The VC Elite are Hoarding the Funds: Emerging Managers are Left in the Dust
In a stark reminder of the rigged game that is venture capital, the latest fundraise from Industry Ventures is a stark contrast to the struggles of emerging managers. While the 24-year-old firm is raking in a whopping $900 million for its early-stage hybrid fund, smaller, newer funds are still struggling to raise a dime.
The VC Elite’s Secret Sauce: Backing the Already-Connected
Industry Ventures’ success is no accident. The firm has mastered the art of backing the already-connected, providing a leg up to established small managers and experienced investors leaving large firms. It’s a classic case of the VC elite hoarding the funds, leaving emerging managers to fight over scraps.
The Myth of Emerging Managers’ Struggles
But don’t believe the hype. According to Roland Reynolds, senior manager director at Industry Ventures, emerging managers are actually doing just fine. They might take a quarter or two longer to raise funds, but most are getting larger fund sizes. It’s a myth perpetuated by the VC elite to keep the status quo intact.
The Secondaries Game: A Way for the Elite to Profit from the Struggles of Others
Industry Ventures’ latest hybrid fund is just the latest example of the secondaries game, where the firm profits from the struggles of others. By buying stakes in emerging managers from other limited partners, Industry Ventures is able to reap the benefits of the VC elite’s favoritism, while emerging managers are left to fight over the crumbs.
The Real Story: A Game of Musical Chairs
The real story is that venture capital is a game of musical chairs, where the VC elite get to choose who gets to play and who gets left out. Industry Ventures’ latest fundraise is just the latest example of this rigged game, where the already-connected get to reap the benefits, while emerging managers are left to struggle.
