AI, LPs, and the New Era of Venture | Lu Zhang (Founder & Managing Partner, Fusion Fund)

Lu Zhang Managing Partner of Fusion Fund joins Peter this week to talk about what it takes to scale an early-stage venture firm—and back game-changing companies—at the speed of today’s AI boom.

Fresh off her oversubscribed $190M Fund IV raise, Lu talks about what most managers get wrong when pitching institutional LPs, what it takes to stand out in a bubble-driven market, and why true founder support means going way beyond capital. She opens up about her unique CXO and Super Founder networks, team-based investing philosophy, and how Fusion unlocks early commercial contracts—even from highly regulated enterprise buyers.

If you’re looking to raise a fund, raise a round, or just understand how great institutional investors think, this is a must-listen.

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Chapters:
01:15 – Fund IV success: fusion in a $190M market moment
02:14 – Why repeat founders are jumping back in
03:32 – Different edges: repeat vs. first-time AI founders
04:46 – Are we in a valuation bubble?
07:10 – Fusion’s advice-first approach to early-stage rounds
08:19 – CXO network as a go-to-market advantage
09:44 – Why “revenue is the best capital”
10:14 – Building founder loyalty through value creation
11:33 – Handling tough decisions: shutdowns, M&A, and alignment
14:38 – Distribution vs. recycling: how Fusion thinks
15:15 – Fund structuring and reserving for multiple follow-ons
17:05 – Matching long-term firm vision with scaling founder support
18:12 – Working across sectors with deep research and reports
19:31 – Beyond Silicon Valley: geopolitical signals + timing
20:05 – What CXOs actually want from AI startups
21:29 – Edge compute, vertical models & AI infrastructure
22:24 – Enterprise readiness and compliance bottlenecks
23:10 – The true cost of AI: what founders overlook
24:18 – Portfolio growth stats: 20x revenue in one year
25:04 – When small teams scale to $100M+
27:15 – How to break into regulated markets with AI
28:25 – Complying with data regulations by design
29:12 – The upside of regulation-readiness for AI adoption
30:18 – Foundation models & new healthcare openness
30:57 – M&A momentum inside Fusion’s most recent exits
32:14 – Fund IV hard cap decisions & LP allocation dynamics
34:04 – M&A vs. IPO: timelines, outcomes & premiums
35:07 – From angels to institutions: how Fusion’s LP base evolved
36:01 – Building LP community with intention
36:56 – Graduation moment: from emerging manager to fund IV
37:47 – Why large LPs are warming to small fund strategies
38:44 – Growing with consistency: keeping method > trend
39:42 – The LP metric that matters: revenue at the portfolio level
40:43 – Why clean marks and real revenue matter so much now
41:17 – Has co-investor behavior changed post-2021?
42:12 – Why Fusion’s map of investors is still highly consistent
42:58 – Lightning round: sectors, geographies & support
43:03 – Sector Lu’s most excited about? Healthcare & space

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