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Evolution of Seed Funds in Venture Capital
The venture capital landscape has evolved significantly over the years, with a growing number of seed funds and increased focus on venture allocation. The industry has witnessed a surge in the number of firms, funds, and dollars, making it more competitive and efficient. Investors are now receiving cold emails seeking venture exposure due to underperformance in other areas. Despite the vast number of emerging managers, some investors choose to focus on funds above a certain size threshold to ensure high ownership and maximize returns. An analysis reveals that top firms can consistently produce multiple unicorns in each fund cycle, leading to significant returns, while smaller seed funds typically achieve one to two unicorns per cycle. This distinction in fund size impacts the overall success and sustainability of venture capital investments.