Experience shows that companies below a $50 million revenue threshold typically lack the necessary systems, processes, and people to support a significant transformation. This creates a bright-line rule for Speyside: go small for bolt-ons, but not for platform companies that require a turnaround, as the risk-weighted returns are unfavorable.

Even with big wins, a venture portfolio can fail if not constructed properly. The relative size of your investments is often more critical than picking individual winners, as correctly sized successful investments must be large enough to overcome the inevitable losers in the portfolio.

As venture capital firms scale to manage billions, their business model shifts from the 'artisan craft' of early-stage investing to an industrial process of asset gathering. This makes it difficult to focus on small, early opportunities and will likely result in IRRs that are no better than the industry average.

Acknowledging venture capital's power-law returns makes winner-picking nearly impossible. Vested's quantitative model doesn't try. Instead, it identifies the top quintile of all startups to create a high-potential "pond." The strategy is then to achieve broad diversification within this pre-qualified group, ensuring they capture the eventual outliers.

While industry-specific roll-ups are common, TeamShares maintains a deliberately diversified acquisition strategy. This protects them from valuation bubbles that can inflate multiples in a hot sector, such as when HVAC companies bizarrely became an "AI play" and started trading at 12x EBITDA. They prefer to avoid these single-industry whims.

TeamShares initially hired young, smart generalists from consulting and banking, mirroring their own backgrounds. They discovered this led to "very uneven" outcomes and a wide variance in performance. They pivoted to hiring experienced, local industry specialists for more consistent, predictable results in their portfolio companies.

A successful seed fund model is to first build a diversified 'farm team' of 20-25 companies with meaningful initial ownership. Then, after identifying the breakout performers, concentrate heavily by deploying up to 75% of the fund's capital into just 3-5 of them.

Contrary to the popular search fund model of targeting $1M+ EBITDA businesses, a less risky path is to start with smaller companies ($100k-$250k earnings). This lowers complexity, reduces the potential for catastrophic failure, and provides invaluable hands-on experience for first-time acquirers.

The classic seed strategy of investing in a founder in a small market and hoping they "stair-step" into a larger Total Addressable Market (TAM) is no longer viable. With entry valuations at $60M+, investors must believe the opportunity is already massive enough to justify a $20B+ outcome to make the math work.