Repeatable Access to Elite Entrepreneurs: The True Edge in Venture

Insights from Sion Evans, Managing Director at VenCap International, one of the standout voices at 0100 DACH last week.

Last week at 0100 DACH in Vienna, one of the standout voices was Sion Evans, Managing Director at VenCap International. In our conversation, he unpacked what it truly takes to build an institutional-quality venture FoF programme in today’s environment. Drawing on nearly four decades of venture investing, he argued that manager selection remains the single most critical driver of repeatable alpha — and that over-diversification is often a hidden destroyer of returns.

He also detailed how secondaries, when used with discipline, can serve both as a structural liquidity tool and as a way to concentrate exposure to the top 1% of outcomes. Against the backdrop of AI-driven platform shifts and extended exit timelines, Evans makes a compelling case for focus, intellectual honesty, and long-term conviction as the foundations of sustainable venture performance.

From your perspective, what defines an institutional-quality venture FoF program today — in terms of repeatable alpha, liquidity management, diversification, and operational scalability?

The heart of any FoF programme is manager selection, manager selection, and manager selection. You need to venture managers who can repeatedly back the world’s very best entrepreneurs; otherwise, nothing else matters. The challenging thing is that these entrepreneurs have a choice on who they work with, and the market is hyper-competitive, even at the very earliest stages.

Once you’ve covered this essential point, it’s important to understand the liquidity constraints of your programme and reflect this in your portfolio construction. Early stage venture takes a long time, secondaries can provide near term liquidity, and venture growth somewhere in the middle. The way you combine these elements needs to be congruent with your liquidity needs, otherwise you’ll struggle over the long term.

Diversification is a hard topic when building a venture portfolio. Naive diversification will destroy a lot of value. You should track your exposure to sectors, stages, and geographies, but use this as a starting point for deeper analysis, not a target.

This is not a passive asset class, so you need to build significant in-house capabilities to manage operations, portfolio monitoring and other active management decisions that come up over a fund’s life. The job doesn’t stop once an investment decision is made.

Having invested in venture since 1987, what differentiates genuine top-tier access in primaries from perceived access in today’s competitive environment?

It’s about being able to construct the portfolio you want without making compromises or taking shortcuts. This requires a lot of intellectual honesty, as anything can be rationalised in the short term given the long feedback loops of the asset class. You’ll never be able to access all the managers you want, or in the scale you want - such is life. We solve this issue by sizing our funds around our projected investment capacity, not the reverse.

You focus on backing leading “unicorn hunters.” How do you balance manager concentration with the diversification required by institutional LPs?

I’d push back a bit here. The best managers don’t want to back companies worth $1bn, they want to generate $1bn in proceeds from a single investment. These are the big leagues. We now have multiple private venture backed companies in our underlying portfolio worth over $100bn, and one over $1tn, so these lofty goals aren’t just hubris.

We’ve learned the hard way that over-diversification kills returns in venture - the drop off from a top-tier to a second-tier firm is steep. If your main reason for making an investment is diversification, then don’t make it. Embracing concentration at the manager level is critical, and the very best managers will typically see you well diversified by sector stage and geography.

How do secondaries complement your primary program — are they primarily a liquidity tool, a way to enhance DPI, or a way to access managers you might not otherwise reach?

Secondaries play an important role in our primary programme in two ways:

1) Providing early liquidity to the programme, which can then be recycled or distributed. We effectively ladder our programme liquidity across secondaries, venture growth, and early stage venture

2) Concentrate capital into the very best private companies, typically by purchasing LP stakes in mature funds that have backed category-leading companies, or by participating in GP-led transactions around the same companies. VC is all about the top 1% of outcomes, any chance we can get to get more capital into these companies is one we take

In periods of exit slowdown and denominator pressure, how do you actively manage capital calls, distributions, and portfolio exposure across both primaries and secondaries?

Despite the industry trends, we saw robust liquidity last year, driven by companies like Scale, Figma, Circle, Dream Games, Netskope, Navan etc. The important thing for institutions managing these tensions is to stay consistent with deployment and not to try to time markets. If you know that you may have tighter liquidity demands, then increasing your allocations to secondaries or venture growth, relative to early-stage venture, would likely be prudent.

Given that most venture returns come from a small number of early-stage outliers, how do you ensure sufficient exposure to early-stage convexity while maintaining portfolio-level liquidity discipline?

I don’t see a trade-off here. Both secondaries and venture growth are also driven by the top 1% of exits and demonstrate similar levels of convexity - as well as loss ratios at the company level. You must approach all aspects of your venture programme through the lens of the very best companies, otherwise you will likely be disappointed by the outcome.

How central is re-up strategy in your portfolio construction, and under what circumstances do you choose not to continue with a previously backed GP?

We actively manage our portfolio, but expect a very high level of re-ups due to our manager concentration. We run a full diligence process for every fund, whether it’s a new relationship or a multi-decade one, but typically look to address any issues or concerns as they come up in real time. We’re always on the lookout for new managers, but don’t have any pressure to expand the portfolio, which is critical to decision-making incentives.

We typically fail to re-up with a manager for one of two reasons: 1) they fail to execute an effective generational transition, or 2) they are no longer able to consistently work with the very best entrepreneurs

With the surge in AI-dedicated funds, how do you assess specialist AI managers versus generalists incorporating AI in their thesis?

The answer is very straightforward, at the risk of sounding like a broken record: are they consistently working with the very best companies? In practice, we prefer working with generalist managers as we don’t think LPs can choose sectors. Our managers gave us early access to companies like OpenAI and Anthropic long before LLMs were obvious to us, as an example.

With a platform shift like AI, the designation of an AI specialist manager probably won’t make sense for much longer – if it makes sense now. We stopped talking about internet-focused funds as the technology became ubiquitous; the same is likely to happen here.

After committing over $3 billion across multiple cycles, what structural adjustments are necessary today to build a venture FoF portfolio that can deliver both top-quartile growth and controlled liquidity over the next 10–15 years?

The key learning for us is focus. AI is a platform shift, and we have invested through platform shifts before, be it cloud, mobile, or even the Internet. In all these prior shifts, returns were heavily concentrated in terms of both companies and funds, and we would expect the same to be true this time. The top 1% of exits make up the majority of the value in venture, and in AI, things are looking even more concentrated than historic norms.

We also see firms fail to remain relevant across these shifts, and new firms emerge to take their place amongst the top tier. Venture capital is not a place for complacency at any level of the stack.

For liquidity, we expect secondaries to become more prominent over the next decade and become a normal part of portfolio management. This will be a double-edged sword. A great portfolio construction tool to double down on the best companies and provide structural early liquidity, but also an avenue for low conviction investors, both VC and LP, so they sell their best companies too early. This is a grave error in venture, which will remain the ultimate long-term compounding asset class. You don’t make money in venture by selling your winners early, despite the short-term temptations.