Hemant Taneja’s essay is a diagnosis of a shift in venture, but it overstates the novelty of the prescription and underestimates the continuing value of judgment, distribution, and founder support. Its strongest point is that capital structure is no longer a back-office concern, it is becoming a source of strategy and differentiation.

At Vertices Capital, we believe the essay correctly rejects the lazy habit of treating markups as evidence of skill. In a tighter, more expensive market, venture firms can no longer rely on multiple expansion and passive public-market tailwinds to mask weak underwriting. That is a healthy correction for the industry, and one that should force better discipline. It also usefully broadens the definition of investor contribution. For many companies, especially in infrastructure, hardware, and other capital-intensive businesses, access to the right financing can matter as much as a board seat or a warm introduction. That is a real insight, not just rhetoric.

Yet, the essay draws too clean a line between the old venture model and the new one. Even in capital-constrained eras, the best firms have not won on capital alone, they have combined underwriting, networks, product intuition, and company-building support. Reducing the prior generation to “counsel or connections” is too crude. It also romanticizes financial engineering. The Drexel analogy is vivid, but it blurs the difference between useful innovation and the temptation to optimize structures that transfer risk rather than create durable business value. Capital ingenuity can help founders, but it can also seduce investors into solving the wrong problem elegantly.

The piece assumes that more complex capital stacks are inherently founder-friendly. That is not always true. Sophisticated financing can lower dilution and extend runway, but it can also add covenants, incentives, and governance complexity that early teams are not prepared to manage. There is also a tension in the argument about “no-moats” businesses. If moats are weak, then capital structure is not automatically a moat substitute, it may simply accelerate competition. In that world, capital efficiency and operational excellence still matter more than theoretical financial creativity.

For Vertices Capital, the most credible reading of this essay is not “venture should become finance-first,” but “venture should become capital-aware.” That aligns with a pre-seed philosophy that still prioritizes culture, trust, and founder quality while acknowledging that capital design increasingly shapes outcomes. The best version of this thesis is narrower and stronger: investors should learn to structure capital better for specific business models, without confusing financial sophistication with investment edge. In other words, capital should serve the company, not become the company. This is an important essay because it names a real transition in venture economics. It becomes less convincing where it turns that transition into a broad claim that capital engineering will dominate the next era by itself. The right conclusion is more modest: the next generation of venture firms will need to be as fluent in capital structure as they are in founders, markets, and timing.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc. Thank you for listening.

A multi-stage GP can serve seed and growth well, but only with dedicated teams, incentives, and senior attention at each stage. LPs should diligence those systems, not rely on a broad “full lifecycle” label.

A common critique of multi-stage venture firms is that they cannot serve early-stage founders and billion-dollar growth companies at the same time. That is too absolute. Some firms can do both. But doing both well is difficult, and LPs should understand why.

The point is not that a GP cannot invest at seed and at scale. It is that delivering an exceptional product at both ends requires deliberate institutional design, not simply a broad mandate. This is the question an LP should test. The challenge is not merely check size. It is that seed and late-stage investing are fundamentally different activities.

At seed, the investor is underwriting ambiguity. There may be no revenue, no established category, and very little data. The work is founder-led, relationship-intensive, and often deeply hands-on. It requires quick decisions, genuine patience, and the willingness to support a company for many years before there is clear external validation.

At the other end of the market, the work changes. A major growth investment is larger, more visible, and frequently more immediate in its effect on a fund’s economics. It involves different diligence, different governance, different portfolio construction, and often a different internal decision-making process. Neither is inherently better. But they compete for attention.

Imagine a firm that has just committed a very large sum to a late-stage company with proven revenues and a widely understood market. That investment may become one of the most consequential positions in the portfolio. It is reasonable that senior leadership spends substantial time on it.

The LP question is whether the firm has preserved the capacity to provide the same quality of attention to a founder raising an early seed round. This is where analysis needs to move beyond labels such as “multi-stage” or “full lifecycle.” An LP should ask: who actually owns the seed relationship? Who makes the decision? How quickly can they act? What resources are dedicated to supporting the company before it becomes an obvious winner? And, crucially, are the people responsible for the earliest investments genuinely incentivised to remain engaged as the company grows?

A multi-stage platform can succeed if it treats each stage as a distinct capability, with real specialist ownership, appropriate economics, and decision-making authority close to the founder.

