New York VCs Go Back To the Future With Smaller Funds

back to the future1 New York VCs Go Back To the Future With Smaller FundsThe 10 year expiration date is coming due on a lot of venture capital funds, and many are expected to fold up shop in the next year, unable to raise fresh capital based on their shoddy returns. 

Investors are increasingly interested in smaller, more agile funds, according to a piece Venture Capital Dispatch. They are seeking a return to the founding days of VC, when former entrepreneurs ran the show. 

Highlighted in the piece is New York’s Roger Ehrenberg, who raised $50 million for his new fund, IA Ventures, last year, even though he had $85 million in demand. 

The smaller funds have shorter exit windows and thus more flexibility. As First Round Capital’s Josh Koppelman put it,

“When I hop on a train in Philadelphia I can either take the local or the express. I think most traditional VCs when they fund a company kind of buy an express ticket to an IPO. And I think what you’re seeing with some of these smaller funds, they’re buying a ticket on a local train.  They’re going to the same destination – trust me, I want a billion dollar outcome just like anybody else – but our fund size allows us that when the doors open at a $50 million stop, or at a $200 million stop, or a $500 million stop along the way, we can sort of look around and say, ‘There’s smoke on the train, we need to get off.”

bpopper [at] observer.com | @benpopper