Episode summary
The Next Anthropic, Sequoia’s Edge, and the New Rules of Venture
How I Invest With David Weisburd
· · Hosts: David Weisburd · Guests: Erik Syvertsen
Summary
Erik Syvertsen argues that venture capital behaves less like a single asset class and more like two: seed investing, where the main challenge is getting into the right rounds, and growth investing, where firms can still win by concentrating capital in proven winners. He says AngelList’s data suggests the best-priced companies are also the most likely to generate outsized returns, which makes venture more efficient than many assume and shifts the edge from picking to access.
That leads to his core framework: in early-stage venture, the question is who consistently gets a seat at the table, not who has the best foresight. He says power laws are even more extreme than many investors appreciate, with a small number of companies driving most of the returns, and that successful firms need the conviction and dry powder to size up into the winners they already have access to.
Syvertsen maps winning venture firms into a “cathedral” model, like Sequoia or Thrive, and a “bazaar” model built by operators, specialists, and smaller managers with a real access edge. He also argues that more retail and accredited investors will need better vehicles to reach private-company value creation, since so much of the economy’s growth is now happening in private markets.
Key takeaways
- Erik Syvertsen says AngelList data shows the top decile of priced venture rounds has about the same 10x-return probability as the 50th decile, implying access matters more than price discovery at seed.
- He argues venture is really two asset classes: seed is about getting into the right deals, while growth is about sizing into companies after they prove themselves.
- Syvertsen says power laws are extreme in venture, with a small share of startups driving most of the returns and a few companies in each vintage accounting for the outcome.
- He frames venture winners as either “cathedrals” with brand-powered access or “bazaars” of specialized operators and small managers with a genuine edge.
- He says retail investors still lack meaningful access to private-market upside, which makes new evergreen and tender-offer structures like US VC important.
- Syvertsen says disciplined partial selling can make sense, but the strongest signal in venture is often staying with founders across rounds rather than flipping shares.
Notable quotes
“it's all about access, not about, you know, having the the best kind of foresight and wisdom on picking”
“the top decile priced companies probability of generating a 10x return is kind of in the 50th decile”
“it's the only asset class where you have to sell your money to the company”
“the alpha goes to the access alpha”
“Power law is the story of venture”
How the episode opens
I'm big proponent of the efficient capital market hypothesis. I was not expecting to see that in venture. Where you would think it's super inefficient, it's idiosyncratic. And what our data shows is like pretty clearly the top decile priced companies probability of generating a 10x return is convene the 50th decile.
So in other words, if you assume that the best companies are known, there's no information alpha, the alpha goes to the access alpha. So if everyone knows the best companies, it's all about how do you access those companies, not who are the best companies. And that kind of strongly suggests there's actually efficiency in the market getting priced in there.
Inspiration from uh it was Eric Raymond in his book on open source software. He talked about the cathedral and the bazaar. And I think there's a lot of analogy there.
That one way you can solve that problem is build a cathedral. And that's what, you know, Sequoia and Thrive and Founders Fund are doing where they build an amazing firm that it brings the best founders into them. And so they get coverage.
Some of the best returning small funds are people are CEOs of current very successful companies that do investing on the side.
So Eric, you spent over eight years at AngelList. What have you come to believe about venture capital a few other people believe? — Yeah. Um when I started at AngelList, I thought that venture capital was uh entirely and necessarily a boutique industry of kind of carefully crafted picking like you were going through a dim sum cart picking out from the menu. Like using your superior skill and vision of the future to kind of pick out the best deals. Um after spending time here, I think that one venture capital's not an asset class.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- venture capital as two asset classes
- startup valuation and returns
- venture access advantage
- cathedral and bazaar framework
- retail access to private markets
Companies and tickers mentioned
- AngelList
- USVC
- Anthropic
Watch the episode
Watch “The Next Anthropic, Sequoia’s Edge, and the New Rules of Venture” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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How I Invest With David Weisburd, this episode and its artwork belong to David Weisburd. Octagon is not affiliated with the show; this page is an independent summary.
