Behind the VCs: LPs and Investors Discuss AI and Pacing
An in-depth look at insights from Beezer Clarkson of LGT Capital Partners and Amit Bhatti of TrueBridge on startup valuations, investment pacing, and LP pressures.
Stock photo for illustration only, not from the actual event
- Limited Partners traditionally diversify portfolios, but many funds now back the same AI giants.
- Venture fund investment cycles have shrunk dramatically from four years down to 18 months.
- Recent startup cohorts show unprecedented growth from zero to $100 million in revenue.
- Emerging and first-time managers continue to raise smaller funds ranging from $5 million to $50 million.
Normally, LPs spread their bets across a wide variety of firms to diversify their portfolios, writing checks to both emerging and established managers while balancing generalist and specialist funds. The ultimate goal is achieving strong returns while minimizing risk. However, the current landscape reveals a different reality where many funds back the exact same marquee AI brands like OpenAI and Anthropic, raising questions about maintaining true institutional diversification.
TechCrunch recently spoke with Beezer Clarkson of Zurich-based LGT Capital Partners and Amit Bhatti of Chapel Hill-based TrueBridge to explore the shifting dynamics, excitement, and underlying anxieties within the venture capital ecosystem.
One major point of discussion is investment pacing. Funds that historically operated on four-year investment cycles have compressed that timeline to three years, two years, and in some cases, just 18 months, prompting concerns over whether this rapid deployment pace is sustainable.
Stock photo for illustration only, not from the actual event
Yet, when looking at what managers are actually acquiring, the fundamentals differ from previous accelerated cycles. While past booms saw heavy investments in zero-revenue crypto ventures, today's market features numerous companies scaling from zero to $100 million in revenue at an unprecedented speed.
The compression of investment cycles underscores the intense competitive pressure in modern venture capital, where capital chases breakout tech sectors like generative AI. While this drives rapid growth, it also introduces systemic valuation risks if market sentiment shifts abruptly.
Beezer Clarkson notes that investors sometimes rotate out of venture altogether because ongoing capital calls require liquidity without immediate distributions returning. Endowments, hospitals, and foundations still need to meet operating commitments, putting immense financial strain on these institutions.
Addressing the 2021 vintage funds raised during the pandemic at peak valuations, Clarkson points out that while those funds are still early at the five-year mark, shorter one-year fund models face steep odds. Catching a breakout AI winner in a single year is exceptionally difficult given inflated market prices.
Source: TechCrunch
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