Can mega-platform venture funds deliver venture-grade returns at their scale?

Jake Gibson · Jul 14, 2023

The mega-funds are playing the AUM accumulation game, and if they want to be returns-focused they will have to shrink.

Fund math at that size requires $10B+ outcomes, and it's unclear how many of those will exist — the 2021 cohort that looked like $10B companies isn't looking so hot now

Scope: conditional on wanting to be returns focused

16:08 20VC: Why Fund Sizes Should Be Smaller, Should Founders Also Have Their Own Funds, Is Emerging Markets Investing Gone, Is Fintech Investing Dead & Who Will Be The Winners and Losers in VC in the Next 10 Years with Sheel Mohnot, Co-Founder @ BTV

Jason Lemkin · Aug 9, 2023

A $500M Series A fund needs roughly $3B of gross exits, implying about $30B of market cap every two years, which makes the model extremely hard to sustain

With 60% reserves and about 10% real ownership, $500M raised every two years requires $30B of exit market cap per cycle — more than a PagerDuty plus a Sprinklr gets you

Scope: assumes 10% real ownership and 60% reserves

42:34 20VC: The Memo: The State of the VC Market: Why Seed Funds Can't Invest in "Hot Startups" Anymore, Why Series A & B is Terrible, Why the IPO Market Will Explode in 2024 & Why VC DD is BS & Every VC Has More Fraud in their Portfolio with Jason Lemkin

Jason Lemkin · Jan 4, 2024 · hedged

Turning a multi-billion dollar fund into a 3x net return is extremely hard because of how many decacorns it requires

The raw math requires an implausible number of decacorn outcomes

Scope: says he wishes he had the data

9:42 20VC: Predictions for 2024: What Happens to Early Stage VC Funding, Do a Load of Venture Funds Die, What do LPs Do in 2024, Does Figma Kill the M&A Market, Will IPOs Comeback & What Does a Trump Administration do for Startups with Jason Lemkin @ SaaStr

Miles Dieffenbach · Aug 4, 2025

A $7B multistage fund at ~5% dollar-weighted entry ownership needs roughly $800B of exit market cap to deliver a 4x net — about an entire record year of IPOs and M&A for one manager

$7B divided by 5% ownership implies $140B of enterprise value bought; a 4x net requires ~6x gross after 2-2.5% and 20-30% fees, so ~$800B of exits, versus $850B in 2021, the best exit year ever

Scope: based on one live unnamed manager underwritten a year ago; assumes LPs invest pari passu across the fund family; their own target is a 4x net

35:57 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Miles Dieffenbach · Aug 4, 2025 · hedged

A $100BN+ venture-backed IPO will remain a generational, rare outcome over the next ten years, and there will not be ten or twenty of them

There have only ever been eleven $100BN venture-backed IPOs, and the two largest — Facebook in 2012 and Alibaba in 2014 — still haven't been beaten despite a decade including the 2021 bubble

Scope: explicitly acknowledges he could be wrong if SpaceX, OpenAI and Anthropic go public at trillion-dollar valuations; based on backwards-looking data

39:13 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Miles Dieffenbach · Aug 4, 2025

At $7BN fund size the math breaks down: even owning 10% of a generational $20-25BN outcome returns only around 0.2x, so you would need fifteen Figmas

Simple arithmetic on ownership, outcome size, carry and fund size

44:38 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Harry Stebbings · Aug 4, 2025

Even historic mega-outcomes are underwhelming for the funds that own them once funds get very large

Wiz was roughly a $32BN outcome — the GDP of a country — and it only returned about a third of Insight's fund

45:08 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Harry Stebbings · Mar 7, 2026

Multi-billion dollar venture funds like a $15B Andreessen and $10B Thrive are insane and far too large

51:16 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Mitchell Green · Mar 7, 2026

The mega funds' math only works if they find the next Google — possibly two or three of them — and current fund sizes are astonishing

Fund math on that capital base requires generational outcomes to return the fund

Scope: hopes to be proven wrong since big funds could acquire his portfolio companies