It becomes more difficult when the early-stage strategy functions mainly as an option on later deployment. In that model, seed may attract attention when a company is becoming successful, but not necessarily when it most needs conviction.

For institutional LPs, this is not an argument against scale. It is an argument for precision in diligence. Do not assume that a large platform produces a better early-stage product merely because it has a seed strategy. Examine whether seed investing has its own leadership, its own incentives, its own pace, and a protected share of senior attention.

The best multi-stage firms are not generalists by accident. They are institutions that have intentionally built separate but connected systems for different stages of company building. That distinction matters. Because in venture, capital can be shared across stages. Focus usually cannot.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.

Welcome to episode number fourteen of our series called “101 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 53.The ultimate objective is partnering with top founders, not hitting arbitrary call metrics.

Founders over metrics. The real objective of any investor is building relationships with exceptional founders, not hitting a quota of calls or meetings that looks good on an internal dashboard. GoingVC’s research on how top VCs reject founders highlights this distinction clearly: firms with strong reputations treat every “no” as a product that protects founder trust for future deals, rather than optimizing rejection speed purely to clear a metrics-driven pipeline.

Then, number 54.

For the growth stage, a good coverage rate is about 70% of deals closed by comparable investors.

Growth-stage coverage benchmark. At the growth stage, closing roughly 70% of comparable deals signals strong sourcing discipline without wasting resources chasing every deal in the market. Insight Partners’ scaled software-investing platform, which closes hundreds of growth deals annually across a large team, reflects the kind of disciplined coverage that avoids both under-participation and excessive meeting volume relative to what peer firms are seeing in the same market.

Now, core principle number 55.

70% coverage is seen as optimal, 100% risks taking too many meetings that fall into "CYA territory" (Cover Your Ass).

Avoiding the CYA trap. Chasing 100% deal coverage at growth stage is a red flag, not a strength, because it usually means taking meetings purely to avoid the appearance of missing something rather than pursuing genuine conviction. Tiger Global’s aggressive 2021 growth-stage sprint, deploying into 315 companies in a single year, illustrates the downside of over-coverage: the fund’s subsequent markdowns showed how chasing near-total market coverage can substitute breadth for judgment.

Finally, number 56.

For early-stage (seed), coverage is typically lower, around 50% to 60% of tracked competitor deals.

Lower coverage at seed. Seed-stage coverage naturally runs lower, typically 50% to 60% of tracked competitor deals, because early-stage sourcing depends more on unique network access than on systematically covering every visible deal. Precursor Ventures exemplifies this approach: as a solo-GP-style seed fund, it deliberately covers a narrower set of pre-seed opportunities sourced through founder relationships rather than trying to match the tracking breadth of larger multi-partner platforms.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.

Welcome to episode number thirteen of our series called “101 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 49.Leadership should apply a "curiosity" lens to younger partners' unconventional deals rather than starting with judgment.

Curiosity before judgment. When a junior partner brings an unconventional deal, senior leadership should first ask “what do you see that I don’t?” rather than defaulting to skepticism, because early pattern-breaking often looks wrong before it looks right. Greylock exemplifies this culture: the firm structures internal reviews around exploring a junior partner’s thesis with genuine curiosity before applying seasoned judgment, which is part of why it has successfully backed generational shifts across enterprise and consumer software rather than only reinforcing what senior partners already believed.

Then, number 50.

If a partner’s unusual approach is unsuccessful four times in a row, only then does the firm step in to suggest a change in method.

Four strikes before intervention. Firms should give an unconventional investor multiple attempts, commonly cited as four, before stepping in, because pattern-breaking approaches often require repeated iterations before the model proves itself. Union Square Ventures’ early bets on “toy” categories like microblogging and social gaming were widely mocked before compounding into massive outcomes, illustrating why patient firms resist correcting a partner’s unconventional thesis after just one or two setbacks.

Now, core principle number 51.

Because the ultimate outputs (returns) take up to 15 years, VCs focus heavily on measuring inputs.

Measuring inputs over 15-year horizons. Because true fund outcomes only materialize after a decade or more, VC firms substitute proxies, deal quality, founder access, diligence rigor, for the outputs they cannot yet observe. Greylock explicitly manages internal performance using input-based metrics rather than only long-term IRR, tracking things like sourcing quality and time invested per opportunity so partners get useful feedback long before an investment’s ultimate return is even knowable.

Finally, number 52.

Metrics to gauge the VC firm’s partners should not be individualized, as this can incentivize "bad behavior," such as calling non-investable founders simply to pad metric.

