The Great Reset in Venture Capital

Today, I think we’re at a similar inflection point in venture capital. Disruption and turmoil is knocking. On the surface, senior partners are leaving top VC firms, new funds are being spun up, and capital is concentrating into fewer hands, much like we saw capital begin to concentrate into the Mag 7 two years ago, only to see that trade unwind in epic fashion over the last week. 

We’re watching the great unbundling of traditional venture capital.

Venture Capital Had It Too Good

From 2012 to 2022, the venture game was built on a simple strategy: raise funds, find breakout startups, wait for exits. It worked well enough— as long as rates stayed low, exits came often, and founders and funders could dream of decacorns.

But that was a dream environment — a unicorn environment, you might say.

Today, the market has revealed its problems for everyone to see — the IPO window is barely open, interest rates remain elevated, inflation is stickier than forecasted, and capital isn’t moving at even half the rate it was just 6 months ago. Suddenly, the system built for growth at all costs has developed a scarcity mindset. 

Legacy firms like Sequoia, Andreessen Horowitz, and Peak XV have seen high-profile exits of top talent — not because these people failed, but because the model isn’t working right now. Or at least, it's severely strained.

The OGs Emerge

There’s a growing group of seasoned VCs who don’t want to be asset managers. They didn’t get into the game to chase AUM or become mini-Blackstones. They got in to bet on outliers — not to write $100 million checks into startups already valued at $2 billion.

People like Bilal Zuberi are walking away from legacy prestige to start small, conviction-led funds. Why? Because a $50M business that’s profitable and scaling should matter — but to a multibillion-dollar fund, it barely registers.

This is the tension inside venture capital today: scale versus conviction.

That’s why so many top partners are leaving. Not out of failure, but because they know the game they love is being played by different rules now.

Raising the Stakes: What Comes Next?

Here’s the hard truth: the entire venture capital ecosystem is compressing. In 2024, just nine firms raised half the capital for all U.S. VC funds. These firms have become so large that they can’t help the true startups anymore. 

So where do we go from here?

We need new capital structures. We need funds that can return capital through royalties, debt, dividends — not just exits. We need to celebrate the Mailchimps and Zapier-style wins, not just the unicorn lottery tickets. 

On the startup front, for one example, we need to once again look at development stage natural resource plays nearing production… we need them. They pay. And the cycle favours them.

There is a private company in that sphere that I’m currently looking at — a small sub-$50 million market cap oil play that’s quickly raising the capital needed to start delivering production and a small dividend to its investors… I’m keen to meet with them this week because it’s an attractive model in the context of the broader macro environment. Yet, it’s too small for virtually all VC funds. 

We need to fund businesses that might not change the world, but that will outlast most of the ones claiming they will.

The Fantasy We Should All Chase

Here’s my fantasy for 2025: that more VCs admit the current model is broken — and instead of squeezing more capital into the same pipe, they design something better.

That startup accelerators teach founders to build without needing VC.

That we reward resilience as much as we once rewarded velocity.

That investors learn to, at least sometimes, see startups not as lottery tickets, but as long games of value creation.