Keep pulling the thread on Miles Dieffenbach.
Miles believes that Limited Partners (LPs) in venture capital are not being adequately compensated for the level of risk they are taking.
Miles believes that 90% of Limited Partners (LPs) should not be investing in the venture capital asset class.
Miles does not believe that the current large, multi-stage venture funds will be able to generate returns as high as their smaller predecessor funds.
A hypothetical $7 billion multi-stage venture fund with a dollar-weighted average entry ownership of 5% would need to generate nearly $800 billion in market cap from its portfolio companies to achieve a 4x net return for its LPs.
Miles considers Index Ventures to be the single best-performing venture capital firm at scale, citing its performance over the last 12 months.
Index Ventures is the largest shareholder in Figma, Dream Games, and Wiz, and the second-largest shareholder in Scale.ai.
Miles argues that large growth-stage venture funds should charge fees similar to long-only public equity funds, such as a 1% management fee and 10% carry.
Venture capital fundraising in the US for the current year is on track to be the lowest since 2017, and in Europe, the lowest since approximately 2016.
More capital was raised through IPOs in the public markets from 2002 to 2004 than from 2022 to 2024, despite the venture asset class being ten times larger now.
CalPERS recently purchased a portion of Yale's venture capital portfolio, which included a significant position in General Catalyst, and saw a $100 million write-up in two months from the Circle position alone.
Miles predicts that 2026 will be a significant year for venture capital liquidity events, citing pending deals for companies like Wiz and Figma.
A U.S. executive order prohibits U.S. dollars from being invested into Chinese companies related to artificial intelligence, semiconductors, or defense.