When is the last time we truly innovated in venture capital?
The standard venture capital model "2-20" (2% of the fund per year in fees, 20% profit share of returns) was borrowed from hedge funds, who borrowed from the tale that Phoenician merchants charged 1/5 of goods they transported across the Mediterranean. This model is still the norm today.
Venture is facing an identity crisis. Returns follow a steep power law, and even the top performers barely beat the S&P 500. Short term games (inflating valuations via mutual underwriting) lead to long term pains (down rounds, paper AUM poorly converting to real returns). GPs have capped downside and unlimited upside, where LPs and startups can't enjoy the same. VC firms are incentivized to see their fees increase by increasing fund size, but larger funds must increases the average check size, which is at odds with technologies like AI making it exponentially easier for founders to build and learn from the market with less capital.
Venture capital must evolve.
Seed Labs is powering the largest-scale experiment in early stage venture, with positive-sum games and long-term collective prosperity at the center of it.
Welcome to the era of distributed venture capital.