Darrell Hanks

Building a VC firm in 2025 was like drinking water out of a firehose. Actually, it was more like drinking out of a firehose while running a marathon in the middle of a literal NYC winter. I've learned more this year as a new VC fund manager than all the years I've been in VC. At the beginning of 2025, Joseph Alalou and I were two people with a vision and a piece of paper with our entity name. By the end, we had landed our first LPs. The middle? That was the hard part. 1️⃣ The narrative iteration was grueling (but vital). We spent months iterating on our thesis. We have more drafts in our shared drive than a Big 4 consulting firm. Every time I thought we were "final," my co-GP, Joe, would pause. I knew what was coming: Back to the drawing board. It was deflating and exhausting, but he was right. The "why you" and "why now" are the only questions that actually matter. 2️⃣ Grind is a prerequisite, not a choice. At the start of 2025, no one knew who we were. Despite the bitter NYC winter, Joe and I were out 4-5 nights a week in Q1 just to get on the map. We were like performers testing new material, sometimes the messaging hit, and sometimes it left people completely bewildered. We just needed to get integrated into the community. 3️⃣ The unglamorous backend is the backbone. We spent 2025 figuring out the "boring" stuff: legal counsel, fund admin, tech stacks, and security. Most of it has changed since January as we became savvier, but building that infrastructure from scratch was a masterclass in operational grit. 4️⃣ Hiring is an endurance test. We learned that hiring for a new firm is messy. Post a VC role and everyone wants to be an investor, even when you need someone who can be a jack of all trades. We made mistakes. When something wasn't working, we learned to move fast instead of hoping it would get better. 5️⃣ Discipline ≠ process We had the outreach, but we lacked the roadmap. After two months of relationship building without a unified plan, we hit pause. Took a month to reset, got organized, and built out a strategy with timelines and goals. Then we heard our first "yes." Best feeling in the world...immediately followed by a "holy shit, this is so hard and we have so much more to go" realization. But that's where the competitive drive kicks in. Every hard thing I've accomplished, D1 volleyball, breaking into VC without a finance background, was achieved through emotional lows, rejection, daily sanity checks, and stubborn determination. People constantly ask me, "Isn't it a brutal time to start a fund?" I never know how to answer that because it's stating the obvious. Anything worth achieving is grueling. If it were easy, everyone would do it. 2025 was about growth, telling fear to f*** off, and building the foundation. But the most important reflection? I've been here before. I know how strong I am. And I'm not stopping until Fund I closes in 2026.

98

35 Comments

Sharing some hot takes from a candid conversation with George Mathew (Insight Partners), Rebecca Kaden (Union Square Ventures) and Ben Lerer (Lerer Hippeau), moderated by Akshit (Ash) Bhatia, CFA on Silicon Valley Bank's H1 2026 State of the Markets report. Key insights: 🔥 A "barbell" effect has emerged in venture capital. At one end, massive, late-stage rounds concentrated in a few (mostly AI) companies. At the other, early-stage investing thrives on discipline and finding "pre-consensus" bets, with a hollowed-out middle. 🔥 Specialization is the winning strategy for investors and founders – success now requires choosing a clear lane. Investors must decide between a "top-down" (access-driven) or "bottom-up" (conviction-driven) approach. Article link: https://lnkd.in/e3ywHwDB

44

In VC and PE firms, investment teams used to follow a familiar pattern. You had one partner principals, associates, analysts underneath them. That model is starting to change. In the next few years, I think many VC firms will look more like reverse pyramids. Fewer people overall, more senior density, and AI doing a growing portion of the analytical work behind the scenes. On the investment side, a lot of the traditional “training ground” work is being automated. Market maps, early screening, surface-level references, pattern matching on public information are things an agent can help with. The leverage of one strong senior investor, supported by a small team and real data infrastructure, is going up. That creates real pressure on the middle. Partners without a track record will face more scrutiny. Principal and VP roles will narrow. Junior roles will still exist, but they will be much more about judgment and relationship-building than copy-pasting data into decks and investment memos. For people in the industry, it means career paths will change. The “climb the ladder slowly” model will not be available everywhere. You will need to be closer to the deals, closer to founders, and closer to the real decisions to stay relevant. For LPs, it means asking different questions. Do you have a deep team, or the right team. Is your data infrastructure doing the heavy lifting, or are you still relying on armies of analysts to push spreadsheets around. The firms that adapt will look smaller on the org chart, but much bigger in terms of real leverage.

28

1 Comment

Private Equity’s OUTSIZED Role in 2024 Bankruptcies Here’s another reason I believe so strongly in ESOPs.   I know some really talented private equity professionals and some outstanding PE firms – ones who deliver on the mantra of buying underperforming companies and improving operational performance while generating a market rate return based on the Company’s success at exit.  But anyone who hangs around the private capital markets knows that this type of PE investor is in the minority. In an age of over-leverage, dividend recaps and debt-fueled bankruptcies, private equity’s growing role in the U.S. economy is showing cracks. The most recent data from the Private Equity Stakeholder Project is pretty damning.  Though PE firms represent just 6.5% of the U.S. economy, they were responsible for 56% of the largest bankruptcies in 2024—those with liabilities over $500M—and 11% of all bankruptcies overall.  This led directly to 65,000+ layoffs nationwide. PE firms played a role in 65% of billion-dollar or greater bankruptcies during the first half of 2024. And no surprise to anyone paying attention, a familiar pattern emerges: debt-fueled takeovers, dividend extractions, and short-term profit priorities that weaken companies instead of strengthening them. If you need further evidence Moody's Ratings reports that FULLY 73% of the most speculative U.S. companies (B3 Negative and lower) are now private-equity backed.  That’s not exactly reassuring and definitely not a great outlook for 2025 and beyond.  With healthcare, retail, manufacturing and other vital sectors serving as the current playground for private equity isn’t it beyond time to ask whether this model is building long-term value as the PE industry claims —or simply extracting it at everyone else’s expense. https://lnkd.in/ggeacqrK

38

4 Comments