You have probably heard talk about values in terms of:

Partnering with the right people.
Building a company culture.
Living a congruent, self-aligned life.

We want to focus— in simple terms— on how value-systems and capital tells us a lot about changes in the market and ecosystem. To start, we need to define what core values are to frame this discussion:

Values are representations—things, activities, interactions, and subject-matters— that we deem to be most important in our lives. Our hierarchy of values— most important to least important— determines what we filter for in life, and more importantly, what we use to govern our decision-making processes.

Let's suppose an additional $1000 finds its way into your hands—

If you value travel and romantic relationships, setting aside necessary expenses required for survival— you will spend most of $1000 on travel and relationship-related items such as; flights, accommodation, dating apps, dinners, etc.
If you value money and capital, setting aside basic expenses required for survival— you will spend most, if not all, of $1000, on ways to grow it, such as; fixed interest savings, trading on the public markets, building a business, etc. Warren Buffet's quote sums up the archetype of someone who strongly values capital "Rule No. 1: Never lose money. Rule No. 2: Never forget rule No.1."

As a rule of thumb— capital flows from those who value it most to those who value it least. This observation isn't a judgment of good or bad. But those who have a high value on capital will find ways to earn more money, such as business, to provide a service or product to those who value that service or product. In exchange, those who value those services and products will purchase them with their capital.

Today, you can see the signals of human value systems in the life sciences market— preventative health services, sustainable foods, and mental & emotional well-being products, for example. Furthermore, you can see the emerging values of environmental sustainability when you look at plant-based meats surging in value and popularity.

Movements in Capital = Great Proxy for Value Systems

Our observation is that strong stewards of capital have a high-value on capital. They are typically not 'flashy' and do not have a strong intrinsic motivation to purchase 'things.' That is not to say they can't and don't enjoy luxuries— they are simply not driven by them alone. Instead, they find fulfillment by finding ways to grow their (or others') capital.

As such, our highest values are quite simple to determine— look at how you spend your money, what you surround yourself with, and what you think about, talk about, and obsess about. Similarly, when you meet someone, you can very quickly determine what they value.

Experienced LPs can determine an emerging manager's online profile and life to discover that the manager's value-system quickly and assess how they align or misalign with the intent of their fund.

The exciting news— as old pools of capitals, the pools of capital that are in the stewardship of the older generation (Baby Boomers) transfers to the next generation (Gen X), we believe that capital will start to reflect the new values of its new stewards. Wealth transfer will also bring plenty of opportunities for emerging fund managers to add tremendous value, especially if they start cultivating their skills and experience today.

Questions:

How will they express those values when they suddenly find themselves sitting on large pools of capital?
Beyond just monetary returns, what expectations will they have of their fund managers?

We will certainly be paying attention!