51:30 20VC: Why the SaaS Apocalypse is BS | Why China Will Win the AI War | Why 50% of VCs Should Not Exist and are Tourists | Why Stock-Based Comp is the Hidden Sin of the Valley with Mitchell Green, Lead Edge Capital

Harry Stebbings · Aug 4, 2025 · hedged

Large multi-stage funds may still work because future outcome sizes will be far bigger than today's, potentially including $50 trillion companies within a decade

Outcome sizes keep expanding — there are now several trillion-dollar companies where a decade ago there were none, so underwriting on today's exit sizes understates the future

Scope: framed as a real chance, not a certainty; projecting a decade forward

38:44 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Harry Stebbings · Aug 4, 2025

There will be far more than ten or twenty $100BN+ outcomes, and the liquidity for them will eventually have to be passed on to public buyers

There are already many companies — Anthropic, OpenAI, SpaceX, Stripe — worth $100BN today that LPs and smaller investors can't access because private markets keep extending, and at some point that liquidity has to transfer

40:04 20VC: Inside Carnegie Mellon's $4BN Endowment | Why 90% of LPs Shouldn't Invest in VC | The $140BN Problem with Multi-Stage Funds | The Hidden Math Behind DPI, TVPI, and Illiquidity with Miles Dieffenbach

Harry Stebbings · Aug 11, 2025

Mega-AUM funds will earn venture-like returns at scale, contrary to the view that they are just fee accumulators facing degraded returns

Outcome sizes have expanded with more trillion-dollar companies than ever, and very few investors can write billion-dollar checks into companies like OpenAI at $300B or Anthropic at $60B

Scope: explicitly a change of mind from his prior view

7:55 20VC: Figma, Scale, Wiz: Inside Index's Decacorn Factory | Decision-Making, Investment Process, Biggest Lessons, Biggest Misses | Why Gross Margin is a Fallacy at Seed | Never Turn Down a Deal on Price with Martin Mignot, Partner @ Index Ventures

Harry Stebbings · Nov 21, 2025

Large multi-stage firms writing very big checks will not necessarily earn lower returns, because outcome sizes have expanded enough that even a billion-dollar check can return 30x

If companies like Databricks reach $200-500B and OpenAI grows from a $30B entry price, huge checks still produce huge multiples

Scope: revises his prior assumption that big funds accept lower rates of return

72:47 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Max Altman · Nov 21, 2025

There will be many multi-hundred-billion-dollar exits, not just OpenAI, so firms like Thrive can deploy very large funds well

Skeptics assumed such exits wouldn't exist, but they are already appearing

73:13 20VC: Max Altman on The New Seed War: Can Anyone Compete with Sequoia and a16z | Leaving $2BN on the Table with Reddit | Lessons from Backing Rippling at $25M Post | Why Climate Tech is a Mirage and Disaster

Alex Rampell · Jan 12, 2026

Far more capital can now be productively deployed in venture because companies stay private much longer and the end-state outcomes are vastly larger than in the 1990s

Series D didn't exist in 1992 — companies IPO'd after Series C at small market caps like Amazon's ~$600M, so firms and exits were both small; today the five biggest companies on earth are technology companies

5:11 20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

Lucas Swisher · Feb 23, 2026

Mega growth fund sizes would not have worked in the SaaS wave but do work in the AI wave because outcome sizes are structurally larger

SaaS outcomes were capped — the largest independent SaaS companies (Salesforce, Workday, ServiceNow) are only a couple hundred billion in market cap; if AI augments labor and shifts spend from human inputs to tokens, addressable markets and outcomes are much bigger

Scope: Conditional on AI actually addressing labor-sized markets

25:11 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Harry Stebbings · Aug 8, 2026

LPs are wrong that returns always get worse as fund size scales; outcome expansion means mega platform funds will deliver venture returns

Outcomes have expanded enormously — Cursor at $60B, trillion-dollar companies like OpenAI and Anthropic emerging in a matter of years

