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Odin retweeted
According to a study from Strebulaev and Jackson, only ~3% of mid/senior-level VC will make 10+ successful investments in their career.
Persistence is poor, the market is volatile, and success is inherently unpredictable. Clearly, it's a challenging strategy to sell LPs, if managers are honest about the challenges.
Alternatively, they can just lie.
Instead of dealing honestly with the uncertainty, they can tell LPs that it's obvious who the winners are and the only real constraint is "access" — an idea which conveniently favours incumbents.
It's a simple truth that if a system can be exploited, behaviour will gradually drift toward exploitation. In this case, that vulnerability is the weak GP:LP interface which is dominated by simple narratives.
This alternative "access" strategy is perfectly optimised for the incentives of institutional LPs: All the confidence of brand-name funds, binders of attractive logos, allocation at scale, and zero career-risk.
Unfortunately, the end-product is largely artificial, and it cannot interface well with real, functioning markets — like the public markets or M&A to public companies with reporting requirements (thus falling exits).
This shift in venture capital is effectively captured by Gresham's Law, which describes how bad money tends to push out good money:
"When two forms of the same thing circulate and one is easier to counterfeit, dilute, or exploit, the lower-quality version tends to dominate. The principle is frequently extended beyond currency to any system in which an exploitable substitute can displace a higher-quality one."
Read the full article: blog.joinodin.com/p/the-blac…
Odin retweeted
These thought pieces have no right to be as good as they are. Agree or disagree with the point they are making...
Founders should read this to understand more about the venture market. Many of you depend on it.
LPs and family offices should read it for some more insight into the game they are playing (and who's).
It's not long.
👏🏻 @credistick as per bloody usual 🙄
blog.joinodin.com/p/the-blac…
Odin retweeted
Investing in things that are “illegible to capital” may cost you the ability to raise your next fund. Takes balls. Safer to invest in consensus even if these aren’t the highest potential opportunities. angels are best positioned for early stage. own cash = not constrained
in theory, there are a ton of venture funds that write inception stage checks into a bunch of ambitious companies with very minimal overlap (i.e. taking idiosyncratic risk)
in practice, there are a ton of small venture funds that are trying to stay in business and make investment decisions on the basis of what they believe other a lot of investors like (esp megafunds), as this is the most reliable way to produce paper markups (and hopefully soon secondaries for liquidity, that other VCs or FOs will buy from them) to continue to persuade LPs to invest in their funds. This leads into more money going into less ideas and less companies (the numbers support this btw) i.e. it effectively orientates the market to invest in things megafunds like, who explicitly don’t take market risk at early-stage (which is the opposite of the idiosyncratic risk early-stage small funds ought to be taking)
(tangentially, many of best positions, both in terms of $$ raised and real traction, went through periods where no one wanted to give them money, so not really a “them problem”)
Odin retweeted
Robots Everywhere! — within ten to twelve years.
That’s @nunzi46's bet as Managing Partner of @CapitalAlso.
AI is the big breakthrough in digital labour productivity and robotics is the breakthrough on the physical side.
He expects knowledge work to commoditise further and more equity value to go to the companies that let AI interact with the physical world.
Full episode of Going Solo out now:
linktr.ee/goingsolowithodin
Odin retweeted
If you believe that many great startups begin on college campuses, you might wonder if college students are best placed to spot them.
Thus began the great experiment of @DormRoomFund, in 2012, led by @joshk.
The success of the program involved a high-trust alumni network, a cosntant stream of fresh perspectives, and a foundation of @firstround's investing wisdom.
In our conversation, @nunzi46 talked about his time at Dorm Room Fund in 2016–2018, and how the experience helped him think about herd behaviour and biases in venture capital.
Other alumni of the program include:
@mntruell - Cursor
@WillManidis - Financier
@aleximm - a16z
@ClaireSmilow - BoxGroup
@TaliaGold - Bessemer
@shawnxu - Lowercarbon
Dorm Room Fund continues today, as an independent spinout led by @themollette, across 30 college campuses in Canada and the US, with about 60 students per year.
