Venture Alignment, Power Laws, and the Quiet Math Behind Fund Performance
Mon Oct 13 2025
John Rikhtegar of RBCx has been dissecting the venture ecosystem with surgeon-level precision lately.Two of his recent analyses — on GP-LP alignment and VC-backed IPOs — pull back the curtain on where real returns (and misalignments) hide.
Takeaways:
▪️ The Alignment Mirage→ “Even if you have perfect alignment, it doesn’t guarantee success.”Small funds look better aligned — lower fees, higher carry exposure — but alignment alone doesn’t produce outperformance. Only 1 in 20 funds (top 5%) actually hit the mythical 3x net. For most LPs, that’s a sobering recalibration.
▪️ Fee Math vs. Fund Math→ A $50M fund with 2% fees earns $10M in guaranteed income over 10 years.A $500M fund? $100M.The large fund could underperform and still make partners rich. That’s the structural irony John highlights — wealth certainty grows as performance risk shrinks.
▪️ The Power Law Follows You→ “The same power law that defines venture private markets continues after IPO.”John analyzed 414 North American VC-backed IPOs from 2010–2022.Result: the top decile averaged +400% after three years.The bottom 70% traded below IPO price — median return: -57%.The few still carry the many, even in the public markets.
▪️ Cycles, Not Curves→ “Venture liquidity is less a sine curve, more a sawtooth wave.”Half of all exit value in the last decade came from just two years — 2020 and 2021.Venture isn’t about timing perfection; it’s about vintage discipline — staying in the game long enough for the next liquidity spike.
John’s worldview is empirical, not romantic.Alignment matters — but selection and structure matter more.The real alpha sits where incentives, discipline, and data intersect.
Important links:
John's LinkedIn post on Small Fund and Alignment: http://bit.ly/47agoFX
John's LinkedIn post on Power Law post IPO: http://bit.ly/475pAvc
John's LinkedIn profile:
RBCx Ventures: https://www.rbcx.com/
Topics that we discussed:
(00:00) Episode intro and overview of TheOnePoint “Brain Snacks” format(00:38) Guest introduction – John Rikhtegar, Director of Capital Investments at RBCx(01:10) What is RBCx and its role in Canada’s innovation ecosystem(02:20) Understanding how fund size shapes venture alignment(04:45) Breaking down the basics of fund economics and incentives(07:10) Why alignment matters—but doesn’t always lead to stronger outcomes(09:40) How longer private company lifecycles affect venture timelines(12:20) What limited partners look for when selecting fund managers(14:40) How fees fit into the overall venture evaluation process(17:40) Comparing post-investment support in venture and private equity(21:50) Exploring power-law dynamics in VC-backed public listings(25:40) Early indicators of durable public-market performance(29:00) Market cycles, timing, and lessons for long-term investors(32:40) Understanding liquidity cycles in venture capital(36:10) Assessing the current market environment in 2025(38:00) Key takeaways – alignment, discipline, and perspective in venture investing
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John Rikhtegar of RBCx has been dissecting the venture ecosystem with surgeon-level precision lately.Two of his recent analyses — on GP-LP alignment and VC-backed IPOs — pull back the curtain on where real returns (and misalignments) hide. Takeaways: ▪️ The Alignment Mirage→ “Even if you have perfect alignment, it doesn’t guarantee success.”Small funds look better aligned — lower fees, higher carry exposure — but alignment alone doesn’t produce outperformance. Only 1 in 20 funds (top 5%) actually hit the mythical 3x net. For most LPs, that’s a sobering recalibration. ▪️ Fee Math vs. Fund Math→ A $50M fund with 2% fees earns $10M in guaranteed income over 10 years.A $500M fund? $100M.The large fund could underperform and still make partners rich. That’s the structural irony John highlights — wealth certainty grows as performance risk shrinks. ▪️ The Power Law Follows You→ “The same power law that defines venture private markets continues after IPO.”John analyzed 414 North American VC-backed IPOs from 2010–2022.Result: the top decile averaged +400% after three years.The bottom 70% traded below IPO price — median return: -57%.The few still carry the many, even in the public markets. ▪️ Cycles, Not Curves→ “Venture liquidity is less a sine curve, more a sawtooth wave.”Half of all exit value in the last decade came from just two years — 2020 and 2021.Venture isn’t about timing perfection; it’s about vintage discipline — staying in the game long enough for the next liquidity spike. John’s worldview is empirical, not romantic.Alignment matters — but selection and structure matter more.The real alpha sits where incentives, discipline, and data intersect. Important links: John's LinkedIn post on Small Fund and Alignment: http://bit.ly/47agoFX John's LinkedIn post on Power Law post IPO: http://bit.ly/475pAvc John's LinkedIn profile: RBCx Ventures: https://www.rbcx.com/ Topics that we discussed: (00:00) Episode intro and overview of TheOnePoint “Brain Snacks” format(00:38) Guest introduction – John Rikhtegar, Director of Capital Investments at RBCx(01:10) What is RBCx and its role in Canada’s innovation ecosystem(02:20) Understanding how fund size shapes venture alignment(04:45) Breaking down the basics of fund economics and incentives(07:10) Why alignment matters—but doesn’t always lead to stronger outcomes(09:40) How longer private company lifecycles affect venture timelines(12:20) What limited partners look for when selecting fund managers(14:40) How fees fit into the overall venture evaluation process(17:40) Comparing post-investment support in venture and private equity(21:50) Exploring power-law dynamics in VC-backed public listings(25:40) Early indicators of durable public-market performance(29:00) Market cycles, timing, and lessons for long-term investors(32:40) Understanding liquidity cycles in venture capital(36:10) Assessing the current market environment in 2025(38:00) Key takeaways – alignment, discipline, and perspective in venture investing