E450: Brijesh Jeevarathnam on Why Venture Is Eating Public Markets, Picking Great VCs, and the AI Boom

The venture LP who backs managers before the feeding frenzy

Venture has matured from a craft industry into a heterogeneous asset class, and the winners are decided earlier than most LPs can see. Adams Street's Brijesh Jeevarathnam has spent two decades picking the managers who get there first, and his edge is confidential information about who backed a company before the crowd. He thinks the AI cycle has years left, and that private capital now builds companies of a size the public markets used to fund.

Takeaways

• Private capital is eating public markets. US public companies fell from more than 8,000 to about 4,000 while their market cap grew nine to ten times to about $80tn. Wiz was acquired for $32bn, and 7% of venture-backed companies generate all the gains.
• Every GP puts AI in the first half. Brijesh says no GP he asks thinks the AI boom is past the fifth inning. He compares ChatGPT in the fourth quarter of 2022 to Netscape in 1993, and says compute demand far outstrips supply. The most dangerous words remain 'this time it's different'.
• Team and strategy beat track record. Adams Street judges the team and the investment strategy, and weighs the backward-looking track record least. It wants chemistry and complementary skills, and managers who see around corners. Brijesh quotes Josh Wolfe of Lux Capital that chips on shoulders put chips in pockets.
• Diamonds in the rough are off by one. Against Marc Andreessen's claim that only diamonds remain, Brijesh says the rough ones are founders who look unusual, whether they come from another geography or are hard to work with. Adams Street looks at who backed a company first, before the feeding frenzy.
• Venture runs on information asymmetry. Brijesh treats confidential information held inside Adams Street, shared only with the investment team, as an offensive weapon. It lets the firm reach the best companies earlier than rivals.
• The venture field grew roughly eightfold. There are about 3,000 to 4,000 venture firms today against about 500 active firms in 2006, and $500 billion-plus is going into venture-backed companies as of the third quarter, per NVCA. Round labels mean little when a company raises five rounds in one year.

Why the giants go public

• David's contrarian take is that the largest private companies, SpaceX among them, will list because they have run out of private capital.
• He cites the first quarter of 2026, when 75% of all venture capital went to five companies, and says that 90%-plus of top founders want to stay private.
• Brijesh separates the cyclical from the structural. Returns get more cyclical the closer a deal sits to the exit, and the venture aperture keeps growing.