Best of LinkedIn: Venture Capital CW 25/ 26

00:00:00: Provided by Thomas Allgaier and Frennus, based on the most relevant LinkedIn posts about venture capital from CW-TwentyFive and TwentySix.

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00:00:28: Okay, so welcome to today's deep dive.

00:00:30: if you're a founder right now or You know anyone in the venture space.

00:00:33: You've probably felt it.

00:00:34: The ground is just its shifting.

00:00:37: Oh massively

00:00:38: Right.

00:00:38: and Today we're unpacking exactly why.

00:00:41: We are looking at the top venture capital insights buzzing across LinkedIn during calendar weeks, twenty five and twenty six.

00:00:47: Our mission here is to sort of cut through the noise and show you the raw signals of what is actually happening in the market

00:00:53: exactly.

00:00:54: we're going to tackle a few main clusters today so we've got founder fundraising on the new well pretty brutal capital strategy.

00:01:02: yeah then were looking at VC fund formation So how GPs are trying to differentiate right now.

00:01:08: Plus, we'll get into the whole market structure of liquidity pressure and finally some major shifts in sectors and regional ecosystems

00:01:15: Which is a lot I know but it's all connected.

00:01:18: so let just jump straight onto the founder side of things The top-of-the-funnel

00:01:21: The funnel reality.

00:01:23: It's rough out there.

00:01:24: It's beyond rough.

00:01:25: Kieran Manta actually shared math on this.

00:01:27: that kind blew my mind.

00:01:29: He mapped out a typical VC funds funnel, out of two thousand inbound pitch

00:01:35: decks.

00:01:35: Two thousand?

00:01:36: Yeah!

00:01:37: A VC takes maybe six hundred initial meetings

00:01:40: which already sounds exhausting honestly

00:01:41: right.

00:01:42: but then it drops to sixty detailed diligence discussions.

00:01:46: and out of those two thousand initial decks yes how many actual investments they make?

00:01:51: I mean, i know the math but it's still shocking.

00:01:54: It's like what?

00:01:54: Eleven eleven

00:01:55: exactly eleven checks from two thousand decks.

00:01:57: The odds are microscopic.

00:01:59: So with that kind of bottleneck What are vcs actually looking for?

00:02:04: well Kevin Corleis really broke this down beautifully.

00:02:07: he pointed out they vcs They aren't funding Revenue milestones anymore.

00:02:12: They're looking for rocket ships.

00:02:14: rocket ships

00:02:14: Yeah, they have to look at his math for a standard fifty million dollar pre-seed fund To get the absolute minimum three x return For their LPs.

00:02:24: and this is after all the dilution that happens along The way.

00:02:27: a GP needs five out of there say twenty bets to become unicorns Five

00:02:32: billion dollar companies

00:02:33: right in a single portfolio of twenty just to hit the baseline.

00:02:37: That's

00:02:37: I mean it sounds like Hollywood to me.

00:02:39: how

00:02:39: do you mean?

00:02:40: Like, you know how massive movie studios operate?

00:02:42: They greenlight all these indie films knowing that ninety percent of them will bomb at the box office.

00:02:47: But they don't care because... ...they just need one billion dollar Avengers blockbuster to cover all the flaws.

00:02:53: So it's exactly it!

00:02:54: The map demands outliers A steady linear fifty million dollar exit is functionally useless to them.

00:03:01: but here's the terrifying part To even get in a room and pitch that blockbuster Founders aren't getting past human associates anymore.

00:03:07: AI gatekeepers

00:03:09: Yes Chris Topman posted about this.

00:03:12: He ran a simulated AI screen on his own pitch deck, he used an AI model like Claude basically mimicking what Sequoia and AsicsKens are doing right now to filter deals...

00:03:23: And how did it go?

00:03:24: It

00:03:24: rejected him in ninety seconds.

00:03:26: Ninety seconds?

00:03:28: Wow!

00:03:28: Yeah, it instantly flagged stale statistics and unsourced total-addressable market numbers.

00:03:34: You aren't pitching humans first anymore.

00:03:36: you are literally kitchen pattern recognition

00:03:38: Which changes everything about how you build a deck.

