Beyond Fund Size: What Really Drives LP Decisions in Venture Capital – 0100 Weekly Brief
Hello, there!
Just a few years ago, the dominant VC narrative was all about mega-funds, big names raising billions, scaling global platforms, and making headlines with ever-larger rounds. Fund size became the signal of success.
But here in 2025, that storyline is clearly starting to unravel.
This Thursday on 0100 Impact Talks, I’ll be diving into this shift with deeptech solo VC Francesco Perticarari, General Partner at microfund Silicon Roundabout Ventures. We’ll explore the rising role of microfunds in today’s VC landscape—especially at a time when fundraising feels like the stone in every GP’s shoe. Do not miss this uncensored conversation!
Additionally, across the venture ecosystem, new data and institutional insights are challenging long-held assumptions. Carta’s 2025 report, for instance, shows that smaller funds—particularly those between $1M and $10M—are consistently outperforming their $100M+ peers on both IRR and TVPI benchmarks.
In this edition of 0100 Weekly Brief, I’m also spotlighting two mega-insightful interviews with leading fund of funds—Vencap and Cross Creek—each with a clear and contrasting take on the “fund size = success” myth. Both offer invaluable perspectives for anyone thinking critically about where venture is headed.
I hope you enjoy today’s content as much as I enjoyed putting it together 😊
📝 Expert Round-up | What U.S. LPs Really Look for in European VC Funds
In a recent conversation in Amsterdam, Karey Barker, Founder and Managing Director of Cross Creek, shared how the Salt Lake City-based venture platform is adjusting its global strategy and increasing its focus on Europe.
Founded nearly 20 years ago, Cross Creek combines late-stage direct investments with a robust fund-of-funds model, offering broad visibility across the venture landscape. The firm has built a reputation for backing managers with long-term outperformance and disciplined fund sizing.
“Our favorite funds could raise billions, but choose not to.”
Most of Cross Creek’s core GPs manage between $200M and $500M per fund, allowing them to stay focused and avoid the dilution of returns that often comes with oversized vehicles.
Key insights from the interview:
Fund size discipline drives returns – Cross Creek prefers managers with $200M–$500M funds, believing oversized vehicles dilute performance.
Europe’s ecosystem is maturing – Talent in deep tech and biotech is attracting more U.S. LP attention, even amid structural challenges.
Biotech leads on liquidity – Despite broader IPO sluggishness, biotech M&A and IPOs have delivered 80% of recent fund returns.
Focus beats breadth – Cross Creek backs managers with deep domain expertise rather than generalists or multi-sector first-time funds.
Regulatory shifts create openings – Evolving rules in the UK and Netherlands are unlocking new opportunities for institutional venture LPs.
📝 Expert Round-up | Why Venture Capital Performance Hinges on Fit, Not Volume
David Clark, Chief Investment Officer at VenCap International, dismantles one of venture capital’s longest-standing assumptions: that fund size is a reliable predictor of success.
Rather than categorizing funds as small, medium, or large, David recommends that LPs focus on aligning fund size, ownership strategy, and the potential to generate fund-returning outcomes.
“If you’re an early investor in Stripe or Revolut, it doesn’t really matter if you’re investing out of a $50M fund or a $2B fund. What matters is owning enough of a company that can return the entire fund.”
VenCap’s approach reflects nearly 40 years of VC experience. Their data shows that 92% of early-stage funds achieving a 3x net multiple had at least one investment capable of returning the entire fund. For David, this reinforces a simple principle: success in venture hinges on backing managers who consistently find top 1% companies, not on chasing trends or optimizing for fund size.
Key insights from the interview:
Fund size is not destiny – Success depends on aligning fund size with ownership and exit potential, not on whether a fund is “small” or “large.”
Fund-returning investments drive performance – 92% of VenCap’s top-performing funds had at least one company that returned the entire fund.
Beware flawed data sets – Public data on emerging managers and small funds often reflects an unrepresentative slice of the market.
Public capital has a role, but with limits – Fund I and II managers may benefit from government support; later-stage funds should stand on their own.
Generalist managers still dominate – The top early-stage bets in AI came from generalists, reinforcing VenCap’s preference for breadth over narrow sector focus.
Strengthening LP Connections at 0100 International: Fireside Chat — "Global Bridges: Linking LPs Across Asia, the Middle East, the Americas, and Europe"
Coming this October at 0100 International: “Global Bridges — Strengthening LP Connections Across Asia, the Middle East, the Americas, and Europe.”
This fireside chat with Chief Investment Officer & Founding Managing Partner at Aceana Group, Russell Deakin, will explore how limited partners are building cross-border relationships to diversify portfolios, share insights, and access new opportunities. Aceana Group is a globally active family office that has invested in 14 funds and more than 50 direct/co-investments since the pandemic.
🌍 Across the Ecosystem | News & Useful Resources for You
We’re not the only ones rethinking long-held assumptions about the size and performance of venture capital funds. The conversation around alignment, ownership strategy, and the pitfalls of relying on incomplete datasets is gaining momentum across the global VC and LP landscape.
Here’s a spotlight on different investor perspectives around this narrative.
📄 Article | The Siren Song of Raising a Venture Fund
Kyle Harrison challenges the narrative of venture capital’s decline and explores how the industry is evolving amid market turbulence. While some predict that 50–75% of active private market investors will disappear in the coming years, Harrison points out that capital in venture is bifurcating: mega-funds like a16z and ICONIQ are raising multi-billion-dollar vehicles and catering to institutional LPs seeking modest, scaled returns, while smaller firms like USV are intentionally maintaining constrained fund sizes to deliver venture-like multiples.
Despite the dominance of large players, a wave of new, smaller funds is emerging, with experienced investors from top-tier firms spinning out to launch focused strategies.
🗞️ News | $1M-$10M VC funds tend to outperform $100M+ funds
Carta’s latest analysis of U.S. venture capital fund performance highlights a notable trend: smaller VC funds with $1M–$10M in assets under management have generally outperformed larger $100M+ funds across recent vintages. Reviewing data from 897 funds closed between 2017 and 2024, the report shows higher median IRRs and TVPIs for smaller funds in most years.
However, larger funds remain attractive to institutional investors due to their scalability and ability to absorb significant capital commitments.
📄 Article | The Evolution of Venture Capital Fund Sizes
Venture capital fund sizes have grown significantly over the past decade, reshaping strategies across the industry. Larger funds require larger outcomes, forcing GPs to target companies with billion-dollar exit potential and recalibrate ownership strategies to maintain performance.
This dynamic has created challenges for smaller funds seeking meaningful ownership and increased pressure on GPs to scale fund sizes to stay competitive.