Edition #17: 51 New Funds, 50 Fund…

1. Key Themes

Theme 1: GPs have become the dominant LP base for emerging funds

GPs are the most active LPs by count

Pavel's lead tweet argues the LP base for small funds has shifted toward other fund managers, with large firms using structured programs.

"the most active type of LP in emerging VC funds is the GP of another fund. not by committed $, but by count. the number of GPs allocating to small funds right now (especially in ecosystems like SF) is insane. large firms invest through dedicated fund-of-funds vehicles/programs…"

Fund-of-funds and GP-backs-GP infrastructure is being mapped and productized

The edition's headline and reports focus on this capital channel, which signals it is a durable market segment.

"VC Fund of Funds: The Players" (Murph Capital report); "Edition #15: H1 2026 State of Fundraising, GPs Backing GPs Map…"

Theme 2: Capital is concentrating into a narrow set of winners, and AI IPOs carry the asset class

A few AI IPOs could dwarf recent venture exit totals

"3 AI IPOs could return 10x all venture exits of 2022–24 combined" (Samir Kaji, Allocate)

Capital abundance is felt only by the consensus names

"F*ck ton of capital out there. However, doesn't feel like it unless you're one of the companies everyone wants lol. Headlines make venture look like 2021 again. It isn't. Capital is concentrating into a relatively small group of…" (Erik Bruckner)

Late-cycle warnings are surfacing

Venky Ganesan's most-engaged post (535K views) invokes Chuck Prince's 2007 "as long as the music is playing" quote to frame current venture conditions.

"When the Music Is Playing In July 2007, a few weeks before the credit markets seized up, Chuck Prince, then the CEO of Citigroup, gave an interview to the Financial Times."

Theme 3: Portfolio construction and round labels are being redefined

Position sizing and composition as the differentiator

"Portfolio composition and position sizing will decide the next VC winners" (Venky Ganesan, Menlo Ventures)

Round names are losing meaning, and the Series A bar is rising

"$60M seed rounds have made round labels meaningless" (Jeff Morris Jr. summary); "Higher Series A bars, consensus defense tech, and the boring industrials no one funds" (Erik Bruckner); "The Series A is dead, Long live the Series A" (Jackie DiMonte)

Alpha vs. beta framing

"Alpha hunts outliers early vs. tech beta bids up the hottest deals" (Dan Gray, Odin)

Theme 4: LP economics are shifting toward fee/carry restructuring

LPs paying upfront to avoid carry on co-invests

"More LPs pay 5% upfront to skip carry, saving $700K on a 3x co-invest" (Sam Huleatt, The Side Letter)

2. Contrarian Perspectives

Big VC-backed IPOs have been terrible public-market investments

Counter to the narrative that mega-IPOs are the payoff for the asset class, the data shows post-listing underperformance.

"Of the >$50b IPOs, aggregate IRR since Day 1 is a -4% annual return, measured against the QQQs with an 18% return." (Miles Dieffenbach)

Implication: venture returns accrue to pre-IPO holders. Public-market buyers of mega-IPOs have lost money relative to the index.

Venture's best-known investor doubts he'd succeed today

Michael Moritz, who led Sequoia and backed Google, PayPal, and Stripe, argues the current market erodes the edge that made his career.

"he doubts he'd thrive in today's venture market, crowded with capital and stripped of information edges."

More concentration may beat the conventional "spray" wisdom, or the reverse

Two podcast guests hold opposing views on portfolio construction. Lior Susan says he tells LPs his portfolio construction is "having none." Jeff Morris Jr. argues "even the best firms' 4–7% picking rates argue for bigger portfolios," yet funnels about 60 companies into about 20 core positions. Both reject the standard model, in different directions.

3. Companies Identified

Legion

Description: Marketplace matching emerging GPs with LPs.
Why mentioned: Newsletter partner.
Quote: "a high-signal marketplace matching emerging GPs with relevant LPs, featuring seamless fund admin, built-in secondary liquidity, and over $300M in investor capital flows."

