The big mega-platforms are effectively taking call options by writing many small checks, which is bad for roughly 95% of entrepreneurs: they get money from a more junior principal who later leaves, so their funding mandate dies and future rounds die with it.
David argues that mega-platforms take 'call options' that work against roughly 95% of entrepreneurs — the junior investor who championed the deal moves on, the company can't hit growth targets, and the funding mandate evaporates; the few who succeed are those who believe they're the exception. ✦ AI generated
David Frankel · 20VC · 2026-08-08 · original ↗
starts at this moment · 22:07
“But if it's commoditized, does price not just become the separator? And if price is the separator, the mega platforms win.”
the mega platforms are taking call options. So, is this good for the mega platforms? Is this good for the LPs? Or is this good for the entrepreneurs? Well, probably for 95% of entrepreneurs, it's not good... You get more money at a higher price with mostly a more junior VC who will let you do your work and not get in the way... The more junior the principal at that big fund moves on. They start their own fund. They move to another fund. Happens all the time. Right. So the person who invested doesn't have mandate... because your champion's gone... you're overlooked because it's like let's focus on our real winners and that thing's worth2 or 3 billion. So 95% is mandate for further funding is dead is gone. Now this is the beautiful thing about most entrepreneurs is they just don't think about themselves in that category. I'm the 5%, I'm the 2%.
verbatim transcript · starts at 22:07
22:07are taking call options. So, is this good for the mega platforms? Is this good for the LPs? Or is this good for the entrepreneurs? Well, probably for 95% of entrepreneurs, it's not good. Why? You get more I'm I agree with you, but I'm just playing devil's advocate. You get more money at a higher price with mostly a more junior VC who will let you do your work and not get in the
22:29way. Isn't that what all entrepreneurs want? >> I mean, sounds amazing, right? >> Yeah. The more junior entrepreneur moves on, right? you're offended and it's like >> more junior in venture investor you mean? >> Yeah. >> Yeah. Sorry. >> And the more junior the the principal at that big fund moves on. They start their own fund. They move to another fund. Happens all the time. Right. So the
22:49person who invested doesn't have mandate. They can't sit around with the partnership and say look let's just put another five to 10 like let's turn over another card because your champion's gone. By the way I'm being contrarian here. This does not always happen this way. I'm just giving you the other side to this. And then you haven't made the kind of 1, five, 10, 15 a r, whatever
23:08you want to call it. You just haven't made that. So it's like you're overlooked because it's like let's focus on our real winners and that thing's worth2 or 3 billion. So 95% is mandate for further funding is dead is gone. Now this is the beautiful thing about most entrepreneurs is they just don't think about themselves in that category. I'm the 5%, I'm the 2%, right? And that's why we love entrepreneurs,
23:33>> but the stats are so far against you. It goes back to >> I hate to think of ourselves as like their insurance policy. >> But I think a few entrepreneurs have thought about that. And I think there's a little bit out in the zeitgeist going FC is a great insurance policy. You want them in the round and that it costs very little to have, you know, Harry or David
23:53in like for 500k or a million. Are you really not tempted to raise more? Like every single constrained fund including benchmark historically the uh central figure in discipline in venture has raised a what a billion dollar a billion and a half growth fund. I was with another great growth fund that is very disciplined as well but we're raising billions too. Everyone who was is like no we realize the game on the field is