37. Benchmark’s "great unfreezing": when Benchmark says Yes to scale

37. Benchmark’s "great unfreezing": when Benchmark says Yes to scale

Benchmark’s shift matters. Benchmark’s first-ever growth fund is more than a sizing change, it is a signal that even a famously discipline-first franchise believes the market now requires more capital, more stages, and a broader platform. For LPs, the key question is not whether the move is “good” or “bad,” but whether the firm can preserve the return engine that made it exceptional while expanding into a different business model. What changed. Benchmark [https://www.benchmark.com/] closed commitments of $2 billion across two new funds, including a $750 million early-stage fund and a $1.25 billion later-stage fund, breaking a more than 20-year pattern of keeping vehicles near $425 million or below. TechCrunch [https://techcrunch.com/2026/06/03/benchmark-raises-its-first-ever-growth-fund-as-part-of-2b-capital-raise/] reports that the growth fund will make five to six larger investments in both existing portfolio companies and new startups, while the early-stage fund gives Benchmark more flexibility across seed, Series A, and Series B. The firm’s move follows a $3.25 billion return from Cerebras at IPO price and comes after a period of GP turnover, including departures by Miles Grimshaw, Sarah Tavel’s role change, and Victor Lazarte’s exit. What LPs should test. LPs should not treat “brand” as a substitute for strategy coherence. When a top-tier VC changes strategy, the first diligence question is whether the new fund architecture is a response to opportunity or a response to scale pressure: do the check sizes, ownership targets, pacing, and reserve policy still support the historical edge, or do they dilute it. LPs should also ask whether the new stage mix changes the firm’s decision rights and sourcing behavior, since later-stage investing often rewards different skills, timing, and governance than early-stage company building. Diligence points for LPs. Use a simple framework when a manager pivots: * Strategy fit. Does the new fund actually match the market the manager wants to win, or is it just capital chasing a hotter segment? * Ownership discipline. Can the firm still get sufficient entry ownership without overpaying as the fund gets larger? * Team stability. Has the partner bench changed in a way that supports the new strategy, or does the shift reflect succession churn? * Portfolio overlap. Are later-stage bets additive, or do they crowd out focus from the core fund? * Evidence of repeatability. Is there a demonstrated ability to win in the new lane, or just one breakout mark-up or liquidity event. Benchmark-specific read. Benchmark has two advantages LPs will notice immediately: an elite brand and a history of concentrated, high-conviction investing. It also has two risks that deserve scrutiny: the temptation to scale into a de facto platform business, and the possibility that AI-era capital intensity forces it into a style of investing that is less ownership-rich and less manager-controlled than its legacy model. The manuscript of the story is not “Benchmark forgot how to invest”, it is that the market it helped define may now be too expensive for the old playbook. How LPs should respond. For LPs, a strategy change is a moment to separate proof from promise. Back a manager’s evolution only if the new vehicle has clear underwriting, a stable team, disciplined fund sizing, and a believable path to preserving net returns after fees and dilution. In Benchmark’s case, the next data points that matter are deployment pace, pricing discipline, ownership levels, partner consistency, and whether the new growth fund produces the same quality of outcomes as the firm’s early-stage franchise. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com [https://verticescapital.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

36. "The Outlier Firm" (ep. 10 of the series "101 VC Core Principles")

Welcome to episode number ten of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”… Let’s dig in. First, number 37. Outliers are typically "spiky" in some direction but must possess a "heart of gold" to collaborate effectively in a team environment. Outlier partners are usually “spiky” in one dimension, technical depth, speed, or taste, but the best ones still have enough humility to work well with founders and teammates. The clearest real-world version of that is Founders Fund: it has repeatedly backed unusually hard, founder-driven companies like SpaceX and Palantir, which require partners who can be intense and opinionated while still collaborating with very atypical founders. Second, number 38. Outlier partners cannot be managed or told what to do. Outlier partners cannot be managed like normal employees; they need trust and wide latitude because the best VC decisions are made quickly, under uncertainty, and often against consensus. GV is a strong example: its decision process has been described as intentionally structured to reduce hierarchy by gathering opinions quietly before discussion, which is exactly what you do when you know seniority can distort judgment. Third, number 39. Influence within the firm should be awarded based on expertise, not on hierarchy or tenure. Influence inside a VC firm should go to the person with the deepest relevant expertise, not the longest tenure or loudest title. At General Catalyst, the power of its AI and software practice has increasingly come from partners with the sharpest category-specific insight, which is why a firm can keep winning in new waves by letting the person closest to the problem lead rather than defaulting to seniority. Finally, fourth, number 40. The VC business adheres to the principle that it is only as good as its next investments. A VC firm is only as good as its next investments because yesterday’s wins do not create tomorrow’s returns. The most vivid example is Tiger Global’s venture platform: it looked unstoppable during the 2021 boom, but the next year’s marks and the 2022 selloff showed how quickly a fund’s reputation can reset when the next portfolio cycle is weaker. Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc [https://vertices.vc/]. Thank you for listening. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com [https://verticescapital.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