00:03:41: And that ties right into what Dooku Dolger was talking About with these deadly pitch deck traps.

00:03:46: Oh Right the runway thing

00:03:48: Exactly.

00:03:49: she calls at The twelve month delusion.

00:03:51: So many founders shoot themselves in the foot by asking for exactly twelve months of runway, but right now The time between rounds is stretching out so much longer.

00:03:59: Right?

00:04:00: If you show an AI or associate a twelve-month plan They just assume You'll die before next round.

00:04:05: Bingo it's automatic pass.

00:04:07: that's why siany bummuck advice Is crucial.

00:04:10: she says Founders should stop trying to raise the maximum capital available

00:04:14: Which is counterintuitive, right?

00:04:15: Usually founders just want as much cash they can grab.

00:04:18: Totally.

00:04:18: but she says you have to reverse engineer it figure out exactly how much You need to reach the next definitive value inflection point and then only raise that amount Just

00:04:28: enough To hit the milestone.

00:04:30: That gets you The Next markup.

00:04:31: Exactly It makes a narrative so much tighter.

00:04:34: But even if you thread that needle Getting A term sheet Can still be a minefield.

00:04:38: Did you see Milad Alakazai's story about the exploding term sheet?

00:04:42: Oh, The Young Founder Who Panicked.

00:04:44: Yeah that was wild!

00:04:45: Yes so this technical founder was deep in diligence with a specialized fund someone who actually understood their tech.

00:04:51: and then out of nowhere A massive generalist fund drops an exploding term-sheet With like...a forty eight hour fuse.

00:04:59: And the founder just caved

00:05:00: Totally caved Took the exploding offer and walked away from The Perfect Specialized Investor.

00:05:06: Which,

00:05:06: as Ellicose I pointed out is just a total mystery of this situation.

00:05:10: Yeah An exploding term sheet isn't a trap It's massive signal that you have to leverage.

00:05:15: Wait

00:05:15: really?

00:05:16: Because it feels like threat?

00:05:17: It meant to feel Like A Threat But the generalist fund only dropped That tight deadline because they knew They were going To lose their deal with the specialist.

00:05:27: So You can say No i need a week.

00:05:29: Absolutely You slow the clock, you trade speed for what you actually need.

00:05:33: That's

00:05:34: a great takeaway.

00:05:35: but these pressure cooker tactics from VCs?

00:05:39: I think it points to something deeper.

00:05:41: GPs are under an immense amount of stress right now.

00:05:43: Oh

00:05:43: they're completely stressed out!

00:05:45: They're fundraising too.

00:05:46: And there struggling...I was looking at Peter Walker data on this.

00:05:49: The twenty-twenty one vintage might go down as the worst performing in decades.

00:05:55: The twenty twenty one hangover is real.

00:05:57: Think about it.

00:05:58: Capital was free valuations were sky high.

00:06:02: But this was all pre-interest rate hikes, and crucially, pre AI.

00:06:07: Right.

00:06:07: so you had GPs buying into SAW's workflow tools at a two hundred million dollar valuation.

00:06:13: Yeah.

00:06:13: And today some kid with a Claude API can build the exact same thing in a weekend.

00:06:19: The

00:06:19: motes are just completely gone Gone.

00:06:21: Which brings up Heath Naken observation about ghost capital

00:06:25: Ghost Capital.

00:06:27: We keep hearing about this series.

00:06:28: A crunch, right?

00:06:29: People say the market is just returning to discipline.

00:06:32: But Nankin says it's structural!

00:06:34: The GPs who happily led your seed round in twenty-twenty two literally do not have a new fund to deploy from in twenty twenty six

00:06:42: because their LPs saw that twenty twenty one returns and close their wallets.

00:06:46: exactly so these gps are walking zombies.

00:06:49: they still take meetings.

00:06:50: They pretend they're active but money isn't there.

00:06:53: hence Ghost Capital.

00:06:55: Okay, but let me push back on that for a second.

00:06:57: if LPs are furious and season GPs are broke Why are we seeing so many new managers pop up everywhere?

00:07:03: Ah

00:07:04: the micro fund boom.

00:07:05: Yeah

00:07:05: Nathan Bucci an Alan Cruz We're talking about this.

