Samir Kaji of First Republic Bank predicts major market consolidation and contraction in the micro venture capital landscape.
Prediction Not checkable as stated
Kaji: Direct VC investments by family offices will end badly
“The vast majority of high net worth individuals and family offices should not be doing direct investments. It's too hard. There's too many red flags that are sitting on the horizon. And I think it's going to end badly for a lot of people.”
Prediction Not checkable as stated
Kaji: Only 10% to 20% of micro VCs will deliver expected returns
“I think a very few percentage of these micro firms are going to produce the type of returns expected. And I think it's going to hit sort of the normal distribution of which, you know, 10 to 20%, you know, have a nice return model. The rest are going to, you kn…”
Prediction Not publicly verifiable
Kaji: $5M-$10M micro VCs will launch on AngelList over traditional funds
“The next generation of sort of these proof of concept funds that are, you know, five or ten million dollars are more likely to get down on Angelus than they are, you know, standalone LP funds”
Prediction Held up
Kaji: Top 10% micro VCs will outperform, but vast majority won't reach 3x net
“And if you're investing in an index, you're going to lose. I think the top 10% of micro VC funds will do phenomenally Well, and will significantly outpace the returns of larger funds, but the vast majority of the micro funds are going to have a tough time retu…”
Opinion
Kaji: Early IRR metrics are meaningless when micro VCs raise Fund II
“Right now, Quite candidly, it's a little bit meaningless and it's more qualitative in function. So if we see a manager that's, you know, tracking at a 1.3 X, that's fine. But the reality is it means very little.”
Prediction Held up
Kaji: Micro VCs raising $15M–$20M Fund I cannot easily scale up Fund II
“I think people that raise that 15 to 20 will have to probably raise another fund of 15 to 20 when it comes to Fund two with the understanding that when it comes to fund three, if they've shown real traction, if they have a few distributions, and that's usually…”