35. "Building for Outliers" (ep. 9 of the series "101 VC Core Principles")

Welcome to episode number nine of our series called “1 O 1 VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”… Let’s dig in. First, number 33 Highly successful people entering VC often need coaching to gain comfort with failure, as the business inherently involves being wrong half the time. Highly successful people often enter VC expecting linear proof, but the job rewards repeated misses, so they have to learn that being wrong is normal rather than disqualifying. A strong example is Emergence Capital’s long-tenured partnership model, where the firm emphasizes continuity and learning over churn; that kind of environment helps former operators like Kevin Spain and Gordon Ritter absorb failure and keep making bold calls without treating every miss as a career event. Second, number 34 Investors must understand and stick to their own unique strengths, they must "play their game". The best investors don’t imitate the crowd; they double down on their own edge, whether that edge is a network, a sector, or a unique pattern-recognition advantage. Lux Capital is a clean example: it built its identity around hard-tech and frontier science, letting partners like Peter Hébert and Josh Wolfe lean into what they know best instead of forcing themselves into generic SaaS-style consensus investing. Third, number 35 The VC firm's fundamental job is to let talented partners run and get out of their way. A VC firm’s job is to create the conditions for talented partners to make fast, high-conviction decisions, then stay out of the way unless the framework is broken. First Round Capital has long operated this way, with partner-led ownership of deals and a strong emphasis on founder relationships, which gives investors room to build conviction without waiting for a committee to turn every idea into a compromise. Finally, fourth, number 36 VC firms must field a team of outliers to successfully partner with outlier founders. To back outlier founders, firms need outlier partners, people with unusual backgrounds, sharp opinions, and enough independence to recognize what others miss. Outliers.vc [http://Outliers.vc] is explicit about this model, assembling a team with technical depth, policy experience, and operator instincts across the MENA ecosystem so it can credibly partner with ambitious founders building category-defining companies. Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc [https://vertices.vc/]. Thank you for listening. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com [https://verticescapital.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

34. "The Discipline of Conviction" (ep. 8 of the series "101 VC Core Principles")

Welcome to episode number eight of our series called “One O One VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VENTURE CAPITAL REALLY WORKS”… Let’s dig in. First, number 29 VC firms use a shared vocabulary to discuss common emotional traps to prevent them, such as “separation of church and state”. VC firms need a common vocabulary because emotional mistakes are easier to see, name, and correct once the firm has a shared code for them. “Separation of church and state” is one such code: it tells the team to separate admiration for a founder from the cold investment case, just as top firms use scout programs and written memos to keep judgment anchored in process rather than chemistry.Second, number 30 “Separation of church and state” is the discipline of preventing the emotional “thrill of the chase” (falling for a founder) from clouding clinical decision-making. The “thrill of the chase” is dangerous because charisma can masquerade as signal, especially when a founder is unusually polished or the company feels culturally magnetic. A useful counterexample is Revolut, where George Robson has described being drawn to the founder and product while at Morgan Stanley, but only later joining Sequoia once the business case and timing were clearer, showing that attraction is not the same thing as conviction.Third, number 31 The earliest indicator of good investment judgment for a new investor is how they choose to invest their time. The earliest tell of good investment judgment is not the pitch they like, but how they allocate their time before a pitch turns into a decision. Bessemer’s public anti-portfolio shows why this matters: they preserved institutional memory by writing down what they missed, which is only possible if investors spend time on pattern recognition rather than merely on meetings that are already obviously hot.Finally, fourth, number 32 Investors who tend to achieve “base hits” instead of “grand slams” are coached to take more risk to achieve the necessary asymmetric upside. If an investor keeps producing base hits, the remedy is usually not more caution; it is a higher tolerance for asymmetric risk, because venture rewards outsized winners, not safe singles. Accel’s early commitment to Facebook is the right mental model here: the firm backed a company with enormous upside while many investors would have preferred a more familiar, smaller idea, and that willingness to lean into scale, not incrementality, helped create a generational fund outcome. Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc [https://vertices.vc]. Thank you for listening. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com [https://verticescapital.substack.com?utm_medium=podcast&utm_campaign=CTA_1]

