👋 Hi, I’m Andre and welcome to my newsletter Data Driven VC which is all about becoming a better investor with data and AI.
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Welcome to another Data Driven VC “Insights” episode where we cover the most interesting research and reports about startups, VCs, LPs, AI & automation.
How the Top 5% of VCs Keep Winning
A new NBER paper from Blake Jackson and Ilya Strebulaev tracks 100,000+ U.S. venture professionals, with its profit-concentration stats drawn from a subsample of 12,151 VCs with complete data.
Profit Concentration: The top 1% of VCs (about 120 VCs) earned 56.6% of the $1.2 trillion in net profits. The top 5% (about 600 VCs) earned 90.1%.
Track Record Compounds: A VC with five or more prior successful investments is 6.7 percentage points more likely to succeed on their next deal, a 47% lift over the sample average.
The Midas List Effect: VCs who unexpectedly made the Forbes Midas List invested $6M more per year and earned $62M more in gross profits on new investments. The boost applied only to new deals, not their existing portfolio, which the authors take as evidence of improved access to deals rather than new resources flowing to the VC generally.
✈️ KEY TAKEAWAYS
Track record is one of the strongest predictors of a VC's own lifetime profits, but it doesn't predict a fund's net IRR or TVPI (the returns LPs actually receive). Public recognition (the Midas List effect above) drives individual deal access and profits, though its effect on fund-level returns isn't tested. Use this as a diligence checklist on the individual GP, separate from diligence on the fund's likely returns.
Time Between Funding Rounds
Peter Walker at Carta shared an analysis of 14,333 priced primary rounds raised by US startups between January 2017 and June 2026.
Current Medians: Medians now run 1.9 years Seed to Series A, 2.3 years A to B, and 2.2 years B to C, roughly in line with the standard "18-24 month" assumption at first but stretching past it in later rounds.
Variance Beneath the Median: Some founders raise two or three rounds in 2026 alone; others go three years or more without one. Walker's takeaway: could your company survive 1,000 days without outside capital?
Existing Investors Won't Automatically Join a Bridge: The analysis covers priced primary rounds only; bridges and note extensions fall outside these medians. Walker cautions founders not to assume current investors will join a bridge automatically.
✈️ KEY TAKEAWAYS
Runway planning should assume the longer end of this range, since falling short means running out of cash. Start bridge conversations early, since existing investors joining is never guaranteed. Building relationships with likely next-round leads ahead of time helps close that gap.
Which Work Gets Automated Next?
Daniel Dippold of EWOR proposes a framework for automation's effect on the workforce, contrasting "Gaussian automation" (past technology displacing workers roughly by skill level) with "Cauchy" or "power-law automation," his term for top performers replacing others.
The Illustrative Model: In Dippold's chart, his estimates show an average worker faces a 99.9% chance of job loss, someone two standard deviations above average (σ, how far above the norm someone performs) still faces 78%, and only the top 2% keep their seats.
Confined vs. Uncapped Demand: Dippold splits industries into those with a fixed demand ceiling, like legal support, and those where demand expands with supply, like software engineering. In the first, top performers absorb the rest of the work and headcount shrinks; in the second, output concentrates without anyone losing a job.
His Thesis: He argues the top 1% will drive most output going forward, and that the software companies that help them maximize it will win this next chapter.
✈️ KEY TAKEAWAYS
Dippold's real emphasis is on performance: paying for top individual performers and helping existing employees find their most effective niche. For investors, that's a hiring and compensation question for portfolio companies.
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The SPV is Dead, Long Live the SPV
The Odin Times surveyed 56 general partners on how small VC funds use SPVs (special purpose vehicles, one-off entities formed to fund a single deal).
84% Adoption: 39 of 56 GPs already use SPVs, with 8 more planning to, putting adoption at 84%. 80% of respondents run funds under $100M, and 51 of 56 invest at Pre-Seed or Seed.
Follow-On Capital Is the Top Use Case: 39 of 47 GPs using or planning to use SPVs cite follow-on capital as the primary reason.
Terms Are Standardizing: Management fees of 0-0.5% are the norm (45%), and carry commonly sits at 16-20% (46%). On GP commitment, 44% put in just 0-0.5% of the deal themselves, while only 27% commit 2% or more.
✈️ KEY TAKEAWAYS
SPVs are becoming standard follow-on infrastructure at small funds, with fee and carry terms converging. The tradeoff for LPs is concentration risk, since one SPV backs a single company. Asking a GP how often they use SPVs versus fund capital is now a fair diligence question.
Small Funds Should Hold Almost No Reserves
Hunter Walk from Homebrew argues that reserving capital for follow-ons no longer makes sense for small funds.
The Old Norm: Early-stage funds have traditionally held 20-50% of capital in reserve for follow-ons. Walk says this was built on insider-access and pricing assumptions that have weakened as VC firms have multiplied.
His New Rule: Walk recommends funds under $100M hold minimal reserves, judging each follow-on against a fresh, net-new investment. He assumes only a small share of a fund's capital will go toward follow-ons.
His Alternative: As a substitute, Walk points to capital recycling, or reinvesting returned money. Homebrew's first two funds each reached over 120% invested this way.
✈️ KEY TAKEAWAYS
Paired with the Odin survey above, this signals a shift from dedicated reserves toward SPVs and capital recycling. LPs should look closely at how a manager plans to handle follow-ons, since a stated reserve percentage may not reflect actual deployment. This is a real, trackable change in fund construction.
Pricing Shrinks From 18 Months to 6
Kyle Poyar, at Growth Unhinged, argues the useful life of a SaaS pricing model has collapsed, drawing on his work advising software and AI founders.
The Pricing Post-Mortem Most Companies Skip: Poyar says most companies change pricing but never systematically check whether it worked, since no function owns the outcome. He recommends a retrospective 1.5-2 sales cycles after any change, tracking net revenue retention, contract value, and time-to-close.
A Concrete Pricing Benchmark: Aim to lose about 20% of deals to price; losing 40%+ signals a real mismatch with the market. Poyar built a win-loss pricing analyzer that pulls call transcripts and CRM notes to track this and surface where losses cluster.
Tie Pricing to a Growing Metric: Poyar recommends tying monetization to a metric that grows with usage, the same way cell phone plans moved away from charging by the minute. Seat-based pricing, once dependable especially for startup-focused sellers, is far less reliable today.
✈️ KEY TAKEAWAYS
A portfolio company that's never checked whether its last pricing change actually worked is worth a direct question. Whether they’ve examined pricing or not is a useful signal of how rigorously they run the business, worth tracking in diligence and board updates.
That’s it for today!
Stay driven,
Andre
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