Scope: notes 'whenever someone says always, be careful'

35:14 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Will Quist · Sep 12, 2022 · hedged

LPs backing $6B funds are behaving rationally rather than deluded: they don't expect 3x or 30-40% net IRR, they want venture/tech-equity exposure at 15-17% net on a deployable quantum of capital

At scale all capital gains start to look the same, and LPs are constrained by how much capital they can move per commitment, so IRR on a large commitment is the math they're actually doing

24:57 20VC: Why 95% of Venture Capital is Not Really "Venture Capital" | The Five Core Levers Needed To Assess Risk and Price a Startup | The Future of Venture; Who Wins, Who Loses, What Happens to the Crossover Funds with Will Quist, Partner @ Slow Ventures

Harry Stebbings · Jan 4, 2024

Multi-billion dollar venture funds are sustainable because they only need to beat these LPs' roughly 7% net benchmark — offering 12% net is a meaningful 4% bump

The comparison set for these large capital pools is mediocre traditional returns, not venture home runs

52:09 20VC: Predictions for 2024: What Happens to Early Stage VC Funding, Do a Load of Venture Funds Die, What do LPs Do in 2024, Does Figma Kill the M&A Market, Will IPOs Comeback & What Does a Trump Administration do for Startups with Jason Lemkin @ SaaStr

Jason Lemkin · Jan 4, 2024

Twitter critics of large fund models are asking the wrong question: the point of a mega-fund is not delivering 8x but beating the poor returns of massive capital pools

52:21 20VC: Predictions for 2024: What Happens to Early Stage VC Funding, Do a Load of Venture Funds Die, What do LPs Do in 2024, Does Figma Kill the M&A Market, Will IPOs Comeback & What Does a Trump Administration do for Startups with Jason Lemkin @ SaaStr

Harry Stebbings · Feb 19, 2024

Andreessen Horowitz will continue to thrive and raise billions more because a 12% return is good enough for LPs relative to the 6-7% net they get elsewhere

If 12% clears the LP's alternative liquid returns, it occupies a perfectly fine place in the portfolio they're building

Scope: said respectfully

23:27 20VC: Why VC Returns Will Get Worse, Why LP Incentive Structures are so Broken, What is the Answer to Liquidity with No M&A or IPOs, When to Sell vs Hold Your Winners & Turning $5M into $250M with The Trade Desk | Roger Ehrenberg, Eberg Capital

Harry Stebbings · May 27, 2025

A sub-2x return on that deal would have been immaterial to Sequoia given their fund size

The absolute dollar return relative to their fund size is what matters to a large fund

69:13 20VC: The Most Insane Story in Startups: Airwallex: The Angel That Turned $1M into $1BN | The Fund That Pulled a Term Sheet & Lost $1BN | Rejecting Stripe's $1.2BN Offer | Scaling to $1BN in Revenue & 100% YoY Growth for 8 Years with Jack Zhang

Alex Rampell · Jan 12, 2026

LPs care more about total dollars returned than headline multiples — a 3x on a billion-dollar fund is preferable to a 5x on a small fund

Winning competitive deals requires selling founders on either deep domain specialty or the scope and connections of scale; a mid-sized generalist offers neither, and LPs chasing returns get gobbled up by the two poles

Scope: applies to most asset classes, not just venture

7:50 20VC: a16z's $15BN Fundraise with Alex Rampell | The Best Companies Have Hostages Not Customers | The Best Founders Materialise Capital, Customers and Labour | Mid-Sized Funds with Die and The Future of Venture Capital

Harry Stebbings · Aug 8, 2026

The quantum of cash a fund can move matters more than multiple, so multistage funds deploying hundreds of millions generate far larger absolute returns

Josh, Elad and the multistage funds move hundreds of millions to billions and make a larger quantum of cash even if the multiple falls

34:42 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Harry Stebbings · Feb 23, 2026 · hedged

Venture returns are so concentrated in a handful of AI winners (Anthropic, OpenAI, Cursor, Lovable, OpenEvidence, Harvey) that a venture investor not in them is largely irrelevant, unless their fund size is small enough that smaller outcomes still return the fund

A small number of companies now create the vast majority of enterprise value (~65% by four companies)

Scope: Doesn't hold for small, size-constrained funds — a $100M seed fund can build a business off a $3B outcome

24:21 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

David Frankel · Aug 8, 2026

Venture is narrowing into a pyramid where the large asset-management end of the business is really selling access, and if a big fund misses the very largest outcomes it becomes much harder to sell to LPs.

