Why new VC funds offer the greatest opportunities in Venture Capital

It's too difficult to develop an investment track record If you aren't independently wealthy or a part of existing homogenous VC networks. Additionally, fund of fund data shows that emerging managers outperform compared to legacy funds. Our industry should be reimagining ways to boost returns via expanding the pool of qualified investors. Emerging ... See more

In an increasingly competitive environment among Venture Capital (VC) firms, fund managers continuously search for ways to develop an edge over their peers. This realisation has led them to pursue more data-driven approaches and to start diving into the potential of data in investment processes.

For early-stage investing, I believe that the small flat partnership is the best structure if the goal is to produce high return on capital funds. Here are some reasons why this model is superior for early-stage investing:- At the early stage, investors must bet on teams and ideas that have not been proven. The biggest winners almost always come fr... See more

Funds taking a more concentrated approach and investing in fewer companies most likely are assuming that one of their investments has an extremely large outcome while the rest either go to zero or whose exits are much more modest. This is called the power law dynamic and historically, this can be seen happening often in venture capital. Funds takin... See more

A great deal has been written about what constitutes Venture Capital and what does not (including by this very author) in these seventy years. Though many different things to many different people, Justice Potter Stewart’s famous dictum in Jacobellis v. Ohio works for our purposes:I shall not today attempt further to define the kinds of material I ... See more

Of course, most of this is a self-fulfilling loop benefiting the brand-name VCs. The well-known firms get to see the best deals and can usually win them—and the cycle repeats itself. If a lesser-known VC is able to find and correctly identify a top deal, they may have a hard time winning the opportunity to invest. It is in the nonobvious cases that

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First, most venture capital firms use antiquated business models that prevent them from being able to move quickly, reach scale, and establish strong competitive moats. Most venture firms are built on a partnership model, like law firms.