Where Returns Lie in Venture Capital - by Kevin Zhang

Recently, I’ve been thinking a lot about the nature of early-stage venture investing. In a world where multi-stage investment platforms are gobbling up LP (limited partner) dollars (allowing these funds to outgun smaller rivals) and AI deals command a 50-100% premium relative to broader software deals, how should “normal” early-stage funds generate returns? As I’ve pondered this more — I’ve concluded that non-consensus picking remains an under-appreciated source of alpha. In the following post, I cover the following: What are the constituent parts of the VC job (sourcing, picking, winning, supporting)? While there’s a ton of effort spent on sourcing, winning, and supporting, there’s comparatively less emphasis on true, non-consensus picking Why non-consensus investing is much easier said than done Several examples where funds have generated outsized returns given their ability to make the right non-consensus investments, as well as opportunities that I’m thinking about Let’s dive in. B

Recently, I’ve been thinking a lot about the nature of early-stage venture investing. In a world where multi-stage investment platforms are gobbling up LP (limited partner) dollars (allowing these funds to outgun smaller rivals) and AI deals command a 50-100% premium relative to broader software deals, how should “normal” early-stage funds generate returns? As I’ve pondered this more — I’ve concluded that non-consensus picking remains an under-appreciated source of alpha. In the following post, I cover the following: What are the constituent parts of the VC job (sourcing, picking, winning, sup