I talk to thousands of LPs every year. Here's what I'm seeing right now when it comes to how they're approaching VC. 1) Late-stage co-investments have never been hotter. The top 5-7 names have effectively *unlimited* demand. And that supply/demand imbalance has created three real issues: First, the question of *true* access. Many of the SPVs floating around for these companies are not sanctioned by these companies. Buyer beware. These companies are tight on their cap tables, and access can be gated beyond just capacity. The fee creep is getting egregious. Someone shared with me recently that for a top AI lab, a group was charging 15% upfront, 20% carry, and 30% over a 2X. At those economics, you can take what would be a generational company but a bad investment. Fees are the silent killer of returns in late-stage co-invest, and this risk is now being focused on the logo, but ignoring the fee effects. Additionally, for those who aren't getting access to the top companies must go a tier (or two) below. Very dangerous in a high-intensity / valuation market for AI. As I've mentioned, there will be a lot of expensive mistakes made as we figure out what winners will look like in the future. 2) Capital is flowing to large, established brands. This is the clearest trend right now. LPs are concentrating on the top multi-stage and Series A firms. The logic is straightforward: these are easier to underwrite, and given how extreme the power law has become, investors want exposure to the trophy assets soon after investing. If you're a top 10-20 brand, you're oversubscribed, sometimes in multiples. If you're not, the fundraising environment is a different world. 3) Emerging and emerged managers are in the toughest spot, with a notable exception. Spinouts from top firms and operators with strong brands are moving fast and generally very oversubscribed. For everyone else, the bar has never been higher. I think this is actually where the opportunity is for LPs If they have the time/expertise to do so. The issue isn't that LPs don't know this. Most do. The problem is twofold: the time and difficulty of sourcing and diligencing emerging managers is real, and the hangover from 2019-2021 is still very present. A lot of people tried VC during that era who probably shouldn't have, and the failure rate on those Fund 1s has made the entire segment harder to navigate. Matching supply and demand here has become nearly impossible. Supply (Managers) far exceeds demand due to the issues noted.

$100M of ARR is becoming easier to create at the same time that $100M of ARR is becoming less of a signal about the future prospects of the company than anytime in history

This was an incredible interview @patrick_oshag Fun fact, my wife uses the same driver as Mike and she says he's one of nicest and most unassuming guys.

Have to disagree with this. Most lps i talk want in kind distributions for top companies like spacex etx

Completely farcical.

This is an um, interesting read on it....

A 1.18 DPI in 9 years in an early stage VC fund (let's say 3 year deployment) is good. LPs focused on return of capital are better equipped to do credit or PE. VC is where, if you have access to top managers, you are seeking compounding, high multiple right tail returns (10-20% of managers). If you don't have access or ability to discover hidden gems before they are access constrained, it's not a asset category to invest in.

Well, better than the multi layer spvs that combine for that or higher. But anything about 1-2pct upfront and 10-15pct carry (or 0/20) is rarely a good path. The 10/1/15 structures ive seen are ridic (10pct upfront) But, times like this, grifters grift, and sometimes make generational wealth.

While we are in consensus driven world today across all stages, I expect to see some of the best outcomes in 2028+being non-consensus. Non consensus founding team Non consensus thesis Non consensus market Finding hidden gems is getting lost today; but think it's largely transient for non-large platforms. Large platforms can play consensus forever, and likely do just fine.

2021: LPs flock to growth 2022-2024: LP flock to Seed 2025-2026: LPs flock to growth 2027-2028: ?

AI M&A is in full effect, and don't think we are close to be done. Cursor: $60B OpenRouter: ~$8B Hugging Face - $12.9B Decart: $6B-$7B Along with Spx, Anduril, Anthro, Ramp, OAI, Databricks, and others on the IPO path, and the next few years will bring historic amounts of liquidity. Also likely prolongs the level of front we are seeing today. But after a long stretch of nothing, this is seriously incredible.

Management fees for large firms are the best biz model. Long term ARR with no churn and rev per employee astronomical. Provide 1st/2nd quartile returns and incredible enterprise Val. Expect a few large vc platforms to go public by end of decade.

doing no harm is actually less pervasive than most think in vc land. Adding real meaningful value *consistently* is really,really hard but doing no harm is actually really hard too. The difference between great vcs and average/bad ones is they know and accept this and it informs how they work with founders

Insane. No coherent consideration about the 2nd or 3rd order effects of implementing this.

Rarely do you see so many people rally for a VC over a founder, but from my experience both @pitdesi and @iamjakestream are wonderful partners and people and so not surprised here. That said, as a founder I also understand how hard it is to not take things personal.

We truly live in a crazy time right now in vc. 1/We are back to rounds at huge upticks every 3-6 months, and sometimes 2 tranches of a round within weeks at diff valuations 2/ For top companies, spv has become a 4 letter word 3/ people casually saying, upside is 500b-1t exit. 4/ vcs publicly dunking on Anthropic 5/non-consensus companies are massively and unnecessarily ignored I am a huge bull on the next wave of innovation, but this “game on the field” doesn’t feel right at all.