General Partner at Vinthera, LP & Direct Investor in Venture Capital
Munich, Germany
Joined November 2011
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Philipp von dem Knesebeck retweeted
Taking money off the table in high valued growth rounds is something that should part and parcel of prudent portfolio management. A company may be "generational" but depending on price point, the risk/reward economic trade may still point to partial sell. At the very least, all GPs should have a thoughtful policy.
Also, I do not think the vast majority VCs should be holding public positions past lock-ups periods. Distribute cash or in-kind (preferred for taxable investors if material)
Philipp von dem Knesebeck retweeted
“You just don’t get it”
Every few years there is a zeitgeist trade where VCs feel they can completely ignore numbers, valuations and basic return math because companies with zero revenue or growth with terrible economics are getting marked up like crazy. Right now there are close to 100 companies value >$1b that have ZERO revenue or product. Let that sink in…
This distinctly occurred during the COVID crypto wave where failed founders/VCs were flocking to the sector, claiming a new world order and lauding that others “just don’t get it.”
We’re seeing the same thing now in pockets related to deep tech, manufacturing and defense. Tech bros saying “you just don’t get it” when they haven’t achieved a dollar of revenue, let alone liquidity. Are there great, rationally minded investors/companies in these pockets? YES. But the flocking of failed/unqualified founders/VCs rushing to these sectors to capture the cheap zeitgeist capital seems on par or greater than during the crypto wave where we would frequently see companies that would spend more on a conference sponsorship than they had in revenue.
Every cycle, the same thing happens - the zeitgeist eventually changes and then most of those markups (and employee common) go to zero, sitting under a liquidation preference stack. Money easy gained is easy lost. Real returns require real work.
If you are in these type of companies, getting liquidity when the market is irrational (which I believe it is right now) is critical…once that liquidity door starts closing, it’s too late. If you were early in these sector, GREAT. That shows that you did the work to get ahead on a trend and develop a right to win in a non-consensus area. That’s the way to win. But sell some of your positions to maintain survivability (LPs will NOT forgive you if they go to zero and many of these companies will not have the fundamentals to support achieving CFP if capital dries up).
If you are the one running to jump on the dog pile at this late stage of the cycle (or as many in this market would say, “the greater fool”), then venture might not be the best asset for you. This game is NOT meant to be THAT easy and the Cambridge data shows that. The only way to consistently win is to put in the work of developing a long-term competitive position with an investing style that spans cycles. This isn’t a theory, it’s a fact.
But then again, I might be one of the folks that “just don’t get it.”
Philipp von dem Knesebeck retweeted
The problem with AI generated pitch decks is that while they are often technically correct and sophisticated, the patterns they use are so repeatable and mechanical that the unique point of view, story and soul of the startup transpire much less.
Memorability goes down as well.
Philipp von dem Knesebeck retweeted
...but if you are going to expect >5x returns from the GPs you back, your best bet is the <$50M fund category.
Analysis by @PatternVentures:
patternventures.substack.com…
Next time you hear a GP predict their new fund will hit 5x or an LP say they are targeting 5x returns from VC, just show them this table from @PeterJ_Walker
Exceptional returns from venture are possible. But, by definition, they are the exception, not the norm.
Solo GP risk is overrated. Team risk is underrated.
People love to rag on solo GPs while simultaneously underestimating how hard partnerships are.
So many VC partnerships seem to be formed around "we can raise more money together" rather than "we invest better together."
Investing is hard enough, and doing it with a partner adds another layer of complexity entirely. The number of partnership splits in recent years is a good reminder of just how hard it can be.
For a partnership to work, 1+1 really needs to be >2.
Philipp von dem Knesebeck retweeted
A few uncomfortable truths that need to be said:
1. Everyone is so afraid of being accused of being a luddite (or, god-forbid, left behind) that the vast majority of people are too afraid to question the dominant tech market narratives.
Philipp von dem Knesebeck retweeted
This is a symptom of a venture ecosystem where paper marks have become culturally equivalent to realized outcomes.
When interim markups and secondaries become the scoreboard, nobody should be surprised that companies optimize for narrative velocity instead of long-term success.
Avi Patel says nobody builds real companies in SF anymore
"SF is filled with striver people that only care about fundraising and not about building real businesses. All they go out and do is brag about their last valuation and then you look at their company and it's a fucking shitshow. No one knows how to build real shit in SF. I'm dead serious."
