LPs Are Abandoning Sub-$100M and $1B+ Funds for $250M-$600M Range
Harry Stebbings · 20VC: NEW FORMAT: Harry Stebbings on Why Seed Pricing is as High as Ever, Why Series A is the Best Place to Invest Today, Why Growth Founders Need to Reshape Expectations, Why M&A Windows Remain Shut and When Will IPO Windows Crack Open · Oct 20, 2023 · at 7:17
Harry Stebbings, host of 20VC and founder of 20VC Fund, discusses changing LP allocation trends away from the traditional barbell fund size model.
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“LPs are moving away from the sub hundred million dollar funds with little track record and little data. In a lot of cases, given the size of their check, it's not worth their time for the risk profile attached. At the same time, LPs are moving away from the billion dollar plus funds in the knowledge that a three X of one billion dollar fund is not a likely return profile. Given the downsizing of outcomes that we're seeing in public markets over the last six to 12 months, That realization of just how hard it is to do three X plus on a billion dollar fund really hits home, I think, to the LP market. As a result, LPs are clustering towards the 250 to six hundred million dollar fund size range, where funds have DPI, the team has history, and there's a reliable mechanism to produce outsized returns, but where they're also able to write a 20 to twenty five million dollar check and be able to reinvest with them for several fund cycles.”
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