00:07:08: The barrier to entry to start a VC Fund has basically collapsed.

00:07:11: It really has.

00:07:12: with these new Start Fund structures You can launch a fund in twenty four hours With zero upfront costs

00:07:17: And you only need what.

00:07:18: one hundred fifty grand For our first close.

00:07:20: yeah

00:07:20: hundred fifty K. So now anyone could be a VC.

00:07:23: But that sparks this huge debate on strategy.

00:07:26: How do you stand out in the sea of microphones?

00:07:28: Well, Alejandro Cremades argues that being a generalist is just dead.

00:07:33: He says deep specialization like only doing AI infrastructure or defense or climate Is the only way to win deals now.

00:07:40: But then you have Michael Rosenblum on the other side.

00:07:42: He's so frustrated with strategy creeps, yeah like VCs trying to emulate a-sixteenz With these massive media empires and scout networks he saying they've over complicated it.

00:07:53: The job is just finding in backing great founders.

00:07:56: It doesn't need a whole media department.

00:07:58: But is picking winners even possible?

00:08:00: And Enzo Welchley had a really structural critique of this that I found fascinating.

00:08:04: Oh, about active management.

00:08:05: Yeah

00:08:06: He argues that venture capital as an actively managed asset class Is fundamentally flawed.

00:08:11: Consistently picking winners is basically impossible.

00:08:14: It's his solution.

00:08:15: he says you either need the law Of large numbers like make a hundred plus bets and hope the math works out, or you need elite guaranteed access to the absolute best deals.

00:08:26: Access is everything!

00:08:26: It's not even about capital anymore?

00:08:28: No it's really not... And that perfectly transitions to Ron Wiener's point about market structure.

00:08:33: right now He calls it K-shaped billionaire buffet.

00:08:37: That's a vivid way to put it.

00:08:38: It IS Right?

00:08:39: Look at Q one.

00:08:41: Five mega funds swallowed seventy three percent of all LP money.

00:08:46: Seventy

00:08:46: Three Percent Just five funds.

00:08:47: Yeah

00:08:48: The top of the K is doing hundred million dollar seed rounds for stealth AI companies.

00:08:54: Meanwhile, the bottom of the k. The median founder Is just starving trying to raise a small bridge round.

00:09:00: and if you want to know why it's so concentrated Niels Gustav Pomburger actually mapped It out.

00:09:04: the

00:09:05: network analysis right?

00:09:06: Yeah He looked at four thousand VC partners in Europe And the medium partner.

00:09:11: they had exactly one connection In the Network.

00:09:13: One

00:09:13: Connection

00:09:13: Just won but the top note the most connected Partner Fourteen hundred connections.

00:09:18: That is insane,

00:09:19: right?

00:09:20: So the scarce resource isn't money it's network density It's access.

00:09:24: if you're a founder and you aren't plugged into those super nodes You're practically invisible.

00:09:28: but let's say you do get funded you win The game you build the company.

00:09:32: Even then, Adam Rossi dropped a reality check.

00:09:35: that is pretty brutal for the LPs.

00:09:37: Oh!

00:09:37: About The S&P-Five Hundred?

00:09:38: Yes he pointed out that A three X venture return after a decade of waiting often loses to a basic brain dead s and p five hundred index

00:09:48: fund because Of the fees in the illiquidity.

00:09:50: exactly you're locked up For ten maybe fifteen years.

00:09:55: You're paying the two and twenty feet drain every single year, you have zero interim income.

00:10:00: So when finally get that three X paper return-

00:10:07: Matt Kreintimer from Two Meter Capital talked about this too.

00:10:10: Companies are staying private for so long now, I mean SpaceX has been private for twenty-four years...

00:10:15: Which is wild!

00:10:16: It completely breaks the traditional ten year fund model.

00:10:19: We need these sophisticated secondary markets just to get aging portfolios some liquidity

00:10:24: And founders were seeing this trap too.

00:10:26: Tebow Louie Lucas actually posted about swearing off VC entirely.

00:10:29: Oh The Bootstrapping wrote

00:10:31: Yeah, he's just bootstrapping his SaaS companies.