Fund of funds and consultants sell access to the top names; missing the trillion-dollar or multi-hundred-billion companies undermines the pitch

Scope: applies to the large asset-management end of venture, not small funds

5:02 20VC: The AI Boom Will Create Enormous Roadkill: Who Wins & Loses | Why Founders Should Never Take Multi-Stage Money at Seed | Why Triple, Triple, Double, Double is Good Enough

Nick Chirls · Sep 6, 2024

Extremely capital-hungry companies like foundation model labs are the ideal investment for big VC firms because they can absorb billions of dollars.

A model that rewards deployment needs companies that require insane amounts of capital, and foundation models require billions for GPUs

0:00 20VC: Why VC is a Ponzi Scheme Today | Why Most VCs are Bankers | Why Big VCs Ruin Startups | Why Incentives in VC are Broken | Why American Dynamism is a Tool for VCs to Raise Money with Nick Chirls, Asylum Ventures

Lucas Swisher · Feb 23, 2026

Vertical SaaS remains a good business category but is not where a large fund should focus today

Large funds need the absolute mega outcomes from platform companies that generate disproportionate returns and actual liquidity; vertical software has produced multibillion-dollar exits but faces constrained TAM and AI risk

Scope: Only for large funds — people have made a lot of money in vertical software historically; Vertical SaaS businesses are still great businesses

27:35 20VC: Inside Coatue's $70BN Machine: Why Price Matters Least | Why Mega Markets are the Most Important | How to Assess Durability of Revenue and Margins in AI with Lucas Swisher

Harry Stebbings · Nov 10, 2025 · hedged

Tiger will do much better than the ecosystem anticipated, with many positions returning at least 1x plus a bit

Their positions in Scale and OpenAI plus the downside protection from the liquidation preferences they actually negotiated

Scope: asks whether he is being too optimistic

62:35 20VC: Benchmark's Newest General Partner Ev Randle on Why Margins Matter Less in AI | Why Mega Funds Will Not Produce Good Returns | OpenAI vs Anthropic: What Happens and Who Wins Coding | Investing Lessons from Peter Thiel and Mamoon Hamid

Everett Randle · Nov 10, 2025 · hedged

Tiger's 2021 strategy may prove to have been prudent all along, and the ecosystem judged Chase Coleman too harshly

They got very large stakes in Databricks, invested in OpenAI very early, hold large positions in companies that could compound another 5x, and benefit from liquidation preferences on the failures

Scope: won't be the best portfolio an LP ever got; conditional on Databricks reaching $400-500B and OpenAI reaching multiple trillions

62:57 20VC: Benchmark's Newest General Partner Ev Randle on Why Margins Matter Less in AI | Why Mega Funds Will Not Produce Good Returns | OpenAI vs Anthropic: What Happens and Who Wins Coding | Investing Lessons from Peter Thiel and Mamoon Hamid

Jason Lemkin · Aug 9, 2023

Mega funds are rational for sovereign-scale pools of capital: if a firm can generate alpha versus that pool's own low single-digit returns while absorbing $500m a year, chasing Gulf and sovereign money is not as silly as it sounds

Sovereign wealth funds earn single-digit returns and have so much capital that deployment capacity, not Nasdaq-beating alpha, is the binding constraint

Scope: alpha measured against the LP's own portfolio, not Nasdaq

59:12 20VC: The Memo: The State of the VC Market: Why Seed Funds Can't Invest in "Hot Startups" Anymore, Why Series A & B is Terrible, Why the IPO Market Will Explode in 2024 & Why VC DD is BS & Every VC Has More Fraud in their Portfolio with Jason Lemkin

