What 20+ years of venture data taught LPs about picking the right investors

And if you haven't watched the Cluely interview, now is your chance

Author

Michael Morgenstern
June 24, 2025

Happy Tuesday Brex Community,

A mentor responded to last week's post with hard data. With a LP track record across dozens of funds, they've never observed correlation between GP personal capital commitment and fund returns. Unfortunately, the data showed emerging managers consistently underperformed tier one funds despite higher personal stakes, often suffering adverse selection. Maybe the skin-in-the-game thesis isn’t so important?

What actually predicts General Partner value: stage specialization (seed experts rarely excel at growth), operator networks with self-awareness about when to connect versus advise directly, and talent acquisition expertise across recruiting, selling, and closing. For first-time founders, a GP's ability to build management teams often matters more than their financial commitment. Personal capital alignment sounds intuitive, but operational expertise and stage-specific track records better predict founder outcomes.

Growing together, Michael Morgenstern 

Ayush Sharma (CEO) and Adam Rankin (CTO) of Warp

Warp is a modern payroll and compliance platform purpose-built for startups scaling across states. As remote work has exploded, so has the complexity of state tax compliance. Warp automates it all - from tax registrations and unemployment setup to .gov accounts and multi-state filings -using AI agents instead of manual workflows.

Warp’s product eliminates the pain of multi-state payroll and tax compliance, a challenge that overwhelms legacy providers. When a startup hires in a new state, Warp handles everything automatically behind the scenes. The result: payroll that runs itself, and founders and ops/finance members who never log into another government portal.

Ambassadors Perspective: Warp is eating the market by solving the hardest problem first: taxes and compliance. Startups are saving hundreds of hours, and the AI-native approach means Warp ships faster than anyone else. Founders tell me using Warp feels like using Linear or Superhuman for the first time - it just works.

Warp has grown rapidly since launch - onboarding hundreds of fast-growing startups and raising $24M in total funding, including a recent $18M Series A led by Sound Ventures. The round also included Drew Houston, Arash Ferdowsi, Kyle Vogt, and operators from Brex and OpenAI.

 

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Don’t hesitate to reach out,🦾!