Avoiding individualized metrics. When firms tie compensation or evaluation to personal call volume or meeting counts, partners are incentivized to hit numbers rather than find genuinely investable founders. SaaStr’s Jason Lemkin has publicly flagged how VCs who chase individualized activity metrics end up meeting founders who aren’t serious just to pad pipeline stats, exactly the “bad behavior” top firms avoid by evaluating judgment and founder relationships collectively rather than through personal quotas.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.

Welcome to episode number twelve of our series called “101 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 45.The stability provided by the partnership allows individual partners the necessary freedom to pursue highly volatile, risky decisions.

Partnership stability enables bold bets. The structural stability of a long-term partnership creates the psychological safety for individual partners to make high-conviction, high-risk decisions without fear of institutional fallout. Benchmark's deliberately small, equal-partner model is the clearest example: because every partner has identical economics and a shared stake in the firm's reputation, there is no internal politics or power imbalance to stop one person from backing a deeply unconventional bet like Uber or eBay, the institutional ground beneath them is solid enough to absorb volatility..

Then, number 46.

New leadership roles at VC firms typically maintain 95% of previous responsibilities, focusing primarily on investing and working with founders.

Leadership transitions preserve investing identity. When a managing partner steps back, the role evolves but the core job, backing founders and making investments, barely changes, because the firm's value lives in the investment work, not the administrative title. Sequoia's 2025 leadership transition is a textbook example: when Roelof Botha stepped aside, Alfred Lin and Pat Grady took the steward role while Botha stayed on portfolio company boards, showing that new leadership at a top VC firm is less a restructuring and more a continuity of who is closest to founders and deals.

Now, core principle number 47.

VC firms must be committed to "consistent compounding", striving to improve across multiple dimensions every day.

Consistent compounding. The best VC firms are not built on occasional greatness; they are built on relentless incremental improvement across sourcing, judgment, portfolio support, and LP relations. Union Square Ventures exemplifies this: since 2003, Fred Wilson and the partnership have compounded their network-effects thesis across three consecutive platform shifts, social, mobile, and crypto, sharpening their filter with each fund, which is why USV generated 10x+ on Fund I and replicated strong performance across multiple subsequent vehicles.

Finally, number 48.

While VCs have a "novelty gene" and enjoy the next new thing, the core business must be built on stability and continually perfected.

Novelty gene, stable core. VCs are naturally drawn to the new, the emergent, and the paradigm-shifting, but that attraction only produces returns when it is grounded in a stable, repeatable operational core. Andreessen Horowitz thrives at chasing genuinely new categories, crypto, bio, AI, defense, yet it has maintained consistency through a shared platform, a coherent partner selection process, and a multi-fund structure that keeps the firm from being destabilized every time a new technology wave emerges.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices dot vc.

Thank you for listening.

Welcome to episode number eleven of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 41.The VC firm’s priority sequence is Founders first, followed by LPs, then the VC firm itself, then the broader team, and finally the individual partner.

Founders First, always. The priority sequence is not arbitrary. It is a practical statement that every resource, every decision, and every firm behavior should begin by asking what serves the best founders. Sequoia makes this explicit in its operating philosophy: when it launched $950 million in new early-stage funds in 2025, partner Roelof Botha framed it entirely around returning to backing promising founders at the earliest stages of creation, with LP returns and firm interests downstream of that commitment.

Then, number 42.

Partners are expected to adhere to core values (e.g., aggressive but humble, strong under scrutiny, demanding and supportive), which are formally reviewed.

Core values under scrutiny. Articulating values like “aggressive but humble” or “demanding and supportive” only matters if the firm actually holds partners accountable to them in formal reviews. Pear VC is unusually transparent about this, publishing its core values explicitly, including “give before you ask,” “we over me,” and “honesty always”, which creates an internal standard that partners are expected to embody and be evaluated against, not just recite.

Now, core principle number 43.

The guiding philosophy for VC firm operations is “freedom within frameworks” to maintain discipline without stifling innovation.

The most durable VC firms create enough structure to make consistent, rigorous decisions, while still giving partners the autonomy to act on conviction without bureaucratic drag. GEX vc describes this tension directly in its portfolio construction approach: its Investment Policy Statement acts as a decision-making filter rather than a rigid constraint, defining the rules of engagement while letting individual judgment determine which opportunities are worth pursuing.

Finally, number 44.

