Key Factors for VC Fund Success

🔎 What actually sets standout LPs, VCs, and Private Equity managers apart in today’s market? The latest conversation with Patrick Miller from J.P. Morgan Asset Management offered some grounded insights—here’s what’s shaping investment strategy in 2025: 🤝 Long-Term Partnerships - Venture capital isn’t about trading in and out. The most effective LPs and GPs focus on stability and building relationships that last through market cycles. Founders like those behind Airbnb and Uber launched in volatile times—steady hands matter. 📈 Institutional Experience - Teams with decades of experience bring perspective and best practices, especially during downturns. Patrick’s team, for example, sits on over 215 boards and has invested across multiple cycles, helping GPs navigate transitions and growth. 🌐 Network & Introductions - It’s not just about capital. The right introductions—to LPs, founders, and industry leaders—can unlock unique opportunities and differentiated access. A strong network is often the edge in winning top deals. ⚖️ Fund Size & Ownership - There’s nuance in fund structure: smaller funds can deliver outsized returns through ownership concentration, while larger funds may rely on a higher hit rate. Both models have their place, but understanding the math behind them is crucial. 🤖 AI’s Impact - 71% of Q1 venture dollars went to AI. Early-stage AI startups are scaling faster and more efficiently, sometimes reaching profitability before raising later rounds. This shift has second-order effects on the entire capital stack—something every investor should watch. 👥 People Drive Performance - In private equity, sector specialists and proven operators are the key to value creation. The right person can take a company from $10M to $100M+. In both VC and PE, it’s about backing teams with differentiated expertise, networks, or strategies. 🧑💼 Mentorship & Initiative - The best advice for anyone in this space? Find a mentor, show initiative, and create value before you ask for anything in return. Building genuine relationships and returning value on someone’s time is what creates a lasting “viral loop” of opportunity. Curious how these trends will shape the next decade of VC & Private Equity? Share your comments below. #VentureCapital #LPs #Startups #AssetManagement #PrivateEquity #VCs #Investing Link to Podcast in Comments Below 👇

Conventional wisdom assumes the bigger the VC fund, the bigger the returns. But does the data agree? On the contrary, investing in smaller, disciplined venture funds has consistently demonstrated superior performance compared to larger funds. Data shows that funds under $350 million are ~50% more likely to return more than 2.5x the invested capital than those exceeding $750 million. Why is smaller better in VC? -Smaller funds maintain strong incentive alignment between GPs and LPs. They rely more on performance (carry) rather than management fees, keeping the focus on strong returns rather than scaling for AUM. -Smaller funds are more agile and able to take on smaller, high-potential seed deals, which large funds might overlook due to the need to deploy larger sums of capital. -This agility not only allows for a more hands-on approach with portfolio companies but also enables higher returns through early exits, often achieved via M&A rather than waiting for IPOs. -The mechanics of smaller funds are also more favorable. With smaller fund sizes, the required exit values to generate meaningful returns are lower, allowing funds to achieve strong multiples even from companies that do not reach "unicorn" status. Sources: Energy Transition Ventures, Institutional Investor, RBCx #VentureCapital #VC #Investing #privatemarkets

