📶 what happened to the "venture capital" I know?

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Good morning 👋

I’ve been deep in the weeds working on a project that I’ll (hopefully) be sharing more soon.

I’ve got nothing witty to say, so let’s get right into the biggest stories since last Friday.

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General Catalyst is signaling the end of traditional venture investing with a new model that looks nothing like the old VC playbook.

Instead of focusing solely on early-stage equity investments, General Catalyst is rolling out revenue-based financing for companies with heavy marketing and customer acquisition costs, taking a share of future income rather than pure equity stakes.

With $30 billion in assets under management and $8 billion in fresh capital, the firm has also acqui-hired smaller VCs over the past few years, and it is even buying a healthcare system in Ohio.

It’s a shift being echoed by other major players, like Andreessen Horowitz, as the lines between venture capital and broader asset management continue to blur.

Why it matters: The classic venture model is dying off, and funds are becoming creative with how they create equity value.

We’re seeing it with seed funds becoming more nuanced in order to gain an edge and win deals.

We’re seeing it with growth funds that are building out service components of their own business in order to support the companies they work with.

And we’re seeing it with mega funds that are registering as RIAs, changing financing structures, acquiring other funds and talent, and buying up assets for distribution purposes.

What happens next: We should write a much longer piece on this (note to self), but this is the latest reminder that traditional venture is over, and a modern approach has taken over.

There are way to many funds fighting over way too little truly great companies. If you’re a top 1% founder, you can take money from whoever you want, and the best firms will keep building products, services, and different offerings for those founders.

Expect more funds to find creative ways to do the core components of an investment firm (find, win, support).

Read more: https://www.generalcatalyst.com/stories/the-unbundling-of-growth-equity

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Thanks for reading this far and giving us a little bit of your attention this week.

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- Clay

Here are the results from our poll question in yesterday’s piece:

Do you do any proactive work to improve your health / prevent disease / live longer?

🟩🟩🟩🟩🟩🟩 Yes - absolutely ✅ (5)

🟨🟨⬜️⬜️⬜️⬜️ No - but I should 🤔 (2)

🟩🟩🟩🟩🟩🟩 No - I'm fine 🙂 (5)

12 Votes