"It's not what it used to be at all. Anybody that's in SF right now doesn't like it. The people who are building real companies are in Palo Alto. All the ones founding companies in SF are like striver Gen Z idiots who don't know what the fuck they're doing, have never had a girlfriend, never had a real interaction with a human being and don't have any friends."
It's perfectly fine to give up economics on Fund I to someone who "puts you into business".
However, don't give up control (IC seats, GP stakes, etc.). LPs invest in General Partners, so they need to be in charge.
Short term mark-ups and long term gains are not necessarily a contradiction, but chasing the former can definitely expose investors to hypes.
LPs who don't dig deeper than paper mark-ups are making the beds they lie in.
Markups have effectively become fundraising currency (especially for EMs).
If your next fund depends on showing LPs unrealized gains by the time you’re doing the first close of Fund II, then you’re structurally pushed to back companies that are likely to raise again in the next 18–24 months (consensus -> inflated price).
Your survival horizon as a GP is shorter than the company’s timeline.
And EMs get hurt from this the most.
They don’t have a franchise buffer. A firm like Sequoia or Benchmark can absorb a few slow portfolios because they’ve built up LP goodwill over time.
An emerging manager raising a $50–80M Fund I with ~3 years to prove momentum before the next raise doesn’t really have that luxury.
And I think post-ZIRP LPs behavior (we need early "success" signals!) just exacerbated this effect.
Philipp von dem Knesebeck retweeted
1/ The VC world loves a good binary debate.
“Concentrated funds outperform.”
“Diversification is better for capturing the power law.”
Both sides argue like it’s obvious. Both sides are missing the point.
Here's the nuance most people ignore 👇
Philipp von dem Knesebeck retweeted
I talk to thousands of LPs every year. Here's what I'm seeing right now when it comes to how they're approaching VC.
1) Late-stage co-investments have never been hotter. The top 5-7 names have effectively *unlimited* demand. And that supply/demand imbalance has created three real issues:
First, the question of *true* access. Many of the SPVs floating around for these companies are not sanctioned by these companies. Buyer beware. These companies are tight on their cap tables, and access can be gated beyond just capacity.
The fee creep is getting egregious. Someone shared with me recently that for a top AI lab, a group was charging 15% upfront, 20% carry, and 30% over a 2X. At those economics, you can take what would be a generational company but a bad investment. Fees are the silent killer of returns in late-stage co-invest, and this risk is now being focused on the logo, but ignoring the fee effects.
Additionally, for those who aren't getting access to the top companies must go a tier (or two) below. Very dangerous in a high-intensity / valuation market for AI. As I've mentioned, there will be a lot of expensive mistakes made as we figure out what winners will look like in the future.
2) Capital is flowing to large, established brands. This is the clearest trend right now. LPs are concentrating on the top multi-stage and Series A firms. The logic is straightforward: these are easier to underwrite, and given how extreme the power law has become, investors want exposure to the trophy assets soon after investing. If you're a top 10-20 brand, you're oversubscribed, sometimes in multiples. If you're not, the fundraising environment is a different world.
3) Emerging and emerged managers are in the toughest spot, with a notable exception. Spinouts from top firms and operators with strong brands are moving fast and generally very oversubscribed.
For everyone else, the bar has never been higher. I think this is actually where the opportunity is for LPs If they have the time/expertise to do so.
The issue isn't that LPs don't know this. Most do. The problem is twofold: the time and difficulty of sourcing and diligencing emerging managers is real, and the hangover from 2019-2021 is still very present. A lot of people tried VC during that era who probably shouldn't have, and the failure rate on those Fund 1s has made the entire segment harder to navigate. Matching supply and demand here has become nearly impossible. Supply (Managers) far exceeds demand due to the issues noted.
Philipp von dem Knesebeck retweeted
VC funds can be way more LP friendly
most funds are NOT optimized for LP friendliness.
there are massive amounts of decision points where GPs can favor themselves over LPs. the obvious one is fees. the less obvious one: when a fund does an SPV, that deal was sourced because the fund was already an investor. should some of the SPV economics flow back to the fund's LPs?
very few funds do this. it gets talked about but almost never implemented…
funds should also clearly decide which expenses it should charge to the fund and which expenses it should charge to the management company. The fewer expenses charged to the fund, the better it is for LPs. LP-friendly funds should recognize this and telegraph how they charge expenses to LPs.
there’s also the community side. many LPs in seed funds are incredible individuals -- founders, executives, family offices -- who'd benefit enormously from knowing each other. funds see emerging categories early, spot trends before they're obvious, identify other funds worth backing. most funds share none of this with their LPs.
the bar for being LP-friendly in venture is genuinely on the floor. quarterly letters and a capital call notice -- that's the industry standard. it shouldn't be hard to clear that bar but most funds don't even try.
the best fund-LP relationships aren't transactional. they compound the same way the best founder relationships do.