Jason Lemkin · Aug 9, 2023 · hedged

Twitter's read on mega funds is wrong: multibillion dollar funds are products optimised for sovereign wealth capital, and if they can reliably return ~10% a year while absorbing huge amounts of capital they will keep raising multibillion dollar funds

Everything in VC that has been around a while is a product, and this product is priced against sovereign LP alternatives, not against top-decile venture returns

Scope: conditional on delivering ~10% annual returns reliably

60:31 20VC: The Memo: The State of the VC Market: Why Seed Funds Can't Invest in "Hot Startups" Anymore, Why Series A & B is Terrible, Why the IPO Market Will Explode in 2024 & Why VC DD is BS & Every VC Has More Fraud in their Portfolio with Jason Lemkin

Beezer Clarkson · Oct 18, 2023

Multibillion-dollar funds will retain a durable LP base because there is a class of LPs that must write very large checks

LPs are not in the same risk-taking business as GPs — they are trying to preserve capital — so if you need to write a $100-150M check and want some alpha without risking loss, large vehicles are a logical home

19:01 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Beezer Clarkson · Oct 18, 2023

An LP that has to write $100M checks structurally cannot access small funds without owning nearly the whole fund

Unless you're willing to be 100% of a fund, the check size simply doesn't fit

Scope: today's ~7% interest rate market complicates the cross-asset comparison

19:38 20VC: Are LPs Open For Business? What Does it Take to Raise a Fund Today? How Has What LPs Want to See in Fund Investments Changed? Why Do LP Incentive Mechanisms Need to Change? Which Funds Will be Hit Hardest with Beezer Clarkson @ Sapphire Partners

Gili Raanan · Mar 28, 2026

Mega funds with established tradition, textbook and guardrails will continue to do well and are worth investing in personally

The opportunity ahead is massive and real, and fast-growing companies need more cash than before, which justifies large fund sizes

12:28 Established tradition and guardrails let mega funds perform

Semil Shah · Nov 21, 2022

LPs will realize that much of their capital in the largest funds is stranded — stuck in companies without product-market fit or in funds too large to clear the hurdle

Capital either sits in a portfolio company that never found product market fit, or in a fund whose size makes it impossible to get over the return hurdle

36:06 Lp capital in mega funds is stranded in no pmf companies or below hurdle funds

David George · Dec 15, 2025

The idea that large venture funds cannot produce great returns is false

a16z's larger funds have outperformed their smaller ones with similar multiples of money; their best-performing fund ever is a $1B fund where Databricks returned 7x the fund and Coinbase has already DPI'd 5x; returns come down to how many winners you capture and how big they are

5:11 Large fund multiples match small funds in realized dpi

Michael Eisenberg · Feb 8, 2021

Capital concentration limits are a real handicap for large funds but much less of a problem for small funds

A small fund can still deliver outsized multiples on its fund size within those limits, whereas a $1.5B fund needs to own 30% of a company like Opendoor to get a multiple, so it must deploy as much capital as possible into winners

21:54 Capital concentration limits handicap large funds more than small funds

Jack Zhang · May 27, 2025

A $1.2BN sale to Stripe would have been a poor outcome for Sequoia

Sequoia had invested at an $800M cap only three months earlier, so they would have made less than 2x

69:03 Sub 2x multiple marks a poor outcome even for a large investor

Mike Maples · Jan 6, 2025

Large multistage funds raised money on 2020–2022 exit assumptions that will not recur for a long time, and will therefore be pressured to shrink their fund sizes — slowly and 'deliberately'

There is a lot of evidence that 2020–2022-style exits are not coming back soon, so the returns those fund sizes were predicated on won't materialize

58:00 Mega funds will shrink fund sizes as 2020 2022 exit assumptions fail to recur

