Happy Thursday! Every venture manager wants to build a top-decile fund. Research from Carta’s VC Performance, Cambridge Associates’ AI: Investing After the First Wave, and TrueBridge’s State of VC highlights themes around performance, portfolio construction, liquidity, and fundraising. While successful managers follow different strategies, these themes appear consistently across many of the industry's strongest-performing funds. More below!
AngelList - As VC firms scale their institutional LP base, finance is no longer just back-office hygiene—it’s a strategic advantage. AngelList’s fund admin operates like an outsourced COO, streamlining operations, meeting institutional diligence standards, and delivering timely, accurate reporting. See why 25k funds and syndicates trust AngelList.
Pliancy - Experience the freedom of IT that just works. Partnering with Pliancy means regaining the time & energy to focus on your mission—without having to worry about the day-to-day tech that makes it possible. Discover why VC firms from coast to coast choose Pliancy (or ask about us in VCBC).
Airstream Alpha CFO - Modern CFO support for venture funds and investment firms. With 50+ CFO mandates, Airstream Alpha brings structured, tech-forward oversight and guidance to fund finance, from reporting and compliance to service-provider coordination, so partners stay focused on investing and LP relationships. Learn how funds work with Airstream Alpha from first close through scale.
What the data shows:
Carta tracks more than 2,700 venture funds representing over $119B of committed capital.
Across nearly every vintage from 2017 through 2024, 90th percentile net IRRs exceed 20%.
The 75th percentile remains below roughly 15% for every recent vintage.
Even within strong vintages, only a relatively small percentage of funds produce the returns many institutional LPs seek.
What this means:
The gap between a good venture fund and a top-decile venture fund remains significant. While overall performance has improved from the 2022 downturn, exceptional returns are still concentrated among a relatively small group of managers.
What the data shows:
Median TVPI increased across nearly every recent vintage during Q1 2026.
Valuation growth has resumed after the reset of 2022 and 2023.
Median DPI remains low across most recent fund vintages.
Even among 2017 and 2018 funds, fewer than 20% have generated a DPI greater than 1x.
What this means:
Fund values are recovering as private company valuations improve. But unrealized gains alone do not return capital to LPs. Converting paper appreciation into realized distributions remains one of the industry’s biggest challenges.
What the data shows:
TrueBridge continues to highlight the power-law nature of venture returns.
Cambridge Associates notes that AI investing increasingly requires disciplined capital allocation rather than broad exposure.
A relatively small number of portfolio companies continue driving the majority of venture fund returns.
Ownership targets, reserve strategy, and disciplined follow-on allocation continue shaping long-term venture outcomes.
What this means:
Top-performing funds are rarely defined by the number of investments they make. Instead, long-term outcomes are often shaped by how managers allocate capital, maintain ownership, and concentrate follow-on investments behind their highest-conviction companies.
What the data shows:
Median LP counts have declined across nearly every fund size.
Larger funds continue attracting more institutional capital.
Anchor check sizes have generally increased as fundraising becomes more concentrated.
Emerging managers continue facing a more selective fundraising environment.
What this means:
Raising a venture fund increasingly depends on securing larger commitments from fewer LPs. As fundraising becomes more concentrated, emerging managers face a smaller pool of active institutional investors and greater competition for anchor commitments.
What the data shows:
Cambridge Associates argues that improving fundamentals across the AI ecosystem continue to support long-term venture investment opportunities.
Infrastructure, applications, and enabling technologies are all attracting substantial investment.
The next generation of venture winners may emerge across multiple layers of the AI ecosystem rather than a single category.
Long-term success will still depend on manager selection, portfolio construction, and disciplined execution.
What this means:
AI is expanding the venture opportunity set, but it does not change the fundamentals of successful investing. The opportunity set is changing, but the characteristics associated with long-term venture success remain largely the same: disciplined underwriting, thoughtful portfolio construction, and supporting companies through multiple stages of growth.
Top-decile venture performance remains rare.
TVPI has improved, but DPI continues to lag.
Portfolio construction and ownership remain long-term differentiators.
Fundraising remains concentrated among fewer LPs and larger managers.
AI is expanding venture opportunities without changing core investing disciplines.
Bottom Line: There is no single formula for building a top-decile venture fund. Different firms succeed through different strategies, sectors, and portfolio construction decisions. Across Carta, Cambridge Associates, and TrueBridge, the same themes appear repeatedly: disciplined portfolio construction, patience through market cycles, strong liquidity generation, and consistent execution.
Today’s discussion focused on what LPs increasingly evaluate when selecting managers.
Paid subscribers can access the same templates and frameworks we use throughout these posts, including:
VC Fund Model
Streamlined VC Fund Playbook
DPI Forecast
Capital Call Forecast
VC Fund Budget
Year-End Finance & Compliance Checklist
These resources help managers build the reporting, planning, and financial infrastructure increasingly expected by institutional LPs.
Comments
Nothing yet. Say the first thing.
Sign in to join the conversation.