Philipp von dem Knesebeck retweeted
Ok, let’s do a quick exercise.
If we take a realistic $50M fund (pretty average for emerging managers in 2025–2026 vintages from both coasts), here's how it can actually work:
1/ 2/20 which is ~$10M management fees over 10 years with ~$40M deployable capital
2/ Reserve ~25% from the fund size for follow-ons which is $12.5M (you can recycle aggressively or bump to 40% if conviction is high)
3/ Leaves ~$27.5M for initial checks
4/ Pure Seed focus (no pre-seed mix to keep it clean): "hot Seed" rounds today: often $4–6M on $20–30M post, but let’s take $5M on $25M post
If the fund tries to lead with 50% of the round ($2.5M checks), you’re suddenly looking at maybe 11 companies in the portfolio with ~10% ownership.
More realistically, though, a new manager probably ends up co-leading or participating with something closer to 1/3 of the round ~$1.7M), which pushes the portfolio toward ~16 companies with ~6–7% ownership.
So the portfolio naturally lands somewhere between concentration and diversification.
And in both cases the outcome probably depends less on the exact fund size and more on execution like pro-rata discipline (selective super-pro-rata on the winners and passes on mediocre positions), some thoughtful liquidity (strategic secondaries, recycling), and a few real exits.
Under those conditions hitting ~3x isn’t crazy ($150M in distribution).
Which is why I’m not fully convinced that the $30–75M category is structurally doomed – the constraints are real, but the math can still work if the manager is disciplined.
LPs love the idea of the 30M-75M high ownership seed fund.
These will be the worst performing funds of this vintage.
Average top tier seed rounds are $5M.
These funds don’t have enough to lead and have a diversified portfolio.
But they are too large to be collaborative and work with the best leads.
Adverse selection takes effect.
Be small enough to collaborate (sub $20M) or be large enough to lead ($100M+).
Philipp von dem Knesebeck retweeted
Interesting idea from a call today.
The more LPs I speak with, the more it feels like there are roughly 3 levels of how people approach manager evaluation.
Level 1 (aka high-level fund metrics)
Most LPs start here. Looking at things like TVPI, DPI, IRR across similar vintages and strategies. Which is fine as a first pass… but in practice almost every fund looks “top quartile” at some point in the cycle, whether because of timing before write-downs, aggressive markups, selective reporting, or some mix of all three.
So those numbers often say as much about timing and accounting as they do about actual underwriting skill.
Level 2 (aka portfolio logos)
More sophisticated LPs go one layer deeper and start looking at the underlying portfolio companies. But even there, I think a lot of people fall back on signals that are simply easier to read:
- which logos joined later rounds
- who led the Series A / B
- which companies raised big up-rounds
- which brand names appear on the cap table
None of these are meaningless. They do signal market momentum. But mostly they tell you who invested next, not necessarily what the manager originally underwrote.
And then there’s Level 3 (aka understanding how the manager actually underwrites businesses)
This is where things get much harder, because you have to look inside the companies themselves and ask questions like:
- where is the growth actually coming from?
- does marginal growth require more capital or less over time?
- does the system build operating leverage as it scales?
- does the business compound internally, or just keep absorbing new capital?
Part of the reason the industry drifted toward the first two levels probably has to do with the macro environment we operated in for ~40 years.
When interest rates are near zero, future cash flows barely get discounted:
- if a company produces $1B ten years from now, at a 1% discount rate that’s still worth roughly $900M today
- at a 10% discount rate it’s closer to $380M
That difference massively changes what investors are willing to fund.
And for a long time, that actually worked, because the system kept refinancing itself. But when liquidity tightens, the gap between momentum signals and business health starts to show up very quickly.
Which is probably why the real question for LPs today feels less like who invested next and more like what kind of businesses this manager consistently chooses to back in the first place.
That’s where Level 3 really starts.
Philipp von dem Knesebeck retweeted
As the firm matures, a concave phase emerges. The GP’s brand becomes legible to LPs, embedding expectations about what the firm is meant to be. Capital has been raised against a story — sometimes against an illusion of learning — where markups are mistaken for returns and a rising tide for manager alpha. Strategy hardens into identity. The GP is no longer free to be interestingly wrong; they are forced to be defensibly safe. buff.ly/7ZHnPHe