First Round remains an LP.
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the founder of @CapitalAlso, a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowithodin
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
Odin retweeted
I wonder how much of VC's disillusion about public markets is a product of the fact that so many went out in 2020–2022 and got slaughtered.
...which was a fairly specific product of that era and the capital environment.
In general, across history, the IPO has been the favoured exit opportunity and the driver of the largest returns by a significant margin.
Importantly, it also allows a company to stay in "founder mode" rather than just being sold-off to an incumbent — a feature that any "founder friendly" VC should value.
Odin retweeted
A curious finding, as the dataset is extended to cover more M&A transactions:
While the methodology makes a real effort to control for scale, the focus on IPOs is likely to preference larger funds that require larger exits to drive DPI.
Despite that, debut funds and funds up to $25M are both significantly overrepresented in the top 10%.
The abruptness with which that Fund I edge falls away illustrates how bad most LPs are at deciding which managers will get to raise a Fund II.
Research indicates this is likely down to focusing on incremental (and potentially frothy) marks rather than making rational (bust costly) qualitative judgements about the underlying investments.
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @pelion_vp
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-…
Odin retweeted
“Robots everywhere!”
More on that and other hot takes in my chat with @credistick and @JoinOdin 👇
It’s been 7 years since starting @CapitalAlso with @WillBruey and @Cfsocc, but we’re still having just as much fun as when we started
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the founder of @CapitalAlso, a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowithodin
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
Odin retweeted
A great anecdote from this conversation is the story of @bridgitmendler and @NorthwoodSpace, and how it relates to the art of origination in VC.
@nunzi46 was the earliest investor in Northwood, and helped later investors understand the scope of the problem space, including getting input from engineers at @VardaSpace and @SpaceX.
The ability to recognise outlier opportunities and pull them into the venture-backed universe is why smaller firms like @CapitalAlso play a critical role as VC's discovery layer.
More on this topic in my article for @JoinOdin:
blog.joinodin.com/p/the-orig…
Mike Annunziata (@nunzi46) spent most of a decade on the LP side before making investments of his own.
He began at the Soros family office before moving on to the @Cornell endowment, where he learned how an institutional manager sets the bar for success.
Today, Mike is the founder of @CapitalAlso, a boutique hard tech fund which grew out of his angel investing alongside @WillBruey. Their early commitments include companies like @RadiantNuclear and @VardaSpace — where Bruey is now CEO.
In this conversation, he describes why @CapitalAlso answers around ten questions about enterprise value before it looks at technical risk, and why fundraising works like selling a luxury good.
He and @credistick get into processes for controlling groupthink, his formative experience with @DormRoomFund, and the introduction that helped @foundersfund understand (and invest in) portfolio company @NorthwoodSpace.
They finish on Mike’s advice to emerging managers to get into business early, and why his vision for the next decade is a Golden Age of Robotics.
Going Solo is Odin’s series talking to small and emerging managers in venture capital. Subscribe to catch future episodes:
linktr.ee/goingsolowithodin
0:00 Intro to Mike and Also Capital
1:24 From the Soros family office to the Cornell endowment
5:24 Where the bar sits for a new fund
6:00 Clearing an endowment's opportunity cost
7:31 Learning seed investing at Dorm Room Fund
11:43 Controlling groupthink in investment decisions
13:28 Why the best deals are contentious
14:22 Stories from Dorm Room Fund
16:28 Varda and the origins of Also Capital
20:07 Diligencing deep tech as a non-engineer
23:15 Using AI in technical diligence
25:34 Raising Fund 1 and Fund 2
30:34 Origination: Atlas and Northwood Space
35:48 The best advice for emerging managers
38:26 What the world looks like in 10 years
Odin retweeted
@JoinOdin's Top 50 VC firms ranking: portfolio IPOs since 2014, long-term value per dollar deployed, primary checks only, and a penalty for one-hit wonders.
Check out the full Top 50 report, which breaks down methodology, data sources, robustness checks, top firms, top funds, and top companies:
Get it here: top50.joinodin.com
Odin retweeted
The top VC firms by value created per dollar at risk.
