Can venture firms adapt their investment strategy quickly, or are they structurally constrained by LP expectations and fund cycles?

Nabeel Hyatt · Apr 4, 2025

Most venture firms are not adapting as they need to, and the evolution cycle in VC is extremely slow

Firms can't act unilaterally — change loops back through LPs, requiring a new fund raised against a new mandate and potentially turning over most of the team

7:22 Evolution cycle is slow because lps require a new mandate

Harry Stebbings · Apr 4, 2025

Doing what is right for a firm strategically can be the wrong thing for LP messaging, because drastic reshaping reads as instability

LPs find instability disconcerting and it may take three years to prove the transition worked, by which point they will have churned

7:45 Strategic reshaping reads as instability to lps

Nabeel Hyatt · Apr 4, 2025

LPs want stability at a time of rapid change, which is the wrong market fit; and the person making the decision at such a firm is likely someone who rode the B2B SaaS markups of four years ago into a leadership position

The decision-maker at a firm today is typically whoever rode the SaaS markups of four years ago into leadership

8:08 Lps want stability during rapid change a market mismatch

Jake Gibson · Jul 14, 2023

LP-GP tension stems from GPs deviating from their stated strategy; if you do what you said you would do, LPs are happy

A lot of GPs went a little crazy in 2021 and LPs were unhappy about it

37:33 Sticking to stated strategy avoids lp gp tension deviation causes it