Is Venture Capital Dying or Evolving?

The new VC game is increasingly defined by PE architecture, an AI engine, and the flexibility of an RIA wrapper.

Back in 2010, I had a front-row seat as Türkiye’s first seed-stage tech fund was being raised. At the same time, we were managing Türkiye’s first evergreen private equity investment fund focusing on SMEs. Each week, I was screening 30-40 startups and 4-5 SMEs. I could easily grasp deep tech and disruptive models.

Yet, I deliberately chose to stay away from venture capital.

Why?

While capital was being deployed and the ecosystem was gaining momentum through events, awards, and exposure, it remained unclear whether any of the funds or fund type strcutures were actually generating real returns. The promise made to LPs was not being matched by measurable performance. Back then, I couldn’t see any convincing signs that future returns would satisfy LP expectations either.

Having grown up in a city built on manufacturing and traditional entrepreneurship, I was drawn to value creation rooted in tangible cash flow and sustainable profitability, which in turn could lead to sustainable returns. That’s why I leaned toward private equity and eventually found my home in private credit.

My decision to stay away from venture capital wasn’t based on theory alone. I stayed close to friends in the VC world, kept listening, and tracked developments up close. Across different verticals in Türkiye and MENA, I consistently observed the same dynamics:

Startups often matured more slowly than anticipated, liquidity events were delayed or absent, and IRRs frequently fell below expectations.

At first, I believed this might be a Türkiye-specific challenge. But it has become increasingly clear that the pressure on the traditional VC model is global.

It was only a matter of time before these underlying tensions began to reshape the model itself. Venture capital, as traditionally defined, no longer seemed sufficient to deliver the scale, returns, and strategic control investors were seeking. Many leading firms began to quietly adjust their mandates, slowly incorporating elements that looked and felt a lot more like private equity.

The Shift is Real

A recent Bloomberg article by Kate Clark confirmed this trend. Lightspeed Venture Partners, managing $31 billion in assets, has officially registered as an RIA (Registered Investment Advisor). They join Sequoia, Andreessen Horowitz, General Catalyst, and Thrive Capital, all of which have also moved away from the conventional venture capital model.

By becoming RIAs, these firms have gained the flexibility to invest across a wider range of assets, including public equities, secondaries, buyouts, and roll-up strategies. This expanded scope allows them to operate more like private equity funds, but with the innovative ethos of Silicon Valley.

Sequoia has transitioned into a single evergreen structure. Thrive has launched a $1 billion platform focused on building and acquiring AI-native companies. General Catalyst, notably, acquired a hospital system and now refers to itself not as a VC firm, but as a global investment and transformation company.

These moves reflect more than just rebranding. They represent a fundamental change in how capital is allocated, how ownership is structured, and how long-term value is built.

This emerging RIA-driven model enables VC firms to launch or acquire companies, infuse them with AI-driven capabilities, build long-term positions through secondaries, take meaningful ownership stakes, and think in terms of platforms rather than portfolios. The traditional spray-and-pray approach (making 25 early bets and hoping for two unicorns) is being replaced by strategies that are more deliberate, compounding, and operationally engaged.

From Theory to Execution: The Model Is Already in Motion

This is not just a theoretical shift. Several leading VC firms that have adopted RIA status are already executing strategies long associated with private equity, such as secondaries, roll-ups, and full-scale acquisitions.

• Lightspeed Venture Partners has executed over $580 million in secondary market transactions in the past three years. These included stakes in companies like Anduril, Rippling, and Stripe. They also hired Jack Fowler, a former Goldman Sachs MD, to lead their secondaries strategy and work directly with CFOs across their portfolio.

• Thrive Capital launched a new investment platform in 2024 called Thrive Holdings, backed by a $1 billion fund to start and acquire AI-native businesses.

• General Catalyst went a step further by acquiring Summa Health, a hospital system, and actively operating it. The firm is also building AI-first ventures internally, moving beyond capital allocation to active transformation.

• Andreessen Horowitz, an early adopter of RIA status in 2019, has since participated in Elon Musk’s acquisition of Twitter and expanded heavily into crypto investments. Both moves represent clear departures from traditional venture capital mandates.

• Sequoia Capital, through its Sequoia Capital Global Equities (SCGE) fund, actively invests in publicly listed companies as well as late-stage private businesses, reflecting a fully hybrid model that bridges VC and public equity investing.

These examples illustrate that becoming an RIA is not just a compliance move. It is a fundamental shift in how venture firms are deploying capital, building platforms, and owning transformation.

Today, Silicon Valley is beginning to resemble Private Equity Valley.

As someone shaped by industrial entrepreneurship, I never believed that venture capital was the ultimate model for innovation finance. After 15 years, 30+ deals, and over half a billion dollars raised and deployed in mid-market companies across emerging markets, I am convinced that venture capital isn’t dying. It is evolving into something entirely different, and it may finally be maturing into what it was always meant to become.

Looking ahead

The next three to five years will likely reward those who build AI-native roll-up strategies, acquire and transform real businesses, construct liquidity through secondary markets, and think like operators rather than pure capital allocators.

Those who stay still may survive. But those who evolve will lead. So I ask again:

In this new era of compounded capital and transformation-focused investing, is it harder to remain a traditional VC or to resist evolving into something more?

Source:

"Lightspeed is Latest Firm to Shift Away From Classic VC Model" by Kate Clark , Bloomberg News – May 1, 2025 👉 Read the full article here