1️⃣ Sutter Hill: 11.6x (@Snowflake)
2️⃣ @foundersfund: 11.2x (@SpaceX)
3️⃣ @iaventures: 10.0x (@digitalocean)
4️⃣ Gigafund: 9.1x (@SpaceX)
5️⃣ Lowercase: 8.8x (@Uber)
The median across the 147 ranked firms: 1.0x.
Founders Fund created $95.2bn. Sutter Hill got its 11.6x on $1.33bn at risk.
Source: @JoinOdin.
Who wins in VC: the biggest funds, or the sharpest pickers?
Odin retweeted
Good neighborhood
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @pelion_vp
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-…
Odin retweeted
Roger the 🐐.
Not only building a top 3 firm, but also planning succession perfectly & then swinging again on a more focused thesis @gamechangersvc
Proud to be a co-investor with @infoarbitrage & team.
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @pelion_vp
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-…
Odin retweeted
The @JoinOdin Top 50 uses a fairly contrarian methodology, in that it does not simply reward AUM.
What matters is a firms exposure to the value created by generational companies, relative to managed capital.
So, the list features a number of firms who aren’t ranked as frequently as they likely deserve. For example:
#15 Founder Collective — @fcollective
#17 Granite Ventures — @GraniteVentures
#22 Romulus Capital — @RomulusCap
#24 Gemini Israel — @GeminiVC
#27 Amplify Partners — @AmplifyPartners
#30 Highway 12 Ventures — @hwy12
#33 Red Swan — @redswanventures
#37 Section 32 — @S32_VC
#38 Flybridge — @flybridge
#41 Altos Ventures — @altosvc
#42 JVP — @JVPVC
#44 Celesta Capital — @CelestaCapital
#46 Madrona — @MadronaVentures
#47 Cathay Innovation — @Cathayinnov
#48 Revel Partners — @RevelPartners
Check out the full report: top50.joinodin.com
If there was an "on-base percentage" for venture capital, what would it look like?
It might involve looking at a firm's exposure to the world's most consequential tech companies.
Not just an arbitrary mark at an exit, where they may or may not have taken liquidity, but the subsequent compounding of those investments over time; using public markets as a sorting mechanism for quality.
For this ranking, we started with venture's greatest success stories, and worked backwards to find out who invested, when, and what fraction of their managed funds the investment represented.
The resulting list reflects the long-term performance of each firm's most successful portfolio companies, relative to capital deployed.
Other interesting features:
• Two firms in the top 10 were founded by the Draper dynasty (@shv and @DFJvc).
• Luke Nosek is a co-founder of two of the firms in the top 10 (@foundersfund and @gigafund).
• Founders Fund created more value than the bottom 22 firms put together, at $95.2B, primarily thanks to @SpaceX and @PalantirTech.
• If you rank by value alone, the top five firms are: Founders Fund ($95.2B), @sequoia ($82.6B), @Accel ($56.0B), @BessemerVP ($48.4B), @NEA ($33.0B).
• Seven out of the ten best performing funds were technically emerging managers, and four were debut funds.
(@iaventures I, @FirstMarkCap I, @Techstars Bullet Time I, @Lowercase I, Founders Fund II, @firstround II, Founders Fund III)
The top 10 firms are:
1 — Sutter Hill Ventures, founded by Paul M. Wythes and Bill Draper (William H. Draper III), in 1964
2 — Founders Fund, founded by Peter Thiel (@peterthiel), Ken Howery (@KenHowery), and Luke Nosek (@LukeNosek), in 2005
3 — IA Ventures, founded by Roger Ehrenberg (@infoarbitrage), in 2010
4 — Gigafund, founded by Luke Nosek (@LukeNosek) and Stephen Oskoui (@oskoui), in 2017
5 — Lowercase Capital, founded by Chris Sacca (@sacca), in 2010
6 — Pelion Venture Partners, founded by Jim Dreyfous (as Utah Ventures / UV Partners), in 1986
7 — Union Square Ventures, founded by Fred Wilson (@fredwilson) and Brad Burnham (@BradUSV), in 2003
8 — Benchmark, founded by Bob Kagle, Bruce Dunlevie, Andy Rachleff, Kevin Harvey, and Val Vaden, in 1995
9 — Bessemer Venture Partners, founded by Henry Phipps Jr. (as Bessemer Securities; VC arm formalized later), in 1911
10 — Draper Fisher Jurvetson, founded by Tim Draper (@TimDraper), in 1985
Read the write-up here:
blog.joinodin.com/p/the-top-…
Read more about the methodology and get the full report here:
top50.joinodin.com/
Odin retweeted
this is a way better analysis than looking purely at dollars returned
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @pelion_vp
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-…
Odin retweeted
If there was an "on-base percentage" for venture capital, what would it look like?
