🔮 The New Rules of VC
AI-Native, Outcome-Obsessed, and Post-Power Law
🔍 1. Deal Sourcing Becomes Commoditised
🔧 2. The Real Differentiator? Value Delivery
🔁 3. Capital Velocity Over Capital Lock-Up
📉 4. Post-Power Law Portfolio Strategy
🤖 5. The AI-Native Fund Stack
📢 6. The LP Wake-Up Call
🧠 7. Vertical Funds Will Outrun Horizontal Hype
🧰 8. Full-Stack Fund-as-a-Product
🧭 9. Founders Will Start Vetting VCs Harder
Venture capital, for all its swagger, is long overdue a reckoning.
For decades, the model hasn’t changed — and neither have the results.
The top 5–10% of funds still capture 80–90% of all meaningful returns.
Median fund performance has flatlined for 25+ years.
Founder failure rates? Still brutally high — no better than two decades ago.
So much capital. So little innovation in capital.
We’ve normalised underperformance, dressed it up in power laws, and called it strategy.
But that era is ending.
The next generation of funds won’t just look different. They’ll operate on a completely new OS — one built around AI, engineered value creation, faster returns, and a flipped funnel that starts with capital efficiency, not just capital deployment.
Here’s how I see the new model — not as a nice-to-have, but as a survival necessity.
Here’s the full series 👇
🔍 1. Deal Sourcing Becomes Commoditised
AI now does what associates used to: scraping LinkedIn, parsing pitch decks, spotting traction signals. No need for 50 coffee chats to “get access.” The game’s changed.
Every serious fund will run sourcing like a tech product:
Ingest
Rank
Qualify
Only loop in a human when it matters
Sourcing is no longer a moat. It’s table stakes. The edge starts after the cheque lands.
🔧 2. The Real Differentiator? Value Delivery
Founders don’t need another “how’s it going?” call. They need firepower.
The funds that win will behave like high-impact operators, not passive capital:
AI co-pilots for GTM, hiring, ops
Embedded teams to close hires, test pricing, prep the next raise
Playbooks built from lived experience, not Medium
No more vague promises of “value-add.” The proof will be in dashboards, metrics, and outcomes. LPs will back what they can measure.
🔁 3. Capital Velocity Over Capital Lock-Up
The old fund model — 10 years, 2% fees, wait-and-see DPI — is done.
Next-gen funds will act more like product loops:
Faster, smaller exits
Early secondaries
Active recycling of capital
We’re not thinking small. We’re thinking smart. Strategic acquirer by Year 3 beats IPO fantasy in Year 10.
📉 4. Post-Power Law Portfolio Strategy
The old model accepted mass failure. “One winner returns the fund.”
But in an AI-native world, that’s no longer necessary — or acceptable.
Now we can:
Track real-time performance
Spot drift before it kills a startup
Pivot fast, not panic late
The goal? Fewer write-offs, more wins. This isn’t romantic. It’s responsible. And it’s what LPs now expect.
🤖 5. The AI-Native Fund Stack
New funds should operate like startups. That means lean, fast, and AI-augmented:
LLMs trained to score deals by thesis
Automated, personalised LP reporting
Fund ops — from compliance to CRM — on autopilot
This isn’t AI theatre. It’s operational leverage. The funds still scheduling partner calls by hand? Extinct in five years.
📢 6. The LP Wake-Up Call
Let’s be honest — LPs helped cause the bloat. They chased logos, got seduced by hype, and ignored the fundamentals.
Now they’re awake — and demanding more:
Faster liquidity
Measurable value-creation
Real-time visibility into fund ops
The best GPs will treat LPs as true partners. Live data. Milestone-based disbursements. No more once-a-year PDFs.
🧠 7. Vertical Funds Will Outrun Horizontal Hype
Generalist, spray-and-pray funds won’t cut it.
The next wave will go deep:
Technical depth (quantum, bio, robotics)
Ecosystem alignment (govtech, industrial, policy-driven sectors)
Founder-embedded networks (operator-led, not outsider-run)
AI will surface the signal — but the real edge will come from knowing the terrain.
🧰 8. Full-Stack Fund-as-a-Product
The best funds will become infrastructure. They won’t just fund growth — they’ll power it.
We’ll see:
VC-as-a-service platforms: AI tools, GTM kits, networks
Programmatic follow-on strategies
In-house accelerators — not for deal flow, but for actual traction
Think Y Combinator rebuilt for an AI-native world — less theatre, more output.
🧭 9. Founders Will Start Vetting VCs Harder
The old power dynamic is gone. Founders are in the driving seat.
They’re now asking:
What’s your value-per-dollar?
Can I plug into your stack from Day 1?
Are you here for outcomes — or optics?
Founders aren’t just raising capital. They’re recruiting co-pilots. And legacy funds? They’re not getting the callback.
🚀 Final Thought: The New VC Isn’t a Money Machine — It’s a Momentum Engine
The future belongs to funds that build leverage across every layer: sourcing, delivery, decision-making, and exits.
AI isn’t a trend. It’s the new baseline.
The next era of VC won’t be led by pedigree, brand, or network.
It’ll be led by those who can engineer returns — for founders, LPs, and themselves.
Forget power laws. Build power loops.
Thank you for reading. If you liked it, share it with your friends, colleagues and everyone interested in the startup Investor ecosystem.
If you've got suggestions, an article, research, your tech stack, or a job listing you want featured, just let me know! I'm keen to include it in the upcoming edition.
Please let me know what you think of it, love a feedback loop 🙏🏼
🛑 Get a different job.
Subscribe below and follow me on LinkedIn or Twitter to never miss an update.
For the ❤️ of startups
✌🏼 & 💙
Derek
