Keep pulling the thread on Meghan Reynolds.
Meghan Reynolds predicts that as institutional investors move away from mega venture funds, retail and high-net-worth channels, via platforms like iCapital, will become the primary capital source for large firms like General Catalyst, similar to the model used by Blackstone and KKR.
Meghan Reynolds predicts that thousands of "zombie funds" that raised capital in 2020 and 2021 will cease to exist and never raise another fund due to poor track records.
TPG raised a $20 billion fund just before the 2008 financial crisis, and its first investment, Washington Mutual, went to zero before the capital was even called.
Following poor performance in its $20 billion pre-crisis fund, TPG leadership, including David Bonderman and Jim Coulter, conducted a "contrition tour" and offered LPs the option to reduce their commitments, which about half of them accepted.
In late 2021, Meghan Reynolds predicted to Altimeter's Brad Gerstner that for his next fund, he should only expect half of the capital to come from his existing investor base due to an impending market downturn.
Meghan Reynolds believes the fundraising environment of the last three years (approx. 2021-2024) has been the most difficult of her 25-year career, even harder than the 2008-2009 financial crisis.
The current fundraising market is more difficult than 2008-2009 because most investors are now grossly over-allocated to alternatives due to a lack of exits, whereas in 2008-2009 many were still building their allocations.
Meghan Reynolds predicts a bifurcation of returns in venture capital, where mega-funds will consistently deliver ~2x returns, while smaller funds will retain the potential for higher, power-law driven returns of 3x or more.
Historically, very few venture capital funds larger than one billion dollars have achieved 3x or greater returns.
Large-scale private technology companies like Databricks, Stripe, and OpenAI are now considered "truly quasi-public" entities.
Meghan Reynolds observes that while very few institutional investors actively pick individual public stocks, almost all of them directly co-invest in individual private companies, which have less information and are less liquid.
When Meghan Reynolds joined TPG, the firm had $40 billion in assets, which grew to approximately $125 billion by the time she left.