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Venture Capital

Early, growth, late-stage venture. The high-variance corner — when it belongs in a client portfolio, and when it doesn't.

Global VC AUM (2025)$2.3T
Top-quartile VC net IRR25%+
Of fund returns from top 10% of deals70%
Typical VC fund life10–12 yr
How it works

The mechanics.

1

Sourcing

GP sources deals through founder networks, partner relationships, accelerators, inbound. The best deals are typically pre-empted, not auctioned.

2

Diligence + Investment

VC due diligence is faster + more pattern-matching than PE. Term sheets in weeks, not months. Series A check sizes $5–15M typical.

3

Portfolio management

Active board work, recruiting, follow-on funding. VC is high-touch — top funds spend significant time per portfolio company.

4

Exit

Outcomes are highly skewed. 50%+ of investments return 0–1x. 10%+ return 10x+. The portfolio math depends on the right-tail outcomes.

Vehicle types

How investors access it.

Drawdown VC fund
Classic structure. 10–12 year fund life. Capital called over 4–5 years. Most VC remains in this format.
Multi-stage VC fund
Larger funds (Sequoia, A16Z, etc.) deploy across seed + Series A + growth + late-stage. Lower variance, lower upside.
VC fund of funds
Diversification across managers + vintages. Good for advisors without manager selection expertise. Stepstone, Hamilton Lane, etc.
Late-stage / pre-IPO
Lower-variance, lower-upside variant. Buy companies 1–3 years from IPO. Lower J-curve, faster DPI.
Sub-strategies

What lives inside the asset class.

Early-Stage (Seed–Series A) · ~30%

Highest variance, highest upside. Top decile returns 5x+ of bottom decile. Manager selection is everything.

Growth Equity · ~40%

Series B–D. Companies with traction. More predictable than early-stage but less right-tail upside.

Late-Stage / Pre-IPO · ~20%

Companies 1–3 years from public markets. Shorter J-curve, lower returns, but lower variance.

Specialty (deep tech, climate, bio) · ~10%

Sector-specific funds. Higher variance even than generalist VC. Requires sector expertise.

Risk lenses

What to watch.

  • Variance: Highest of any alt category. Manager dispersion is enormous. Top-decile returns are 3–5x median.
  • Vintage: Vintage matters enormously. 2014–2018 were extraordinary; 2019–2021 are recovering from over-valuation hangover.
  • Illiquidity: 10+ year fund life. DPI typically doesn't start meaningfully until year 6–7. Plan accordingly.
  • Concentration: Single-fund concentration risk. Diversify across at least 3 vintages + 2–3 managers.
FAQ

Common questions.

Should every client have VC?

No. VC is for clients who: (1) are QPs with $5M+ in investments, (2) have multi-decade horizons, (3) understand they may lose 30%+ in a bad vintage, (4) already have meaningful PE allocation.

How much VC in a portfolio?

For Orion's growth model: 5–10% of the alts sleeve. Cap it — don't let VC creep above 10% of total alts.

How to think about manager selection?

Access to top funds is the #1 challenge. Use multi-manager VC FOFs to diversify if you can't access top decile directly.

Why has VC underperformed lately?

2019–2021 over-valuation hangover. Recent vintages (2022+) are reset and likely to perform better than 2019–2021 vintages. Don't chase. Stay disciplined.

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