Do the largest venture funds optimize for capital deployment velocity rather than for returns?

Jason Lemkin · May 6, 2022

Deploying a multi-billion dollar fund in a single year requires a velocity that makes it impossible for investors to care much about any individual company

At that pace an investor has done 40 investments and sits on 20 boards; a $20M entry position is too small to command attention and there is simply no time

Scope: applies to multi-billion dollar funds raising every twelve months

31:42 20VC: Why the Traditional Seed Fund Model No Longer Works, Why Multi-Stage Funds Investing at Seed Bring Signaling Risk but also Less Pressure, The One Criteria All Potential Sales Hires Need to Have and The Clear Signs of 10x Sales Hires with Jason Lemki

Harry Stebbings · Jan 10, 2024

Advising founders to turn down inflated valuations is unrealistic because large funds are in a deployment game and will keep paying up

Mega funds with a billion to two billion to deploy know more LP money is coming because they are top brands, so they do deals they themselves consider bad

21:43 20VC: Did Figma Kill M&A Markets in 2024, The Three Biggest Mistakes Made in Growth Investing, The Three Requirements Companies Need to Go Public in 2024 with Ed Sim and Jamin Ball

Harry Stebbings · Apr 4, 2025

It is very difficult to win great companies when you optimize for fund performance and your competitor optimizes for deployment

He has lost two deals in twenty-four months where the competitor trebled the price and bought common stock — free money the founder should rationally take

16:24 20VC: Why To Win in AI, Investors Need to Change Their Approach | Why VC is Run by Principals and Associates and is a Broken System | The Bull Case for Anthropic & Whether Deepseek Changes Their Strategy with Nabeel Hyatt @ Spark Capital

Harry Stebbings · Aug 4, 2025

Venture fund economics is a game of levers that too few people recognize: a manager can run a smaller fund but deploy it faster to accumulate fees and AUM

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Everett Randle · Nov 10, 2025

Capital velocity, not returns, is the north star of the mega-funds — as their own junior investors would confirm

the people inside those firms — principals, junior partners, associates — would tell you deployment is what the firm optimizes for

Scope: about the largest multi-stage firms

0:00 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

Six to eight firms now run investment velocity as their north star, so the Tiger model proliferated even after Tiger itself faltered, while essentially no tier-one brand has moved toward the high-touch Benchmark end of the spectrum

Observing firm behavior over the last four years — Thrive and Founders Fund doing concentrated large investments, mega funds like Lightspeed and General Catalyst deploying at scale — all flavors of velocity as north star; the emptiness of the other pole is why he was confident joining Benchmark

Scope: these firms run different flavors of the strategy

56:04 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

At the mega funds, capital velocity is the de facto north star regardless of what firm leadership says, because getting money out the door is how junior investors get promoted

The test is to interview the principals, junior partners and associates at those firms — the people actually doing investments feel the pressure to deploy, and that is their only path up the organization

Scope: applies to the actual mega funds rather than to Thrive

58:27 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

Michael Eisenberg · Dec 6, 2021

Rapid capital deployment is not the real game in venture; the game is finding great founders, taking large ownership, and accelerating companies over time

Venture is about relationships, networks and bringing management to portfolio companies, which is not outsourceable and is inherently time-limited, so slower deployment optimizes for reputation and longevity

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Sarah Tavel · May 6, 2024

An investment model of one or two new commitments per partner per year with no delegation is superior to firms where investing becomes a capital deployment game

A very high bar for yes means the full partnership commits behind each company and no part of the job is delegated to a team, which forces focus on making those investments big

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Johannes Reck · Jun 23, 2025

The '$500M in thirty minutes' image of SoftBank did not apply to their round; the marketplace team ran a deep, metrics-driven growth equity diligence process

That San Francisco marketplace group, which also backed DoorDash, behaved like traditional growth equity investors, and Masa was only one meeting along the way

Scope: specific to SoftBank's marketplace investments team

42:25 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Johannes Reck · Jun 23, 2025

Masayoshi Son is a genuinely capable financial investor, contrary to the headlines portraying him as reckless, and is more financially oriented on marketplace deals than on deep tech

In their meeting he went surprisingly deep on the P&L, valuation and long-term profitability, and was good at it

Scope: based on one hour-long meeting; the deep-tech comparison is his impression

43:07 20VC: The Wild Story Raising $450M From Masa and Softbank | Why My Biggest Mistakes Came From Listening to VCs | Why 100 VCs Turned Us Down | Why European Founders Are Tougher Than US Founders with Johannes Reck, GetYourGuide

Harry Stebbings · Nov 10, 2025 · hedged

Mega funds like Lightspeed and General Catalyst are solving for large check sizes rather than investment velocity, and Thrive is not running velocity as its north star either

They need to deploy $500M in some cases, which forces them into mega companies — a different constraint from Tiger's velocity strategy

58:05 Mega funds solve for check size not velocity

Everett Randle · Nov 10, 2025

Working at a mega fund is a worse job than it looks because junior investors get only a small sliver of market coverage and must force deals to get promoted

With 50 investors, the best companies and founders are already claimed by senior partners, so a new partner is left as point person on ~30 decent companies and needs to convert two into investments to earn tenure — optimizing a local maximum rather than doing only the very best deals

64:34 Thin coverage forces junior partners to manufacture deals for tenure

Miles Dieffenbach · Aug 4, 2025

Time diversification matters a great deal, and what should govern an LP's reaction to deployment pace is whether the GP did what they said they would do

The LP underwrote a stated investment period; a two-year fund coming back in two years is fine, but a three-to-four-year fund coming back in two years warrants questions about why

53:25 Judge deployment pace against stated investment period not absolute speed