From “cottage” industry to “mainstream” global technology: the new paradigm of Venture Capital and what it means for your asset allocation

Returns in venture follow an extreme power law: a very small number of companies, and an even smaller group of top funds, generate most of the returns.

Catching the (Venture) Bus, by Jen Kha, makes the case for why institutional investors need to guard against being under-allocated to venture capital just as technology and AI become an increasingly dominant source of economic value.

Catching the (Venture) Bus

“Tech has left the cottage—and venture went with it.” — Jen Kha

Kha's argument: venture allocations were historically sized for a "cottage industry," typically 5–10% of a portfolio. That assumption broke the day SpaceX went public. Between SpaceX, Anthropic, and OpenAI, several trillion dollars of enterprise value has been built largely in private markets — and LPs without exposure to it are increasingly exposed to a different kind of risk.

The piece walks through how concentrated the S&P 500 has become around a handful of technology names, how venture-backed exit values now dwarf private equity's largest outcomes, and why the old rule-of-thumb allocation to venture no longer reflects where economic value is actually being created.