Harmonic

Description: AI-powered company and people data platform.
Why mentioned: Partner and data engine behind the monthly "Seed-to-Scale Signal" ranking.
Quote: "aggregates real-time data on 30M+ companies and 190M+ people to surface the signals that actually matter"

Rho

Description: Financial platform for startups and fund managers.
Why mentioned: Now the official media partner.
Quote: "They built their name on all-in-one banking for startups, now that infrastructure comes to venture – capital calls, LP wires, portfolio accounts, treasury, and more for GPs and LPs."

Cura

Description: VC portfolio intelligence tool.
Why mentioned: Partner.
Quote: "a VC portfolio intelligence on autopilot that connects your Granola notes, iMessage, LinkedIn data and more to automate support and intelligence."

Wonderstruck

Description: Storytelling and design studio for venture-backed companies.
Why mentioned: Partner.
Quote: "Trusted by 1517, Kindred, Sunflower & 200+ founders."

Eclipse

Description: Hardware/industrial-focused venture firm founded by Lior Susan in 2015.
Why mentioned: Case study in operator-led venture and a large Cerebras outcome.
Quote: "started Eclipse in 2015 with a $125M debut fund... has grown it to $12.5B AUM, with a ~$147M bet on Cerebras worth roughly $2.5B at its IPO."

Cerebras

Description: AI chip company.
Why mentioned: Eclipse's marquee investment, which has now IPO'd.
Quote: "a ~$147M bet on Cerebras worth roughly $2.5B at its IPO."

Sequoia Capital

Description: Venture firm.
Why mentioned: Moritz's former firm and Pat Grady's current firm.
Quote: "Michael Moritz, who led Sequoia from the mid-1990s until 2012 and backed Google, PayPal, and Stripe"

Chapter One

Description: Seed-stage fund launched in 2017 by Jeff Morris Jr.
Why mentioned: Case study in evolving portfolio construction.
Quote: "launched Chapter One in 2017 and closed a $64M Fund III in 2026."

Menlo Ventures

Description: Venture firm.
Why mentioned: Venky Ganesan's firm; new Principal hire.
Quote: "Juliette Bolea comes aboard Menlo Ventures as a Principal, focusing on early-stage consumer and AI-native applications"

Ekiden Capital

Description: New venture firm spun out of FJ Labs.
Why mentioned: New launch in the Signals section.
Quote: "Jeff Weinstein spins out of FJ Labs to launch Ekiden Capital, staying on as a Senior Advisor to help with the portfolio and secondary opportunities"

NVIDIA's NVentures

Description: NVIDIA's corporate venture arm.
Why mentioned: New AI-focused investor hire.
Quote: "Gary Pesola joins NVIDIA's NVentures as an Investor, backing founders building with AI across stages"

Equal Ventures

Description: Venture firm and host of the Emerging Manager Summit.
Why mentioned: Event host and new Venture Partner.
Quote: "Garrett Koehn joins Equal Ventures as Venture Partner, bringing 25+ years of insurance leadership from CRC"

USV

Description: Venture firm (Union Square Ventures).
Why mentioned: New analyst hire.
Quote: "Liv Jenks steps into USV as an Analyst, focusing on consumer and enterprise applications, healthcare, bioengineering, and physical AI"

Frachtis

Description: Pre-seed investor.
Why mentioned: New investor hire.
Quote: "Patrick Ambrus comes aboard Frachtis as an investor, backing pre-seed companies in crypto infrastructure, AI, middleware, and consumer apps"

Carta, Commonplace, Newcomer, Team8, Allocate, The Side Letter, Odin, a16z, Euclid Ventures, Chicago Ventures, Refining VC

Description: Research and publishing sources.
Why mentioned: Authors of the month's key reports and longreads.
Quote: "VC Fund Performance: Q2 2026" (Carta); "The Emerging Manager Paradox" (Team8); "Where LPs are putting capital in the next 12 months" (Commonplace)

4. People Identified

Pavel Prata

Description: Author of Murph Capital.
Why mentioned: Newsletter author with a top tweet on GP-as-LP dynamics.
Quote: "GPs are now the most active LPs in emerging funds: a call option on deal flow"

Venky Ganesan

Description: Partner at Menlo Ventures.
Why mentioned: Most-viewed post of the month (535K views) on late-cycle risk.
Quote: "Portfolio composition and position sizing will decide the next VC winners"

Pat Grady

Description: Sequoia partner.
Why mentioned: AI briefing for Boston College's Investment Committee.
Quote: "The Boston College Investment Committee (an LP and my beloved alma mater) asked for a few thoughts on what's happening in AI."