The key capabilities in the venture value chain are Sourcing, Picking, Winning, Building, and Harvesting.

The full value chain. Winning in venture requires excellence across all five stages, Sourcing, Picking, Winning, Building, and Harvesting, because a breakdown at any one link destroys returns regardless of strength elsewhere. Harry Stebbings has explored this on 20VC, noting that many firms score highly on sourcing (8–9 out of 10) but slip to a 6 on picking, which is exactly the pattern that produces busy deal flow but mediocre fund performance, as good deal pipelines without rigorous selection still yield average outcomes.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices dot vc.

Thank you for listening.

Benchmark’s shift matters. Benchmark’s first-ever growth fund is more than a sizing change, it is a signal that even a famously discipline-first franchise believes the market now requires more capital, more stages, and a broader platform. For LPs, the key question is not whether the move is “good” or “bad,” but whether the firm can preserve the return engine that made it exceptional while expanding into a different business model.

What changed.

Benchmark closed commitments of $2 billion across two new funds, including a $750 million early-stage fund and a $1.25 billion later-stage fund, breaking a more than 20-year pattern of keeping vehicles near $425 million or below. TechCrunch reports that the growth fund will make five to six larger investments in both existing portfolio companies and new startups, while the early-stage fund gives Benchmark more flexibility across seed, Series A, and Series B. The firm’s move follows a $3.25 billion return from Cerebras at IPO price and comes after a period of GP turnover, including departures by Miles Grimshaw, Sarah Tavel’s role change, and Victor Lazarte’s exit.

What LPs should test.

LPs should not treat “brand” as a substitute for strategy coherence. When a top-tier VC changes strategy, the first diligence question is whether the new fund architecture is a response to opportunity or a response to scale pressure: do the check sizes, ownership targets, pacing, and reserve policy still support the historical edge, or do they dilute it. LPs should also ask whether the new stage mix changes the firm’s decision rights and sourcing behavior, since later-stage investing often rewards different skills, timing, and governance than early-stage company building.

Diligence points for LPs.

Use a simple framework when a manager pivots:

* Strategy fit. Does the new fund actually match the market the manager wants to win, or is it just capital chasing a hotter segment?

* Ownership discipline. Can the firm still get sufficient entry ownership without overpaying as the fund gets larger?

* Team stability. Has the partner bench changed in a way that supports the new strategy, or does the shift reflect succession churn?

* Portfolio overlap. Are later-stage bets additive, or do they crowd out focus from the core fund?

* Evidence of repeatability. Is there a demonstrated ability to win in the new lane, or just one breakout mark-up or liquidity event.

Benchmark-specific read.

Benchmark has two advantages LPs will notice immediately: an elite brand and a history of concentrated, high-conviction investing. It also has two risks that deserve scrutiny: the temptation to scale into a de facto platform business, and the possibility that AI-era capital intensity forces it into a style of investing that is less ownership-rich and less manager-controlled than its legacy model. The manuscript of the story is not “Benchmark forgot how to invest”, it is that the market it helped define may now be too expensive for the old playbook.

How LPs should respond.

For LPs, a strategy change is a moment to separate proof from promise. Back a manager’s evolution only if the new vehicle has clear underwriting, a stable team, disciplined fund sizing, and a believable path to preserving net returns after fees and dilution. In Benchmark’s case, the next data points that matter are deployment pace, pricing discipline, ownership levels, partner consistency, and whether the new growth fund produces the same quality of outcomes as the firm’s early-stage franchise.

Welcome to episode number ten of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 37.

Outliers are typically "spiky" in some direction but must possess a "heart of gold" to collaborate effectively in a team environment.

Outlier partners are usually “spiky” in one dimension, technical depth, speed, or taste, but the best ones still have enough humility to work well with founders and teammates. The clearest real-world version of that is Founders Fund: it has repeatedly backed unusually hard, founder-driven companies like SpaceX and Palantir, which require partners who can be intense and opinionated while still collaborating with very atypical founders.

Second, number 38.

Outlier partners cannot be managed or told what to do.

Outlier partners cannot be managed like normal employees; they need trust and wide latitude because the best VC decisions are made quickly, under uncertainty, and often against consensus. GV is a strong example: its decision process has been described as intentionally structured to reduce hierarchy by gathering opinions quietly before discussion, which is exactly what you do when you know seniority can distort judgment.

Third, number 39.

