Podcast Summary: How I Invest with David Weisburd

Episode E290: How LPs Underwrite Venture in 2026

Published January 26, 2026
Guest: Narayan (Co-Founder & Partner, Franklin Park)
Host: David Weisburd

Overview

In this episode, David Weisburd speaks with Narayan, co-founder and partner at Franklin Park, a $21B AUA/AUM investment firm. The discussion centers on the unprecedented complexity in venture capital (VC) markets, the challenges Limited Partners (LPs) face when underwriting funds, and what characteristics will define winning managers through 2026. They explore valuation anomalies, the limits of venture data, evolving founder-investor dynamics, the importance of long-term relationships and networks, and strategies for truly differentiated due diligence.

Key Discussion Points & Insights

1. The "Untethered Sentiment" in Venture Capital

[00:14 – 02:16]

• Narayan describes the market as "the most confusing, untethered sentiment" he has ever seen—highlighting wild events like enormous individual compensation packages and companies scaling rapidly with minimal staff.
• Quote: "There seems to be some event, some pricing, some scaling thing… there's no basis for, no precedent for." (Narayan, 00:26)
• The market is described as “bipolar,” with extreme disparities between the “haves and have-nots.”
• Key question: "Why do founders want to give up part of their precious life's work to somebody else?" (Narayan, 02:04)

2. Proliferation of New Funding Models & Data Problems

[02:16 – 05:19]

• Explosion of alternative models: e.g., Midjourney achieving $500M ARR with no outside capital; accelerators replacing cash with services.
• The quality of venture data is fundamentally problematic: reporting is biased, non-representative, incomplete, and often lags.
• Quote: "The scary part… the data is very often plagued with holes, non reporting, self bias reporting, it's lagged." (Narayan, 03:34)
• Challenges in making confident decisions based on historical “slices” or out-of-date datasets.

3. LPs Seeking "Ground Truth" in Data

[05:19 – 07:32]

• Shift from GP-reported to LP-sourced data (e.g., MSCI Burgess, Addepar) is promising—offering more independent and complete performance perspectives.
• Still, bias exists depending on which LPs report data, particularly as access to top funds (and performance) varies by LP profile.
• Quote: "You're still going to then deal with the fundamental LP bias that is driving those portfolios… access of course is a… huge deal in venture." (Narayan, 06:12)

4. Tethering to the Future, Not the Past

[08:57 – 09:54]

• Weisburd posits that current actions—like billion-dollar comp packages—may appear irrational by historical standards but become logical when “tethered” to future outcomes like AI-driven growth.
• Quote: "Paying 3 to 5 billion dollars on these 3 to 500x engineers… becomes highly rational, but only when you tether it to the future, not when you tether it to the past." (David, 09:38)

5. Noisiness, Networks, and the Value of 'Founder Love'

[09:54 – 13:32]

• Consensus in venture forms much more quickly today, reducing the opportunity for "first principles" investing.
• In high-noise environments, value accrues to groups with long, positive founder relationships and federated alumni networks.
• Longevity, discipline, and stage consistency matter: old reputations don’t always translate in new market conditions.

6. Evolution of the Manager Landscape: Specialists vs. Generalists

[14:31 – 14:58]

• New "generalist" managers are hard to underwrite due to market saturation; differentiation and specialist networks are increasingly valued.

7. Product, Distribution, and Media as Value-Adds

[14:58 – 16:29]

• A new meme: "product and distribution" are essential, and top VCs are investing heavily in media to augment brand and founder access.
• Not all “distribution” or media strategies are durable—many high-profile narratives are ultimately anecdotal.

8. Principal-Agent Issues & Cutting-Edge Manager Selection

[16:29 – 17:06]

• Institutions like Franklin Park balance the desire for high-return, high-risk funds with the need to avoid disaster outcomes and “headline risk.”
• Quote: "The interesting thing about power laws is one investment can often save a firm." (Narayan, 17:08)

9. Solo GPs, Operational Risk, and Reliance on References

[17:06 – 21:32]

• Solo GPs can be high-returning but bring operational and continuity risks; institutional quality and behavior under stress matter.
• Extensive, continuous backchannel referencing is seen as the greatest source of alpha in manager selection.
• Quote: "For us it has to be continuous… you really can't be reactive. You kind of always have to be every day in the market." (Narayan, 21:48)

10. The Power of Long-Term Networks

[25:46 – 28:38]

• Career longevity and relational style are self-reinforcing; those who “opt into the long road” and collaborate for decades tend to see the greatest long-term venture success.