It might involve looking at a firm's exposure to the world's most consequential tech companies.
Not just an arbitrary mark at an exit, where they may or may not have taken liquidity, but the subsequent compounding of those investments over time; using public markets as a sorting mechanism for quality.
For this ranking, we started with venture's greatest success stories, and worked backwards to find out who invested, when, and what fraction of their managed funds the investment represented.
The resulting list reflects the long-term performance of each firm's most successful portfolio companies, relative to capital deployed.
Other interesting features:
• Two firms in the top 10 were founded by the Draper dynasty (@shv and @DFJvc).
• Luke Nosek is a co-founder of two of the firms in the top 10 (@foundersfund and @gigafund).
• Founders Fund created more value than the bottom 22 firms put together, at $95.2B, primarily thanks to @SpaceX and @PalantirTech.
• If you rank by value alone, the top five firms are: Founders Fund ($95.2B), @sequoia ($82.6B), @Accel ($56.0B), @BessemerVP ($48.4B), @NEA ($33.0B).
• Seven out of the ten best performing funds were technically emerging managers, and four were debut funds.
(@iaventures I, @FirstMarkCap I, @Techstars Bullet Time I, @Lowercase I, Founders Fund II, @firstround II, Founders Fund III)
The top 10 firms are:
1 — Sutter Hill Ventures, founded by Paul M. Wythes and Bill Draper (William H. Draper III), in 1964
2 — Founders Fund, founded by Peter Thiel (@peterthiel), Ken Howery (@KenHowery), and Luke Nosek (@LukeNosek), in 2005
3 — IA Ventures, founded by Roger Ehrenberg (@infoarbitrage), in 2010
4 — Gigafund, founded by Luke Nosek (@LukeNosek) and Stephen Oskoui (@oskoui), in 2017
5 — Lowercase Capital, founded by Chris Sacca (@sacca), in 2010
6 — Pelion Venture Partners, founded by Jim Dreyfous (as Utah Ventures / UV Partners), in 1986
7 — Union Square Ventures, founded by Fred Wilson (@fredwilson) and Brad Burnham (@BradUSV), in 2003
8 — Benchmark, founded by Bob Kagle, Bruce Dunlevie, Andy Rachleff, Kevin Harvey, and Val Vaden, in 1995
9 — Bessemer Venture Partners, founded by Henry Phipps Jr. (as Bessemer Securities; VC arm formalized later), in 1911
10 — Draper Fisher Jurvetson, founded by Tim Draper (@TimDraper), in 1985
Read the write-up here:
blog.joinodin.com/p/the-top-…
Read more about the methodology and get the full report here:
top50.joinodin.com/
Odin retweeted
Very proud of what we built at @iaventures.
Very early conviction, Deep founder alignment. Long time horizon. Generational returns.
My partners @beyroutey and @bradgillespie continue to do the work at IA Ventures.
My partners @ssokol94 @mattgjfield and @ethanehrenberg and I are applying similar principles to investing at the intersection of live experiences and AI at @gamechangersvc.
Just you watch…
The Top 50 VC Firms
Ranked by the long-term value created by primary investments per dollar at risk.