Influence within the firm should be awarded based on expertise, not on hierarchy or tenure.

Influence inside a VC firm should go to the person with the deepest relevant expertise, not the longest tenure or loudest title. At General Catalyst, the power of its AI and software practice has increasingly come from partners with the sharpest category-specific insight, which is why a firm can keep winning in new waves by letting the person closest to the problem lead rather than defaulting to seniority.

Finally, fourth, number 40.

The VC business adheres to the principle that it is only as good as its next investments.

A VC firm is only as good as its next investments because yesterday’s wins do not create tomorrow’s returns. The most vivid example is Tiger Global’s venture platform: it looked unstoppable during the 2021 boom, but the next year’s marks and the 2022 selloff showed how quickly a fund’s reputation can reset when the next portfolio cycle is weaker.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.

Welcome to episode number nine of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 33

Highly successful people entering VC often need coaching to gain comfort with failure, as the business inherently involves being wrong half the time.

Highly successful people often enter VC expecting linear proof, but the job rewards repeated misses, so they have to learn that being wrong is normal rather than disqualifying. A strong example is Emergence Capital’s long-tenured partnership model, where the firm emphasizes continuity and learning over churn; that kind of environment helps former operators like Kevin Spain and Gordon Ritter absorb failure and keep making bold calls without treating every miss as a career event.

Second, number 34

Investors must understand and stick to their own unique strengths, they must "play their game".

The best investors don’t imitate the crowd; they double down on their own edge, whether that edge is a network, a sector, or a unique pattern-recognition advantage. Lux Capital is a clean example: it built its identity around hard-tech and frontier science, letting partners like Peter Hébert and Josh Wolfe lean into what they know best instead of forcing themselves into generic SaaS-style consensus investing.

Third, number 35

The VC firm's fundamental job is to let talented partners run and get out of their way.

A VC firm’s job is to create the conditions for talented partners to make fast, high-conviction decisions, then stay out of the way unless the framework is broken. First Round Capital has long operated this way, with partner-led ownership of deals and a strong emphasis on founder relationships, which gives investors room to build conviction without waiting for a committee to turn every idea into a compromise.

Finally, fourth, number 36

VC firms must field a team of outliers to successfully partner with outlier founders.

To back outlier founders, firms need outlier partners, people with unusual backgrounds, sharp opinions, and enough independence to recognize what others miss. Outliers.vc is explicit about this model, assembling a team with technical depth, policy experience, and operator instincts across the MENA ecosystem so it can credibly partner with ambitious founders building category-defining companies.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.

Welcome to episode number eight of our series called “One O One VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”…

Let’s dig in.

First, number 29

VC firms use a shared vocabulary to discuss common emotional traps to prevent them, such as “separation of church and state”.

VC firms need a common vocabulary because emotional mistakes are easier to see, name, and correct once the firm has a shared code for them. “Separation of church and state” is one such code: it tells the team to separate admiration for a founder from the cold investment case, just as top firms use scout programs and written memos to keep judgment anchored in process rather than chemistry.Second, number 30

“Separation of church and state” is the discipline of preventing the emotional “thrill of the chase” (falling for a founder) from clouding clinical decision-making.

The “thrill of the chase” is dangerous because charisma can masquerade as signal, especially when a founder is unusually polished or the company feels culturally magnetic. A useful counterexample is Revolut, where George Robson has described being drawn to the founder and product while at Morgan Stanley, but only later joining Sequoia once the business case and timing were clearer, showing that attraction is not the same thing as conviction.Third, number 31

The earliest indicator of good investment judgment for a new investor is how they choose to invest their time.

The earliest tell of good investment judgment is not the pitch they like, but how they allocate their time before a pitch turns into a decision. Bessemer’s public anti-portfolio shows why this matters: they preserved institutional memory by writing down what they missed, which is only possible if investors spend time on pattern recognition rather than merely on meetings that are already obviously hot.Finally, fourth, number 32

Investors who tend to achieve “base hits” instead of “grand slams” are coached to take more risk to achieve the necessary asymmetric upside.

If an investor keeps producing base hits, the remedy is usually not more caution; it is a higher tolerance for asymmetric risk, because venture rewards outsized winners, not safe singles. Accel’s early commitment to Facebook is the right mental model here: the firm backed a company with enormous upside while many investors would have preferred a more familiar, smaller idea, and that willingness to lean into scale, not incrementality, helped create a generational fund outcome.

Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc.

Thank you for listening.