00:10:33: Keeping all the profit maintaining total freedom.

00:10:36: no whiteboard growth targets to hit.

00:10:38: I love that.

00:10:39: No Whiteboard Growth Targets.

00:10:41: but i mean thats great for SaaS.

00:10:43: But if you're building physical infrastructure like defense tech or AI hardware You can't Bootstrap That!

00:10:49: You need capital Huge

00:10:50: Capital

00:10:51: Right.

00:10:51: So who is funding that If VC Model Is Stressed?

00:10:55: Alexander Hirstle and Susan L Both highlighted this shift toward family offices.

00:11:00: Oh, patient capital!

00:11:01: Exactly these are principles with generational horizons.

00:11:05: they aren't stressed about a three-year exit to satisfy LPs.

00:11:08: They want real governance and alignment.

00:11:11: And

00:11:11: endowments are stepping up big time too.

00:11:13: Atlas Berry shared this amazing post about Yale in nineteen eighty five

00:11:17: With David Swenson.

00:11:18: Yeah he made that huge early bet on venture capital for endowment's.

00:11:25: The University of Michigan turned a twenty million dollar early stake in open AI into two billion dollars.

00:11:31: Two billion?

00:11:32: That is the compounding power of endowments right there.

00:11:34: It's

00:11:35: staggering!

00:11:36: And that OpenAI example really highlights a shift Leon Eisen reported on... AI funding is totally maturing.

00:11:43: Maturing

00:11:43: how?!

00:11:44: Like moving away from the consumer stuff.

00:11:46: Exactly,

00:11:47: investors are over the flashy capability demos and AI wrappers.

00:11:51: The real money is shifting down the stack into control layers governance And deep infrastructure.

00:11:57: But here's the thing about infrastructure specifically in deep tech.

00:12:01: Stanley Agu pointed out a massive flaw in the European ecosystem.

00:12:06: Oh,

00:12:06: the Neriari Robotics round?

00:12:07: Yeah did you see this?

00:12:09: Germany had this record one point.

00:12:11: two billion euro around for neriari robotics

00:12:15: sounds like a huge win for Europe right

00:12:17: on paper.

00:12:18: But if you look at the cap table, it was overwhelmingly funded by American

00:12:21: tech giants.

00:12:22: Is US capital coming in?

00:12:23: Exactly!

00:12:24: Europe has a talent but they still can't scale capital intensive companies on their own so that equity and eventual returns just flow right back to U.S.. Which

00:12:33: is such an important lesson for emerging ecosystems.

00:12:36: Alina Trujina actually posted something really provocative about this aimed at places like Qatar.

00:12:40: What's

00:12:41: her take?

00:12:41: She argues these emerging hubs shouldn't be copying the twenty-ten Silicon Valley playbook.

00:12:47: You mean like putting a thousand startups in one physical area to build critical mass?

00:12:53: Exactly, that was the old way but now because generative AI has collapsed at cost and time of building software.

00:13:00: ecosystems have been built completely differently.

00:13:02: you don't need a thousand localized start ups.

00:13:05: The architecture for next decade is entirely different.

00:13:08: It makes sense.

00:13:08: everything's decentralized right.

00:13:10: okay Before we wrap, I want to leave you with one last dynamic to mull over.

00:13:15: Shane Sabine posted about this new regulation in California.

00:13:18: Oh the demographics reporting?

00:13:20: Yeah

00:13:20: yeah.

00:13:20: California is now requiring VC funds to publicly report the demographic.

00:13:25: so gender race disability status of the founding teams they invest in...I

00:13:29: saw that!

00:13:30: ...yeah and Shane frames it in a really interesting way.

00:13:32: he presents it just as a paper trail.

00:13:34: basically The data already exists internally.

00:13:41: So the question is does making that funding gap publicly visible act as an invitation for the industry to invest better?

00:13:49: It just makes the allocation transparent.

00:13:51: It's a fascinating shift,

00:13:52: for sure.

00:13:53: definitely

00:13:53: if you enjoyed this episode new episodes drop every two weeks.

00:13:57: also check out our other editions on private equity m&a and strategy consulting.

00:14:02: thanks so much for tuning into This Deep Dive.

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