March 23, 2023
Executive Summary
SELECTION
- Building a well-functioning Investment Committee (IC) is a critical step in the stewardship of perpetual assets. It determines how effectively the investment program is governed, which translates. directly into dollars and cents. But who should serve on that committee, what experiences and principles should they bring, and how the group should work together are critical questions that should be asked.
- Completing an IC composition matrix can help identify characteristics and areas of expertise that are important for IC members to possess, as well as highlight any current gaps.
- Based on our experience, the best IC members are often those that, irrespective of their professions, possess “soft skills” like open-mindedness and strong listening skills.
SIZE
- Determining the ideal size of an IC requires weighing factors that can increase or decrease the potential effectiveness of the committee.
- In GEM’s experience, a 4-5 person IC is often ideal, as it forces a level of engagement that can be lost in larger groups. Some experts broaden that range and indicate that a 1-9 person IC can be best depending on the size of the organization.
NORMS
- In GEM’s experience, establishing and enforcing strong IC governance norms is the key differentiating factor for committee effectiveness.
- GEM has put in place a number of practices to help ICs establish and maintain foundational norms like IC member preparation (reviewing all materials and submitting questions in advance), focus on long-term investment horizon, and ongoing IC member education.
The firm announced the final close of GEM Seed & Micro Venture Fund, LP. The Fund closed with $82 million in commitments—exceeding its hard cap and fundraising target—and marks GEM's first vehicle focused specifically on seed- and micro-stage venture capital.
Kelly Barofsky, a Managing Director in GEM’s Investment Research Group, spoke with PitchBook about the continued momentum behind independent sponsors and why deal-by-deal structures can create strong alignment between sponsors and investors.
Head of Venture Capital, Kate Simpson, joined the Swimming with Allocators podcast to discuss how GEM constructs its venture portfolio, why the market has bifurcated, and where disciplined manager selection creates the most compelling opportunities.
Let’s start a conversation about how we can help.
