Why VC Specialization Is Good For Founders And Investors As Markets Mature
The expectations for professionals, including doctors and athletes, have shifted from a one-size-fits-all approach to specialization. Similarly, venture capital (VC) is moving towards a more focused and specialized model. While some argue that VCs should have broad knowledge and be adaptable across different sectors and stages, the analogy of preferring a heart surgeon with expertise in heart surgery highlights the benefits of specialization. Specialized VCs can provide more relevant networks and value-added services to startups in specific domains. However, there are challenges to consider, such as maintaining a large and effective network across multiple industries. Being too narrowly focused can also lead to conflicts and competition between portfolio companies. Finding the right balance between specialization and breadth is crucial for VCs to deliver value to founders. Ultimately, founders will seek VCs that offer focused guidance while maintaining a diverse portfolio that benefits each company. The specialized VC landscape is emerging as a viable option in the industry.
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