33. "The Psychology of the Bet" (ep. 7 of the series "101 VC Core Principles")

Welcome to episode number seven of our series called “One O One VENTURE CAPITAL CORE PRINCIPLES FOR NEW LPs, WILLING TO UNDERSTAND HOW VC REALLY WORKS”…Today we’re going to explore four new core principles:Number 25. Courage is necessary to swallow one’s pride and invest in a deal at a high valuation after having passed on it previously.Number 26. Courage is also required to make an investment that nobody else supports, enduring the feeling of looking "stupid" to peers and partners.Number 27. The two primary psychological barriers preventing good decisions are the fear of missing out (FOMO) and the fear of looking stupid.Number 28. An investor’s largest decision errors typically stem from a psychological bias or emotional trap, not from calculation mistakes.Let’s dig in…First, courage is necessary to swallow one’s pride and invest in a deal at a high valuation after having passed on it previously.The hardest version of courage in VC is returning to a company you once passed on, now at a far higher price, because the renewed conviction must overcome both ego and the internal scrutiny of partners who remember the original pass. Benchmark initially declined Snap's seed round when it seemed like a niche teen messaging fad, but Mitch Lasky then led the firm into Snap's $13.5 million Series A at a $60–70 million valuation in 2013 and continued backing subsequent rounds at higher prices, a willingness to admit the initial hesitation was wrong that ultimately produced a return worth hundreds of millions when Snap went public at a $24 billion valuation in 2017.Second, courage is also required to make an investment that nobody else supports, enduring the feeling of looking “stupid” to peers and partners.Investing when nobody else will… Some of the most important investments in VC history were made by a single investor willing to write a cheque that every peer in the market considered either premature or irrational. When Fred Wilson and Union Square Ventures backed Twitter in July 2007, just four months after launch and with no discernible revenue model, they were essentially alone in their conviction that Twitter's network-effect architecture justified the bet—a position that peers found hard to defend at the time but that ultimately generated one of USV's defining returns.Third, the two primary psychological barriers preventing good decisions are the fear of missing out (FOMO) and the fear of looking stupid.NFX research identifies the two primary psychological forces distorting VC decisions as FOMO (fear of missing out) and FOLS (fear of looking stupid), and both reliably produce opposite but equally damaging errors. FOMO drives investors into crowded, late-stage rounds at consensus prices where upside is gone; FOLS prevents them from backing genuinely contrarian companies, like an Uber competitor after Uber raises billions, because the social risk of being wrong in public outweighs the financial logic of the investment.Finally, fourth, an investor’s largest decision errors typically stem from a psychological bias or emotional trap, not from calculation mistakes.Investment mistakes at the top level of VC are almost never arithmetic failures, they are failures of emotional discipline, where groupthink, overconfidence, or herd behaviour overrides rigorous underwriting. Tiger Global's 2021 venture fund deployed $12.7 billion into 315 startups in a single year, driven by FOMO-fuelled herding rather than independent conviction-based analysis, and the fund was subsequently marked down from $93 million to $65 million per unit with a negative 15% IRR, a bottom-decile outcome caused not by bad models but by the psychological trap of chasing consensus momentum at any price. Stay tuned for our next episode, and meanwhile, you can reach out to us, Vertices Capital, on our website: vertices.vc [https://vertices.vc/]. Thank you for listening. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit verticescapital.substack.com [https://verticescapital.substack.com?utm_medium=podcast&utm_campaign=CTA_1]