Current Micro-VC landscape as of October 2015

1. Micro-VC landscape The who,
what, and why
By: @samirkaji

2. What are Micro-VC’s?

3. Not quite

4. What are Micro-VC’s?
• Primarily initially invest somewhere in the seed stack
• Invest on behalf of 3rd party Limited Partners
• Most commonly have fund sizes that are sub-$100MM
• Initial check sizes of $250K-$2MM

5. Why the growth of the space?
• Inferior historic return performance of large funds during
2000’s
• Capital efficiency of startups – the cost of starting a company
has come down 100x during the last 20 years.
• Less reliance on “unicorns” to generate outsized returns
relative to larger firms.
• Compelling data that evidences smaller funds in the top decile
far outperform top decile large funds
• Lower barriers of entry – Most smaller fund do not require
institutional backing

6. Micro-VC Firms by year
0
50
100
150
200
250
300
2009 2010 2011 2012 2013 2014 2015
# of firms
Year

7. Current State of Micro VC Market
• 250+ Micro VC’s active globally
• 35% of firms < $25mm AUM
• 50% of firms have their largest fund < $25mm
• Fastest growing sub-sector of the venture market, as >150
new firms formed since 2012
• Institutional LP’s actively investing and/or exploring in space;
• Fund of Funds – I.e. Top Tier Capital, Industry Ventures, Northern
Trust, Sapphire Ventures, VIA, Weathergage, TrueBridge, Horsley
Bridge, etc.
• Endowments – UCLA, UNC, Duke, UND, Wake Forest, Davidson,
etc.

8. Micro VC’s Geography
• 250+ Micro VC’s
• Opportunity in California
• ~50% Micro VC Firms
15
17
33
115
70
Boston
SoCal
NY
SF Bay Area
Other Cities

9. Top Micro VC Investors In The
Current US Billion Dollar Club
Select Companies
1
1
1
2
2
2
2
4
6
6
16
Floodgate
Vast Ventures
Bullpen Capital
K9 Ventures
Soft Tech VC
Crunchfund
Queensbridge Ventures
Felicis Ventures
AF Square
Lowercase Capital
SV Angel

10. Future of Micro-VC?
• Expansion then contraction (expect 350+ firms by end of
2016)
• New Micro-VC firms are unlikely to be generalists, but
thematic, niche, or vertically focused.
• Top decile Micro-VC returns will continue to outpace larger
counterparts
• Graduates – Many top performing Micro-VC firms will become
full stack venture firms that raise funds >$125MM
• I.e. Felicis, Data Collective, Amplify.
• Cold winter ahead for many - many Micro-VC firms that are
not institutionally backed will encounter difficulty raising
follow-on funds if expected market pullback occurs in 2017.