Harry Stebbings · Jan 6, 2025 · hedged

Today's large fund sizes may simply be the new normal, since what seemed insane fifteen years ago — a $150M seed fund, or a trillion-dollar company — is now unremarkable

Norms about scale have repeatedly shifted: trillion-dollar companies once seemed absurd and now there are five or six

58:42 Todays large fund sizes are simply the new normal as scale norms keep shifting

Harry Stebbings · Jan 12, 2026 · hedged

The dollars-returned argument for large funds ignores the opportunity cost of capital — endowments can allocate to smaller funds, so large funds scale out of being the best risk-adjusted place for certain LPs

Endowment-scale LPs are able to write small checks into small funds, so the constraint Alex describes doesn't bind for them

10:51 Lp opportunity cost means large funds lose risk adjusted appeal

Alex Rampell · Jan 12, 2026

You cannot take it as given that a small fund will outperform a large fund, even though a small fund can mathematically produce a bigger multiple

Most of the best deals go to the best-known firms because founders choose their investors, so access matters more than fund math; e.g. Mickey Malka still gets the best fintech deals with a much bigger fund

11:40 Brand access to the best deals outweighs small fund multiple math

David Tisch · Feb 27, 2023

A fund is only 'too big' if it can't produce outlier returns; size itself isn't the test.

The job and obligation to LPs is producing outlier returns, which comes from funding companies with amazing outcomes — the math follows from that.

13:28 Fund size is only too big if it fails to produce outlier returns

Chris Dixon · Mar 27, 2024

A $4.5B crypto fund is not too large for the space

The total market cap of crypto assets is roughly $2.5 trillion, so the fund is a very small percentage of the market, and the charter allows investing in over-the-counter assets like Bitcoin and Ethereum in addition to venture and seed

52:01 Fund size should be judged relative to total addressable market cap not absolute dollars

Harry Stebbings · Dec 6, 2024

If you are writing billion-dollar checks, there are very few places where you can plausibly get a three to five times return

Check size that large sharply limits the universe of opportunities with meaningful multiple upside

57:05 Billion dollar check sizes sharply limit the universe of three to five x opportunities

David Frankel · Aug 8, 2026

Large funds have delivered very strong returns in the right vintages, but DPI performance for funds from 2020 onward is still unproven.

Thrive and a16z have had big funds that returned very well, though less so since 2020; outliers like being in SpaceX and OpenAI are rare air.

26:39 Big fund returns were real but post 2020 dpi is unproven

David Frankel · Aug 8, 2026

Mega platform funds will largely not deliver venture-grade multiples because they are optimized for the IRR their sovereign wealth fund LPs want, not for multiplying the fund

Their LPs are increasingly sovereign wealth funds and public investment corporations measuring IRR rather than fund multiples; endowments are now rounding errors for them

35:41 Sovereign lp irr optimization precludes venture grade multiples

Miles Dieffenbach · Aug 4, 2025

LPs should choose funds with the greatest margin of safety — funds where only $10-30BN of outcomes are needed to hit target returns rather than $800BN — which makes real alpha hard to imagine from very large multi-stage funds

Applying the Buffett/Graham margin-of-safety concept: he would rather underwrite a billion-dollar fund with 10% entry ownership needing tens of billions in outcomes than a fund requiring an entire year's worth of global exits

40:37 Margin of safety favors funds needing smaller outcomes

Jason Lemkin · Aug 11, 2023 · hedged

When the IPO engine revives, SaaS companies will again absorb roughly $400M of capital each before going public, which will reflate the mega funds.

In 2019 the average SaaS company that went public had absorbed just under $400M pre-IPO; big funds are designed around putting a couple hundred million into a single such company.

46:57 Saas companies will again absorb 400m pre ipo reflating mega fund economics

Harry Stebbings · Oct 24, 2022

Large multi-stage funds like Tiger face a structural challenge because they have too many portfolio companies demanding follow-on capital at scale

Too many hungry mouths to feed

45:17 Large funds face structural strain from too many portfolio companies needing follow on capital