The invisible Alpha - What happens before the first closing
Why the real edge is built long before the first term sheet.
Hi all 👋
I’m writing to you from a lounge in Mexico, just before boarding my flight back to Europe, after two full weeks of real holidays in Latin America. A pause that allowed me to recover a level of sharpness my daily routine has a tendency to dull.
I’m also delighted to reconnect with the US this week, thanks to a meeting that was initiated last winter. You might remember : we explored the start-up studio : Hexa with one of its founders, Quentin Nickmans, then the corporate start-up studio : 3,2,1 Founded with Patrick Amiel. This time, I’m bringing you the fund equivalent : Coolwater Capital. My meeting with its founder, Winter Mead, brought me back to a theme I’ve been exploring for a long time : the invisible.
In fund management, the invisible is everywhere.
On the surface, everything looks perfect : a polished, well-calibrated pitch, a few amazing deals, a strong track record. But reality is also shaped by what LPs don’t see: the robustness of the back office, the discipline of delivering reporting on time and without errors, the legal coherence of the LPA or the quality of relationships nurtured well before the first close - both between GPs and with LPs. As a board member and advisor, I see it clearly : what separates a fund that lasts from one that doesn’t is less about strategy than about how well it tends to this invisible foundation.
This invisible shows up first in relationships between GPs, especially in the case of a spin-out. Being colleagues in a large fund and co-founding a vehicle are two entirely different realities. Real deal attribution, decision-making power, internal governance, clarity of roles : these may all look settled on paper but quickly become strained when pressure rises.
I’ve seen founders discover, too late, that their partner was toxic and arrogant - unbearable over the long run - others who couldn’t handle LP relationships or situations where all investment decisions were concentrated in two hands or where the claimed track record was largely built on access, brand or processes from the previous fund. A savvy LP knows this, and that’s where due diligence (DD) becomes so critical.
Because the invisible is also what emerges from a truly rigorous DD conducted by a sophisticated LP. I’ve accompanied funds through these processes and the level of detail can be overwhelming. The valuation policy under the microscope, fair value calculation methods, consistency between LPA, PPM and side letters, documentation of every investment decision, governance and conflict of interest processes, an audit trail of operations… Everything is scrutinised and cross-checked with off-market references, whether from former founders or co-investors. These are not moments where you can improvise.
The invisible also plays out in the back office. Some outsource, others internalise, but in both cases, it all depends on the people and the standards. Outsourcing to a reputable provider can streamline operations but only if deadlines, data quality, and service continuity are irreproachable. Internalising offers more control but requires a solid profile (someone who can withstand closing pressure and speak the auditors’ language). I’ve seen fundraises jeopardised by a service provider change mid-process, or by inconsistent reporting that forces an LP to ask questions you’d rather not have to answer.
LP discoverability, finally, is an invisible factor many GPs underestimate. An LP might be convinced by your thesis, but if they discover your fund after the final closing, it’s already too late. Investor GTM strategy, the way you maintain relationships well before fundraising, the consistency in your responses, the alignment between your pitch and your documents, these are subtle signals, but they carry real weight. The LP / GP relationship is forged before any commitment is signed.
My discussion with Winter Mead
My conversation with Winter Mead confirms what I’ve observed for years : a fund’s performance depends just as much on visible execution as it does on this invisible foundation that few truly master. Winter talks about emerging managers coming out of large funds with attractive track records, but without fully grasping the difference between being part of a team and carrying the sole responsibility for a vehicle. He also describes the double gap Coolwater is working to close : the gap that keeps LPs from discovering and accessing top talent early enough and the gap that leaves those talented managers without the infrastructure, discipline and investor education needed to inspire confidence.
His conviction (which I share) is that discoverability, operational rigor and the quality of the LP / GP relationship are invisible investments but decisive ones. A fund that neglects them, no matter how brilliant it looks on paper, undermines its chances of enduring.
As a conclusion
What I call invisible alpha is this combination of strong deals, an impeccable back office, a partner relationship designed to last (almost like a marriage) and a constant focus on LPs, even when no one is watching. You don’t win your raises thanks to a good back office, but you can lose an LP with a mediocre CFO. You don’t build a franchise on a flashy LinkedIn post but on hard conversations held before the storm hits. In this business, the detail is never just a detail : it’s the line between funds that weather cycles and those that remain promises.
At every layer of fund management, the human factor remains the common denominator. Behind every deal, every DD, every report, every AGM, there’s a human relationship and thus a way of communicating and listening. An LP doesn’t just assess the numbers; they also gauge the coherence and transparency of the people presenting them. Between GPs, mutual trust, clarity of roles and the ability to resolve tensions influence the trajectory as much as a strong investment thesis. Even in the back office, it’s people who choose precision or approximation, who anticipate a problem or let it grow into an incident. The technical, legal and financial architecture is essential but it’s the quality of human interactions that ensures its Long Term strength.
Artificial intelligence is already entering this invisible space, making data rooms smarter, checking NAV consistency in real time, preparing for complex DDs, and assisting in deal flow management. On the LP side, it enables faster cross-checking of track records, detection of inconsistencies, and analysis of co-investment networks.
But it will never replace human judgment : it amplifies strengths just as it magnifies weaknesses.
J’adore cet angle et cette idée que l’essentiel se joue souvent dans l’invisible :)
Ça m’a fait penser à la rose du Petit Prince : tout le monde la connaît comme métaphore, mais peu savent qu’elle était inspirée de la femme de Saint-Exupéry, avec toute la complexité et les nuances qu’il y avait derrière. Comme dans ton texte, c’est ce qu’on ne voit pas qui donne toute la profondeur à l’histoire.