Mega-funds can justify paying "stupid prices" at the seed stage because they aren't underwriting a seed-stage return. Instead, they are buying an option on the next, much larger round where they'll deploy real capital. This allows them to outbid smaller funds who need to generate returns from the initial investment itself.

Many sub-$500M venture funds are over-invested and under-reserved. While venture capitalists like Josh Wolfe predict a 50% failure rate for these "minnows," the Limited Partners (LPs) who fund them are even more bearish, believing the involuntary extinction rate will be closer to 90%.

VCs who spin out of tech giants like Airbnb have a powerful initial network. However, this edge typically expires after their third fund as original colleagues move on, forcing them to build a more durable, independent network to source deals.

Top-tier VC firms like Andreessen Horowitz are evolving beyond traditional venture investing. They are mirroring the playbook of private equity giants like Blackstone by acquiring other asset managers, expanding into new verticals like wealth management, and preparing to go public, prioritizing AUM growth.

The leadership change at Sequoia, arguably the world's top venture firm, is a strong indicator of the intense pressure the entire VC industry faces. It reflects a fear of falling behind in the AI race and the brutal reality that even the best are struggling to adapt to the new competitive landscape.

Seed-focused funds have a powerful, non-obvious advantage over multi-stage giants: incentive alignment. A seed fund's goal is to maximize the next round's valuation for the founder. A multi-stage firm, hoping to lead the next round themselves, is implicitly motivated to keep that valuation lower, creating a conflict of interest.

The increased volatility and shorter defensibility windows in the AI era challenge traditional VC portfolio construction. The logical response to this heightened risk is greater diversification. This implies that early-stage funds may need to be larger to support more investments or write smaller checks into more companies.

The high-velocity investment model pioneered by Tiger Global didn't disappear. Instead, its core strategy—prioritizing capital velocity over returns—was adopted by 6-8 other major firms. The venture landscape has bifurcated, with many top-tier brands moving toward this model, leaving a void in the craft-focused, high-touch space.

The career arcs of venture and buyout investors differ starkly. VCs rely on networks relevant to young founders, leading some to retire by 45 as connections become stale. In contrast, buyout investing is an apprenticeship business where age and experience are increasingly valued.