October 08, 2025

The Future Starts Small: Why Emerging Managers Drive Venture Returns

42 minutes

This week on Swimming with Allocators, Michael Downing, serial entrepreneur and venture investor, shares his journey from founding startups to building MDSV Capital, while diving into the essential role of emerging manager funds in today’s venture landscape. The discussion covers the evolution of venture capital, key strategies for both LPs and GPs, the importance of innovative sourcing and community-building, and how the Promontory platform fosters stronger connections and investment outcomes. Listeners will take away insights on industry shifts, the value of supporting innovative early-stage funds, practical guidance for thriving amid changing venture dynamics, and so much more.

Highlights from this week’s conversation include:

Michael’s Entrepreneurial Journey & Early Startups (1:20)

Transition from Founder to Investor and Early Micro VC Experience (5:23)

Power Law, Missed Opportunities, and Emerging Manager Alpha (9:57)

Capital Extension Structure & Alignment with Managers (14:13)

Filtering and Assessing Emerging Managers in a Crowded Market (16:52)

Common LP Misunderstandings and Venture Capital Dynamics (19:22)

Insider Segment: Trends in LP Activity and Fund Composition (22:20)

Direct Investment vs. Fund Commitment by LPs (25:14)

Trends Managers Are Missing & Seed Funding Explosion (25:54)

Sourcing Methodology and the Platform Approach Advantage (28:48)

Criteria for Managers to Engage with Michael Downing (29:05)

Deep Tech/Defense Tech Priority & Generalist Outperformance (33:41)

Best Practices for Building Relationships with LPs via Promontory (35:33)

Future Vision: Programmatic LP Allocation and Software Approach (38:28)

Final Thoughts and Takeaways (40:30)

MDSV Capital is a Palo Alto-based investment firm led by Silicon Valley veterans with over two decades of entrepreneurial and venture experience. The firm has built a premier ecosystem of top-tier emerging manager funds (EMFs) and LPs through its invitation-only community, The Promontory, and its Emerging Horizons event series. MDSV’s Emerging Manager Alpha at Scale strategy targets the top 1% of emerging managers while investing directly in early-growth outliers from their portfolios. Learn more at www.mdsvcapital.com.

Sidley Austin LLP is a premier global law firm with a dedicated Venture Funds practice, advising top venture capital firms, institutional investors, and private equity sponsors on fund formation, investment structuring, and regulatory compliance. With deep expertise across private markets, Sidley provides strategic legal counsel to help funds scale effectively. Learn more at sidley.com.

Swimming with Allocators is a podcast that dives into the intriguing world of Venture Capital from an LP (Limited Partner) perspective. Hosts Alexa Binns and Earnest Sweat are seasoned professionals who have donned various hats in the VC ecosystem. Each episode, we explore where the future opportunities lie in the VC landscape with insights from top LPs on their investment strategies and industry experts shedding light on emerging trends and technologies.

The information provided on this podcast does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this podcast are for general informational purposes only.

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