Has growth in venture fund sizes over the decades reduced how hands-on investors are with their portfolio companies?

Michael Eisenberg · Feb 8, 2021

If you want to be a company builder alongside founders rather than merely an investor, you have to keep your fund small and stage-focused

Your most precious commodity is time, not money; being shoulder to shoulder with founders requires time, and running a huge multi-stage fund inevitably turns you into an investor over time

Scope: a personal choice; exceptions exist, e.g. Keith Rabois taking board seats at giant funds

22:56 20VC: Aleph's Michael Eisenberg on Why Generalists Over Specialists, Why Boutique Smaller Firms Over Multi-Stage Firms, Portfolio Construction Theory, Capital Concentration Limits and How To Think Through Reserve Allocations with Market Cycles in Mind?

Mark Goldberg · Oct 25, 2024 · hedged

Running a venture organization of hundreds of people across multiple countries imposes a tax of people management and administrative work, when the most important use of time is being with early-stage founders

Time spent on management and admin is time not spent with founders

Scope: applies to the largest multinational funds

6:34 20VC: The Truth About Multi-Stage Firms; Why Portfolio Services are for VCs not Founders | Why Politics is Rife & Decision-Making is Broken in Large VCs | Why Reserves are Bad for Founders & How Boutique Firms Will Win with Mark Goldberg @ Chemistry

Hussein Kanji · Jan 20, 2025

Venture in the 1960s-90s was far more hands-on than today, and fund size growth is what killed that work ethic.

Oral histories of the early venture capitalists show a different job — Dave Marquardt spent a year cleaning up Microsoft's partnership structure before being invited in and ended up owning 10%; today the economics push you to raise a $5-7B fund and deploy $50M at a time rather than do that work for a small position.

29:10 20VC: Why Large Seed Rounds Increase the Chances of Success | When to Sell in Venture | Why Multi-Stage Firms Do Not Do The Work | Is Europe Totally F****** and Why AI Means London Can Compete with the US with Hussein Kanji

Chris Paik · May 8, 2023

Venture is not an asset class that is meant to scale; it requires fewer, deeper, hands-on relationships and the investor the founder shook hands with must be the one who shows up

You can't pay someone else to go to your kid's soccer games — the implicit contract with a founder is that the person joining the board is the person spending time with them

10:01 Venture requires personal continuity and deep relationships so it cannot scale

Chris Paik · May 8, 2023

Long, patient investment periods (Pace's fund one deployed over three and a half years) solve the bandwidth problem for high-touch investors, unlike firms that deploy a fund and raise another in the same calendar year

Waiting for the right pitch spreads out the work, and as companies exit or go under, bandwidth constraints roll off

13:14 Long patient deployment periods preserve bandwidth for hands on support

Mark Goldberg · Oct 25, 2024 · hedged

Fund size itself doesn't drive founder alignment; what matters is the purview of the fund's responsibilities and having a stage focus

Growth of additional products and portfolio size erodes an investor's focus

5:26 Stage focus and scope not fund size drives hands on attention

Mark Goldberg · Oct 25, 2024

Portfolio load inevitably compounds the longer you are in market, but cutting the bureaucracy of a large institution still gives an investor superpowers in how they spend their time

Portfolios grow like an iceberg, especially when liquidity is scarce; bureaucracy is the removable part of the time drain

6:13 Bureaucracy not portfolio load is the removable driver of reduced hands on time