Venture Capitalist Brayton Williams Highlights LP Demand for Concentrated Funds

Brayton Williams, co-founder of early-stage venture capital firm Boost VC, recently drew attention to a significant preference among Limited Partners (LPs) for highly concentrated investment vehicles. In a social media post, Williams quoted LPs stating, "> We love super concentrated, 20 companies every 3 year fund." This comment underscores an ongoing industry discussion regarding portfolio strategy in venture capital.

This preference for a "20 companies every 3 year fund" suggests LPs are seeking focused portfolios, aiming for deeper engagement and potentially higher returns from a select group of startups rather than broad diversification. Such a strategy is often believed to align with the power law distribution of venture returns, where a few outlier successes drive the majority of a fund's performance. LPs are increasingly scrutinizing fund performance metrics like Distributions to Paid-in Capital (DPI), favoring managers who can deliver consistent, strong returns.

Boost VC, co-founded by Williams and Adam Draper in 2012, is known for its high-volume investment approach, particularly in "sci-fi tech" sectors. The firm has invested in over 300 companies, with Williams previously noting their rapid pace of "a deal a week." This strategy, while successful for Boost VC, contrasts with the concentrated model highlighted by the LPs, indicating a potential divergence in preferred investment philosophies within the venture ecosystem.

The broader venture capital landscape is currently navigating a period of heightened LP selectivity and extended fundraising timelines. While some LPs value diversification to mitigate risk, others, as highlighted by Williams, are leaning towards more concentrated funds, believing it offers a better chance for outsized gains. This dynamic puts pressure on General Partners (GPs) to clearly articulate their investment thesis and demonstrate how their chosen strategy will generate superior returns in a competitive market.