Hi! Interesting to see the rise of mega funds such as Sequioa and a16z. I think venture is overall splitting into two tiers: Mega-funds and micro funds. The one's in the middle will get wiped out.
I write a newsletter focused on LegalTech startups. Would love to connect with you!
Yeah I’ve seen a few people now predict the “barbell theory” or as you said, disappearance of middle sized funds.
While it is plausible (because they aren’t nimble enough to back outliers but also not big enough to use brand on scale and lead) I must say I don’t share the view because what matters in the end is the “edge” of each VC and not their size.
Size of the fund is a transitory state; if they’re not good enough they’ll cease to exist, and if they’re good enough they’ll likely grow to a big one. In that light, I don’t think size will be a determinant, but their proprietary dealflow, knowledge, reach, distribution and other value-adds.
If they can obtain meaningful ownership, and occassionally picking amazing companies, they’ll survive. On the other hand, power law will intensify, for sure.
Hi! Interesting to see the rise of mega funds such as Sequioa and a16z. I think venture is overall splitting into two tiers: Mega-funds and micro funds. The one's in the middle will get wiped out.
I write a newsletter focused on LegalTech startups. Would love to connect with you!
Yeah I’ve seen a few people now predict the “barbell theory” or as you said, disappearance of middle sized funds.
While it is plausible (because they aren’t nimble enough to back outliers but also not big enough to use brand on scale and lead) I must say I don’t share the view because what matters in the end is the “edge” of each VC and not their size.
Size of the fund is a transitory state; if they’re not good enough they’ll cease to exist, and if they’re good enough they’ll likely grow to a big one. In that light, I don’t think size will be a determinant, but their proprietary dealflow, knowledge, reach, distribution and other value-adds.
If they can obtain meaningful ownership, and occassionally picking amazing companies, they’ll survive. On the other hand, power law will intensify, for sure.
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