VCs must now optimize for IRR and beat a no-fee public index by about 1,000 basis points, because AI startups all pay the Magnificent Seven. Listen
Ganesan said that 28 years ago investors focused on cash-on-cash returns and IRR took care of itself. Today, every venture company pays Nvidia, a hyperscaler and probably a foundation model provider, all of which are or will be investable in no-fee, no-carry index funds. To justify private-market capital, he said, a venture fund must beat that by roughly a thousand basis points.
“there's no way for Venture to be successful in today's era without the Mag 7 participating in everything you're doing.”
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