In their recent Venture Capital Update, SVB Capital raises an interesting point about the performance of smaller funds vs. larger funds. It is often thought that the larger funds have better visibility and more resources and therefore have a better chance of landing the most lucrative deals.

Findings from the SVB Capital Study on Fund Size vs. Performance

Well, according to the analysis of SVB Capital, this is not so. Their research indicates that “funds at the smaller end of the size spectrum consistently outperform larger funds across vintage years”.

In fact, seven times as many small funds returned at least a 3X multiple than large funds.

The key reasons SVB Capital mentions contributing to the superior performance of the smaller funds are fund managers’ industry-specific expertise, focus on particular segments, and strong general partner commitment.

Managing funds that are firmly in the small fund territory as defined by SVB, we are not surprised but encouraged by these findings. We are especially proud of their reasoning: these three points have been at the very core of Nexit’s thinking and message from day one.

While this superior performance is no guarantee of anything, it outlines a compelling case for both limited partners and companies to seriously consider boutique funds as partners.