The top 10:
1. @shv
2. @foundersfund
3. @iaventures
4. @gigafund
5. @Lowercase
6. @pelion_vp
7. @usv
8. @benchmark
9. @BessemerVP
10. @DFJvc
Read more: blog.joinodin.com/p/the-top-…
Odin retweeted
Towards the end of ZIRP it became increasingly common to allow early selling after an IPO if the share price was above a certain threshold at the first earnings.
Essentially, if the market was still hot, you had permission to sell before the lockup period ended.
From 2016 to 2021 this clause went from appearing in 0% in this sample of US VC-backed IPOs, to 83%. Today it lingers in about 80% of IPOs.
Aaccording to data from Renaissance Capital, looking at the IPO market as a whole, early lockup provisions rose from 9% in 2020 to 25% in 2021 — which was heavily concentrated in tech IPOs.
The slight delay in early selling in 2021, and much longer time to >50% sold or distributed, relates to the market turning at the end of the year, which is visible in the split in activity from early 2021 to late 2021.
It's hard not to construe this as VCs looking for an opportunity to pump and dump shares into a frothy market — the same investors who often voice concern about public markets being myopic / claim going public has become "more challenging".
Perhaps public markets are tired of being left holding the bag?
Renaissance Capital (@IPOtweet) research:
renaissancecapital.com/IPO-C…
For an excellent read on IPO exits, check out this paper form @Yifat_ar, @Prof_Broughman, and @elizpollman: papers.ssrn.com/sol3/papers.…
Why don't VCs hold their winners after IPO as often anymore?
Likely because VC-backed IPOs perform significantly worse than in previous eras, as they absorb more capital and grow more fragile ahead of listing.
Results from the 50 largest VC-backed IPOs, measured across three windows (Up to Oct 2 in the end year) show that the most recent group (2014–2026) has by far the worst aggregate performance — and even that is propped up by just three companies.
1994–2006
Mean: −2
Median: −36
Beat the index: 14 of 50
Mean without top 3: −21
2004–2016
Mean +88
Median: −28
Beat the index: 22 of 50
Mean without top 3: −6
2014–2026
Mean: −12
Median: −90
Beat the index: 8 of 50
Mean without top 3: −121
Data on VCs selling more quickly post IPO:
papers.ssrn.com/sol3/papers.…
Odin retweeted
If you're a VC ranking connoisseur, I suggest staying tuned to blog.joinodin.com this weekend.
🤖 Made with AI
Odin retweeted
Fewer opportunities + more capital = enmeshment
Per round, and per dollar, the large venture firms are increasingly similar in their coverage.
They converge on the same companies as funding rounds progress, herding in more capital to drive prices up further while adding logos to their LP deck.
Unfortunately, the underlying businesses do not become significantly stronger and price quickly accelerates far beyond value.
Thanks to the good folks at @harmonic_ai for letting me analyse their data for this. More to come.
For a long time, concentration in VC remained fairly stable, as capital inflows were broadly distributed.
This changed in the last five years as exits dried up and the "illiquidity ratchet" kicked in — only the largest and least sensitive LPs have sustained allocation, to the largest firms.
(i.e. Smaller LPs need distributions to recycle into new comittments, and therefore rely on the market acting rationally to produce exits. On the other hand, large firms produce irrational behaviour.)
The HHI (Herfindahl-Hirschman Index) is a standard measure of market concentration. It is the sum of the squared market share of each participant.
A score of >1,800 designates a highly concentrated industry, trending toward oligopoly, which receives extra antitrust scrutiny on M&A.
This must also factor the "relationship-based" of venture capital, where firms are not independent actors operating in competition with each other.
So, it's possible to calculate a "similarity-adjusted" score which considers the level of enmeshment — how frequently the portfolio companies of a particular firm share the same set of investors.
Bu this measure, venture capital has clearly reached a point where concentration is problematic, surpassing the 2023 antitrust threshold and even the higher original threshold from 2010.
As the market becomes more concentrated, this manifests as conesensus investing and increasingly inflated prices for mediocre assets.
The eventual "buyer" is yet more downstream private capital, each getting marked up by the next. There's no bagholder if the bag keeps getting passed around.
It's unclear how this is corrected without some form of intervention.
