seed-stage fund or super-angel group—one that has more Internet-focused experience than most traditional Boston angels. That said, these are young investors (all in their early 30s) who are raising their first fund together, so there is bound to be a learning curve. And it will take time to build up a track record as investors.
Indeed, it’s still very early in the micro-VC game, but I wanted to hear Beisel’s take on how the broader venture industry will evolve. There are two things going on, he says. One is that over the past decade, venture funds have gotten larger, while more recently mid-size VC firms have struggled to raise new funds. “But over the next 10 years, bigger firms will actually raise larger funds,” he says. At the same time, the other big trend is that young Internet startups need much less capital than they used to, as they can rely on pay-as-you-go cloud computing and other efficient infrastructure services.
Beisel thinks there will be an “emerging segment” of micro-VC that is “enduring” and will sit in a sweet spot between the various incubator and accelerator programs (like TechStars, Y Combinator, and MassChallenge) and big venture funds. And, for the record, he does think micro-VC is disruptive to traditional venture capital.
That being said, won’t successful micro-VCs just morph into big VCs down the road? Beisel didn’t exactly say no, but he replied, “We founded the firm to be the best micro-VC firm.” And he pointed out that in venture capital studies covering the last 30 years, “the earlier the stage, the higher the returns.”
More fundamentally, what Beisel’s firm represents is a relatively recent grass-roots approach to investing early in tech entrepreneurs—a strategy that many traditional VCs have adopted as well. “We’re embedded in this ecosystem. We’re not just participants, we’re contributors,” he says. “The days of pitching in Waltham are over.”
