How I Invest · 5 min · Oct 28, 2026

Small funds can turn a focused founder network into an edge

GEGavin Ezekowitz · Co-Founder & Chief Investment Officer, BFA Global Investors

He argues that network-specific smaller funds can find promising companies early, while large funds may struggle to make those investments matter at the fund level.

In this episode

9:07 Underwrite the team and milestones, not a distant market forecast6 min
29:19 Venture returns require convexity, pacing and position sizingPro pick 6 min
48:09 Avoid letting macro timing override your investment mandatePro pick 5 min
1:49 Early AI markets can produce more than one leading company5 min
26:59 SpaceX's compute buildout shows the value of anticipating shortages3 min
37:28Small funds can turn a focused founder network into an edge5 min
43:18 Small initial stakes can dilute a fund's biggest winner3 min
1:06:49 A manager's response to a mistake can end an LP relationship5 min

“small funds, early funds, well, managers with a very clear network can produce really incredible outcomes by being close to founders.”

GEGavin Ezekowitzat 38:15 · How I Invest

Takeaways

Fund size can dilute a winner's effect on overall returns.
A focused network may give smaller managers early access.
Test whether the sourcing edge persists across later funds.

About this segment

He argues that network-specific smaller funds can find promising companies early, while large funds may struggle to make those investments matter at the fund level. Allocators should test whether a manager's sourcing edge will last.

GE

Gavin Ezekowitz

Gavin Ezekowitz is co-founder and chief investment officer of BFA Global Investors.

Built a career across capital markets and investment banking, then became a venture and growth investor.

David Weisburd, Host

From “Gavin Ezekowitz on AI Valuations, Asymmetric Returns, and Why Great Investors Fail”, Oct 28, 2026. Watch the full episode

Transcript

From the transcript How I Invest publishes with the episode.

37:40
Because I think one of the pieces of that puzzle that is super interesting, certainly in in Silicon Valley, is there are these amazing super angels. And they are they are real taste makers at at the seed and pre seed level. Now, we're in a very crowded time in the market. I think it's always we need to be really careful that we're not just sort of judging that it will always be thus and and so forth.
38:11
But I think that there is no question that well connected folks with really a good sense of what makes for good companies can at the pre seed and seed level still do important things. And small funds, early funds, well, managers with a very clear network can produce really incredible outcomes by being close to founders. And I think one of the one of the myths that is also goes around is that, you know, well, Sequoia is gonna see all the best companies, and recent Horowitz is gonna see all the best companies.
38:54
And I'm like, well, let's imagine they do, and let's imagine that they, in fact, even invest in them, which they don't. Neither is true. But given the scale of the funds, the scale of the investment, what it would require in order for them to to carry that through and so forth, may not even be the case that that really great or good company delivers kinds of returns that you might like at a fund level, unless they really prosecuted it well.
39:21
Whereas in a manager with really great taste and network precision of process, maybe network to some angels, maybe network to some communities that can be the communities can be varied, can find these really interesting companies at an early stage. And I think that there is a bit of a myth that, look, if you're a third time founder, you know the market, you've got, you know, you got lots of acts, you got a team, you got access to all the pieces, and you get called by one of the big firms, you're just gonna go with them.
40:01
It's just simply not. I don't... It doesn't bear out. Founders choose VCs for all kinds of reasons that we we make choices. Relationship, the help they need, the kind of person that they want at that time of their firm, their knowledge that perhaps some of these larger firms made very early checks are not as helpful as they may advertise or differently helpful. There are plenty of reasons that different kinds of founders choose different kinds of kinds of managers.
40:42
And so I think for us, it's always about what is the likelihood in this environment that the network and the process of a manager will lead them to very likely find the quality of company that can be that, you know, outstanding returner. And that, you know, I think that that is a very interesting very interesting assessment process. And because there's so much qualitative that goes in there, there's so much about understanding the meaningfulness of that network, about how they how they build out those relationships, how much of that network needs to stay current.
41:33
You know, I think if you... Let's use SpaceX as an example. If you left SpaceX today, I'm not sure what the half life of your relationship... Your your network might be. Might it be a few years. It could be shorter. It could be longer. But it's probably not forever. Parts of it might be. But right now, it's very meaningful. So if you left today and you start a fund and you're well networked to all these people who might also be leaving certain companies or whatever, that could be really powerful.
42:04
Is it really wonderful today? Well, where are you three funds down the line? Like, how you may have evolved that? Is your advantage sustainable? Is your process and that advantage sustainable? Are the things that you did to generate... Because, you know, if you get to a fund two, you've probably done okay in your fund one most often. And fund ones are wonderful because there's there's always these two or three companies that folks have in that fund one that are like their profound observation.
42:35
They do empirically perform really well. They do. Yeah.