Private Markets Allocation: Investment Advisor Perspectives

Interview Snapshot

Rohit Yadav: Frank, great to have you. What is Morgan Creek Capital Management, and how has it evolved?
Frank Tanner: Thanks, Rohit. Morgan Creek was founded in 2004, spun out of the UNC Endowment, and we carry that endowment DNA—also with roots in Notre Dame, Stanford, and Duke. Today, we manage capital for a range of clients—from high-net-worth individuals and family offices to large institutions like pensions. We've become increasingly specialized, especially in early-stage venture capital, but we also invest across the broader private markets—real estate, energy, buyouts, you name it.

“We’re much more specialized now across thematic areas and areas of conviction…. We want to expand access to the early-stage segment of the venture asset class…. Venture is still hard to navigate for many individuals and smaller institutions.”

Rohit Yadav: Within that broad spectrum of alternatives, what’s your primary focus these days?
Frank Tanner: It’s primarily venture capital. On my side, I focus on early-stage venture—sub-$100 million funds, usually fund I, II, or III, mainly pre-seed and seed. Separately, we also have Morgan Creek Digital, which invests directly into blockchain infrastructure and digital assets—this was spun out from our fund investing and thesis-building work dating back over a decade.

Rohit Yadav: Who are your LPs, broadly speaking?
Frank Tanner: By investor count, it’s mostly individuals and families. But by dollar volume, it’s institutions. Our discretionary funds are typically anchored by public pensions, while our non-discretionary mandates lean more toward single and multi-family offices and affiliated foundations.

Rohit Yadav: Looking ahead, where do you see Morgan Creek in the next three years?
Frank Tanner: I hope we keep building our reputation and brand in the early-stage ecosystem. A lot of individuals and smaller institutions haven’t been able to access venture meaningfully. We want to continue unlocking that segment—democratizing access to early-stage innovation.

Rohit Yadav: Why are alternatives, especially private markets, becoming essential in portfolio construction for HNWIs and family offices?
Frank Tanner: Alternatives help create a more balanced and sophisticated portfolio. They offer diversification, uncorrelated returns, and the potential for alpha. But beyond return, families often value the impact and purpose—venture gives them exposure to cutting-edge innovation and technologies aligned with their values. It becomes more than just capital deployment; it becomes involvement in shaping the future.

“Families also want investments that align with their values or offer impact…. Being part of innovation is important for a lot of our clients… A long-term view is almost a prerequisite for venture…. You can’t be tactical in early-stage venture—it needs to be programmatic.”

Rohit Yadav: Let’s talk strategy. When a family office is thinking long-term versus tactical, how do you guide them?
Frank Tanner: Venture, by nature, demands a long-term view. You can't tactically trade venture capital. Sure, there might be some tactical plays at later stages—say, pre-IPO—but early-stage investing must be approached programmatically. It’s about building relationships and committing to a long horizon. The key is partnering with the right managers and keeping consistent exposure through vintages.

Rohit Yadav: So where do you see the most promising opportunities within private markets?
Frank Tanner: We think early-stage venture is compelling. It offers asymmetric upside driven by power-law dynamics. In early-stage, return dispersion allows you to actually generate alpha. That’s less true in later-stage or multi-stage venture where returns are more normally distributed and volume can dilute alpha. So we favor the high-variance early bets—especially if you can pick the right managers.

Rohit Yadav: What’s your approach to portfolio construction within venture?
Frank Tanner: Our focus is on aggregating exposure to smaller funds—solo GPs, former operators, emerging managers at fund I, II, or III—who write the first checks into companies pre-product market fit. We never recommend just one or two micro-VCs; that’s too risky. But in a basket, the mean return can be quite attractive, and alpha through manager selection becomes additive. This plays well with a barbell strategy: have beta exposure through multi-stage platforms, and then stack upside via early-stage bets.

Rohit Yadav: How do you compare FOs’ views on PE vs VC?
Frank Tanner: Traditional PE can sometimes feel capped in terms of upside, especially when you’re dealing with market efficiencies and financial engineering. In early-stage, upside is more compelling if you’re willing to take the risk. Exposure is fundamentally different—it’s innovation, not leverage.

Rohit Yadav: What are LPs currently expecting from venture in the short-to-mid term?
Frank Tanner: I don’t think there’s a consensus. We’re still working through a reset. But if you look ahead three to five years, I expect IPO window to reopen, exits to return, and further consolidation among larger multi-stage funds. There’s a bifurcation playing out, which creates opportunity at both ends.

“When you aggregate a basket of micro VCs, the mean return can be quite attractive… Multi-stage strategies offer diversification but lose some of the upside asymmetry… We don’t recommend investing in just one or two micro VCs—it’s too risky.”

Rohit Yadav: Then why are some LPs holding back?
Frank Tanner: It’s backward-looking sentiment—DPI has been low, valuations compressed, exit markets frozen. But ironically, this is a much better time to allocate than 2020-21, when everyone was piling in at peak valuations. Founders today are more serious. Valuations are reasonable. For those with dry powder, this is a great time.

Rohit Yadav: So it’s really about consistency in allocation, not timing the market?
Frank Tanner: Exactly. You don’t want to miss a vintage. This asset class requires duration. Venture is network-driven. If you take a break, you lose access and context. Innovation doesn’t stop, so your exposure shouldn’t either.

Rohit Yadav: Let’s touch on some classic debates. Specialists vs generalists—what’s your take?
Frank Tanner: We don’t take a hard stance. Our approach is first-principles based—we evaluate every manager on five S’s: source, select, secure, support, and signal. Whether you’re a generalist or a specialist, if you’re executing on those five, we’re interested. It’s less about what’s hot and more about structured execution.

Rohit Yadav: And emerging vs established managers?
Frank Tanner: We’ve ended up doing a lot with emerging managers—not because we set out to, but because that’s where the alignment and hunger often are. Across the platform, about 75% of our investments have gone to emerging managers. You avoid some of the strategy drift and AUM-driven mindset that can come with later-stage funds.

“In venture, consistency is key—innovation is an evergreen opportunity… We use a first-principles framework—our 5 S’s: source, select, secure, support, and signal… Whether you’re a specialist or generalist, if you’re executing on those 5 S’s, we’re interested.”

Rohit Yadav: Should family offices do direct startup investments or leave that to experts?
Frank Tanner: Depends on the family. If they have the network, operating history, and infrastructure to execute, great. But if not, they risk adverse selection. We always ask: why are we seeing this deal? If it’s a truly proprietary look, maybe. If it’s a broad syndicate, maybe not. Partnering with funds is a great way to add network and context.

Rohit Yadav: Let’s go into the early-stage ecosystem. Where are we now?
Frank Tanner: Valuations are relatively reasonable—typically high single digits to $20 million post. There’s a negotiation between how much a founder wants to dilute and what they need to reach the next milestone. We’re seeing a clear divide—legible vs non-legible founders. Those who “pattern match” get capital easier. But for VCs, the real opportunity is backing the non-consensus founders who prove themselves and then get snapped up by larger funds later on.

Rohit Yadav: How are you approaching venture allocations in this environment?
Frank Tanner: We’re constructive. Fundraising is hard for everyone right now, including allocators. But we see opportunity, and we’re increasing activity. Last year, most capital flowed to 30 large firms. We think micro VCs are underappreciated—yet they’re often the source of alpha for bigger funds down the line.

Rohit Yadav: Frank, this was an incredible conversation. Thanks for your time and all the insight on how venture fits in portfolios and the nuanced strategies within early-stage VC.
Frank Tanner: Thank you, Rohit. Really enjoyed the discussion and appreciate the work you’re doing in this space.