Miles Dieffenbach

Description: Carnegie Mellon-affiliated analyst/poster.
Why mentioned: Data on poor post-IPO returns of mega VC-backed IPOs.
Quote: "aggregate IRR since Day 1 is a -4% annual return, measured against the QQQs with an 18% return."

Erik Bruckner

Description: Bruckner Ventures, hard tech investor.
Why mentioned: State-of-hard-tech-VC thread.
Quote: "Capital is concentrating into a relatively small group of…"

Samir Kaji

Description: Allocate.
Why mentioned: AI IPO return math.
Quote: "3 AI IPOs could return 10x all venture exits of 2022–24 combined"

Sam Huleatt

Description: The Side Letter.
Why mentioned: Co-invest fee structure trend.
Quote: "More LPs pay 5% upfront to skip carry, saving $700K on a 3x co-invest"

Dan Gray

Description: Odin.
Why mentioned: Alpha vs. beta framing and UK small-fund regulation.
Quote: "Alpha hunts outliers early vs. tech beta bids up the hottest deals"

Michael Moritz

Description: Former Sequoia leader (mid-1990s to 2012).
Why mentioned: Podcast on reading founders and doubting his fit for today's market.
Quote: "he explains how he read founders through their first 14 years, why he fought to bring an underwater fund back to par for Sequoia's mostly non-profit LPs"

Lior Susan

Description: Founder of Eclipse.
Why mentioned: Operator-led VC model and unconventional portfolio construction.
Quote: "why free cash flow over gross margins is the metric that matters."

Jeff Morris Jr.

Description: Founder of Chapter One.
Why mentioned: Evolution from 56 small checks to concentrated core positions.
Quote: "none of his Fund I returners were in the Bay Area."

Patrick O'Shaughnessy

Description: Host of Invest Like the Best.
Why mentioned: Interviewer of Michael Moritz.
Quote: "On Invest Like the Best with Patrick O'Shaughnessy"

Jeff Weinstein

Description: Founder of Ekiden Capital (ex-FJ Labs).
Why mentioned: New firm launch.
Quote: "spins out of FJ Labs to launch Ekiden Capital"

Other Signals hires: Liv Jenks (USV), Patrick Ambrus (Frachtis), Gary Pesola (NVentures), Juliette Bolea (Menlo), Garrett Koehn (Equal Ventures). See quotes in Section 3.

5. Operating Insights

Use the Harmonic-powered seed-to-scale signal to evaluate emerging managers

For LPs and GPs benchmarking peers, the newsletter scores seed investors on realized follow-on success rather than reputation.

"we score funds based on the stage, round size, and whether they led the seed. It's not a static ranking, but a real-time signal showing which emerging managers possess genuine picking skill."

Consider concentrating from a wide funnel

Jeff Morris Jr.'s evolution offers a concrete portfolio model: start broad, then double down on winners.

"He went from 56 small checks in Fund I to a model where roughly 60 companies get funneled into about 20 core positions."

Use unconventional geographies and track free cash flow

Chapter One's Fund I returners all came from outside the Bay Area, and Lior Susan argues cash generation beats vanity metrics.

"none of his Fund I returners were in the Bay Area." / "why free cash flow over gross margins is the metric that matters."

6. Overlooked Insights

Moritz fought to restore an underwater fund for non-profit LPs

A brief podcast detail shows an unusual fiduciary posture: prioritizing LPs' outcomes over firm economics.

"why he fought to bring an underwater fund back to par for Sequoia's mostly non-profit LPs"

UK regulation of small funds is being actively debated

It is listed only as a longread title, but regulatory friction affects where emerging managers domicile and raise.

"Reforming UK Regulation for Small Funds" (Dan Gray, Odin)