNW and smaller institutions
• [01:59] — Rate environment, risk differentiation
• [02:32] — Differences between individual and institutional uses
• [03:20] — Comparison against banks, points of differentiation
• [04:40] — Typical LTV ratios and bespoke cases
• [08:21] — Recourse terms and personal guarantees
• [10:22] — Behavioral impact of standby liquidity, “insurance” for investors
• [12:56] — Flexibility around loan sizing and LTV
• [16:11] — Average loan duration, speed of execution
• [17:12] — Standby NAV lending partnerships with funds and fundraising impact
• [22:09] — Underwriting risks: asset pledging and diligence
• [23:44] — Advisory board lessons and composition
• [29:22] — Purpose-driven business building and motivation
• [34:09] — “Building cathedrals,” narrative, and the sixth gear in finance

Notable Quotes & Memorable Moments

• “This is essentially just a way to unlock liquidity without forcing a sale.”
  — Founder of Liquid LP (00:08)

• “With a secondary, it’s permanent—so you’re exiting at a discount and losing the future upside. Whereas a loan allows the LPs… to still retain ownership.”
  — Founder of Liquid LP (00:44)

• “Knowing that you could always borrow maybe at a higher rate than you would like, but you could always borrow some standby loans… it makes investing less fragile.”
  — Alex (10:22)

• “It kind of sends a certain indication to the investors that it makes it a little bit more evergreen… pre-screened… could potentially help them raise more.”
  — Founder of Liquid LP (17:12)

• “It’s always great to have great names on your advisory board… but you should try and meet them where they’re at as much as possible or just manage expectations.”
  — Founder of Liquid LP (23:44)

• “Just having an undertone of love as we was at Maison is just super important because, like, we are on this earth for, like, a short time. Life is short.”
  — Founder of Liquid LP (34:54)

Conclusion

This episode offers a rich, inside look at the rapidly-evolving NAV loan market, exploring how bespoke lending solutions are enabling LPs and GPs to access much-needed liquidity without giving up the upside in their illiquid private fund positions. It demonstrates the growing sophistication and personalization in alternative finance, the importance of behavioral factors both for borrowers and teams, and how aligning purpose and narrative can drive innovation even in a technical, spreadsheet-driven domain.