11. Velocity vs. Relationship-Driven Approaches

[28:38 – 30:31]

• Fast-paced, high-volume deployment periods reward some with luck/optionality. Still, enduring value and ability to consistently underwrite depend on founder perceptions and the depth of prior relationships.
• Quote: "You reorient to get money out the door… if I can, if I can early in my career make 50 bets and they viewed them as bets… If one of them hit now I have a halo deal…" (Narayan, 28:52)

12. Who’s Picking Whom? Founder-Driven Dynamics

[31:07 – 36:33]

• Research ground truth is that founders increasingly pick VCs, not the reverse—especially post-seed.
• At the early stage, founders care about: (1) minimal, credible firm brand; (2) respectful, efficient process; (3) certainty of capital; and (4) interpersonal “fit” for multi-year partnerships.
• Firms with federated founder networks and histories of “demonstrated care and love” retain advantages through cycles.

13. What’s Knowable?

[36:33 – 38:09]

• Narayan concludes two things with conviction:
  • Teams can now accomplish considerably more, much faster, than ever before.
  • Buyers (customers) are more open than ever to swapping incumbent offerings for fundamentally better products.
• Quote: "A small team in less time is getting a lot done." (Narayan, 37:24)
  "Willingness to change plus ability to change—I'm definitely convinced that amazing value is going to be turned over." (Narayan, 37:51)

Notable Quotes & Memorable Moments

• Narayan: "The market is very bipolar… so insane to me. It's just a very bipolar market. All these little niches." ([01:10])
• Narayan: "The data is very often plagued with holes, non reporting, self bias reporting, it's lagged." ([03:34])
• David: "Paying 3 to 5 billion dollars on these 3 to 500x engineers… becomes highly rational, but only when you tether it to the future, not when you tether it to the past." ([09:38])
• Narayan: "It’s those folks where… they’ve created a federated network of founders for them… that are helping them look around the corners." ([10:32])
• Narayan: "We really can't be reactive… you have to be every day in the market… and you build this giant graph of, okay, I'm waiting for this thing to happen." ([21:48])
• David: "I think references are the greatest source of Alpha in GPs… what truly separates the top LPs is that they just do more references." ([20:50])
• Narayan: "A small team in less time is getting a lot done… buyers are saying… I'm willing to consider swapping out big iron for something new." ([37:24–37:51])

Timestamps for Key Segments

• The Untethered Market: [00:14–02:16]
• Alt Funding Models & Data Woes: [02:16–05:19]
• LP Data Ground Truth: [05:19–07:32]
• Tethering the Present to the Future: [08:57–09:54]
• Noise, Founder Love, Legacy Value: [09:54–13:32]
• Managers: Specialists vs Generalists: [14:31–14:58]
• Media, Product & Distribution: [14:58–16:29]
• Principal-Agent Dilemmas in Institutional LPing: [16:29–17:06]
• Solo GP & Operational Risks: [17:06–21:32]
• Building Long-Term Networks: [25:46–28:38]
• High Velocity, Option Value Investing: [28:38–30:31]
• Founder-Driven VC Selection: [31:07–36:33]
• What’s Knowable—Conviction Calls for 2026: [36:33–38:09]

Conclusion

Narayan and David provide a masterclass on how top LPs are approaching underwriting in the turbulent, data-challenged venture landscape of 2026. The edge lies not in datasets or narratives but in long-term relationship networks, continuous referencing, and an acute understanding of the shifting power dynamics between founders and investors. As the venture ecosystem changes and power increasingly accrues to enduring, founder-loved platforms and highly differentiated specialists, the incremental value of reputation, patience, and discovery cannot be overstated.

For investors, founders, and emerging managers, this episode offers a rare look behind the curtain at how LPs are thinking, adapting, and building conviction in an era of foundational change in venture capital.