How does the performance of new and emerging boutique VC funds compare to large established VC funds? What factors explain these performance differences? We just released a new white paper that answers these questions with hard industry data: "𝐒𝐮𝐩𝐞𝐫𝐢𝐨𝐫 𝐑𝐞𝐭𝐮𝐫𝐧/𝐑𝐢𝐬𝐤 𝐎𝐩𝐩𝐨𝐫𝐭𝐮𝐧𝐢𝐭𝐢𝐞𝐬 𝐢𝐧 𝐍𝐞𝐰 𝐚𝐧𝐝 𝐄𝐦𝐞𝐫𝐠𝐢𝐧𝐠 𝐁𝐨𝐮𝐭𝐢𝐪𝐮𝐞 𝐕𝐂 𝐅𝐮𝐧𝐝𝐬." ℹ️ This paper aggregates and summarizes performance data, findings, and perspectives from VC industry data providers and analysts (e.g., Pitchbook, Cambridge Associates, Preqin) and LPs. ❌ Historically, many LPs viewed large established VC funds as the premier targets for investment due to their long history and known brands. 💡 However, 𝐢𝐧𝐝𝐮𝐬𝐭𝐫𝐲 𝐝𝐚𝐭𝐚 𝐫𝐞𝐯𝐞𝐚𝐥𝐬 𝐭𝐡𝐚𝐭 𝐧𝐞𝐰 𝐚𝐧𝐝 𝐞𝐦𝐞𝐫𝐠𝐢𝐧𝐠 𝐛𝐨𝐮𝐭𝐢𝐪𝐮𝐞 𝐕𝐂 𝐟𝐮𝐧𝐝𝐬 𝐭𝐲𝐩𝐢𝐜𝐚𝐥𝐥𝐲 𝐨𝐮𝐭𝐩𝐞𝐫𝐟𝐨𝐫𝐦 𝐥𝐚𝐫𝐠𝐞 𝐞𝐬𝐭𝐚𝐛𝐥𝐢𝐬𝐡𝐞𝐝 𝐕𝐂 𝐟𝐮𝐧𝐝𝐬. New and emerging boutique VC funds typically deliver higher IRRs and return multiples than large established VC funds. Most of the top-performing VC funds in the industry are small, new and emerging boutiques. 📈 Interestingly, 𝐭𝐡𝐞 𝐬𝐮𝐩𝐞𝐫𝐢𝐨𝐫 𝐫𝐞𝐭𝐮𝐫𝐧 𝐩𝐫𝐨𝐟𝐢𝐥𝐞 𝐨𝐟 𝐧𝐞𝐰 𝐚𝐧𝐝 𝐞𝐦𝐞𝐫𝐠𝐢𝐧𝐠 𝐛𝐨𝐮𝐭𝐢𝐪𝐮𝐞 𝐕𝐂 𝐟𝐮𝐧𝐝𝐬 𝐢𝐬 𝐧𝐨𝐭 𝐚𝐬𝐬𝐨𝐜𝐢𝐚𝐭𝐞𝐝 𝐰𝐢𝐭𝐡 𝐚 𝐡𝐢𝐠𝐡𝐞𝐫 𝐫𝐢𝐬𝐤 𝐢𝐧 𝐭𝐞𝐫𝐦𝐬 𝐨𝐟 𝐝𝐨𝐰𝐧𝐬𝐢𝐝𝐞 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞. In fact, data shows that the bottom quartile of large established funds has worse returns than the bottom quartile of new and emerging boutique VC funds, meaning that the downside risk can be worse in a large established fund. 💪 𝐓𝐡𝐞 𝐬𝐮𝐩𝐞𝐫𝐢𝐨𝐫 𝐫𝐞𝐭𝐮𝐫𝐧/𝐫𝐢𝐬𝐤 𝐩𝐞𝐫𝐟𝐨𝐫𝐦𝐚𝐧𝐜𝐞 𝐨𝐟 𝐧𝐞𝐰 𝐚𝐧𝐝 𝐞𝐦𝐞𝐫𝐠𝐢𝐧𝐠 𝐛𝐨𝐮𝐭𝐢𝐪𝐮𝐞 𝐕𝐂 𝐟𝐮𝐧𝐝𝐬 𝐜𝐚𝐧 𝐛𝐞 𝐞𝐱𝐩𝐥𝐚𝐢𝐧𝐞𝐝 𝐛𝐲 𝐟𝐢𝐯𝐞 𝐤𝐞𝐲 𝐟𝐚𝐜𝐭𝐨𝐫𝐬:  1. New and emerging boutique VCs have smaller funds which are easier to earn high returns with.  2. They are more specialized, providing advantages in sourcing, selection, and value-add.  3. They allocate all or most of their capital to seed/pre-seed, which can enable higher multiples than multi-stage investing.  4. Their economic incentives are more dependent on maximizing investment returns (rather than on management fees).  5. They are extra-motivated as newcomers to prove themselves. See the white paper for more data and insights. https://lnkd.in/dnkmibs3