While the redwoods and Andreessen Horowitzes around the world continue to grow in size, their influence on venture capital may be headed in the opposite direction as micro-funds increase their influence on the industry.
Whether you define micro funds as under $50 million or under $25 million, these are truly the funds that are powering the future of the industry. They help venture capital centers to emerge, bring expertise and specialization to the market, and take on a role in the venture capital ecosystem that larger firms simply cannot.
They can also be credited with starting many of the big unicorns and public companies we know today, as many of them got some of their first dollars from a microfund: Robinhood (Elefund), Coinbase (Initial Capital, which was investing from a $7 million fund at the time) and Flexport (Anorak Ventures).
I’ve written about the rise of micro-funds in the US before, but when Sweetwood Ventures contacted me a month ago about their new fund of funds strategy to support nano—under $15 million—funds in Israel, I was intrigued. I hadn’t realized that the micro-fund explosion extended beyond the US market, but Sweetwood general partner Amit Kurtz told me it’s something he’s been tracking for several years.