Back

Venture capital, in its utter importance in recent days, is on the threshold of change—namely, tech private equity. This turning point in venture capital is a giant one because the great names in Silicon Valley-Lightspeed, a16z, Sequoia, and Thrive-are probably the very stalwarts of the new era of tech-ized private equity, and does that even matter? The Existential Crisis of Old-School VC It slowly rots away on the very stake of its weakness. 🔹 20% Rule: VCs could only allocate 20% to non-startup assets, such as public stocks, secondaries, and buyouts, along the way. 🔹 Liquidity Jail: Ample 10-plus years in a holding pattern waiting on IPOs or exits. 🔹 Passive Governance: Inability to exercise control within portfolio companies. The RIA Revolution The very registration as Registered Investment Advisors turned Lightspeed into an actor with a clout like that of private equity: ✅ Unlimited Asset Flexibility: Public stocks, secondaries, roll-ups, buyouts ✅ Active Ownership: Build, buy, and run companies (not just advising them) ✅ Liququidity Engineering: Ride the wave of the secondary market, which is booming to $100B+ • Hired ex-Goldman MD Jack Fowler to lead its secondary strategy • a16z (RIA since 2019) operates across crypto, wealth management, and PE-style governance The New Playbook 1️⃣ Build AI-Native Roll-Ups Buy traditional companies → Rebuild with AI (Thrive's $1B "AI factory") General Catalyst was buying a hospital system to test healthcare AI at scale. 2️⃣ Evergreen Funds Sequoia has eliminated the ten-year fund model in favor of a pool of permanent capital. 3️⃣ Vertical Domination Build sector-dedicated platforms (fintech, healthtech) versus spreading munitions. 4️⃣ Public Market Crossovers Pre-IPO investment → Post-IPO holding → An activist governance What’s Next? • Death to all mid-tier VCs: Only scalable RIAs will survive • Tech-enabled PE: Algorithms sourcing deals, AI optimizing portfolios • Caution, Founders: VCs now compete with you using their own built ventures The Bottom Line There is a merging between VC and PE. This means for founders: ✔️ New capital partners (with broadened time horizons) ✔️ Ruthless competition expected from rival investors-built competitors ✔️ Exit routes beyond IPO/M&A (secondaries, roll-ups) Source: @TheIcahnist