US VC Manager Style Drift (PitchBook, 2021)
| Author | PitchBook (Joshua Chao) |
|---|---|
| Published | June 2021 |
| Format | Report |
| Original | Read the original |
TL;DR — PitchBook’s June 2021 note tracking how US VC firms shifted between generalist, targeted and specialist styles across 2006–2020.
The note, by PitchBook analyst Joshua Chao and published June 9, 2021, applies the firm’s Private Manager Style framework, which repurposes the Herfindahl-Hirschman Index (HHI) to measure how concentrated a manager’s deals are by sector and by industry group. It adds a third “targeted” category between the generalist and specialist labels used in PitchBook’s Q4 2020 note. Sequoia is given as the example of a targeted manager, Khosla Ventures and Kleiner Perkins as generalists, and 5AM Ventures as a specialist. Only firms with at least 15 VC deals in a period are counted.
The headline finding is that the targeted middle is shrinking: 48.5% of firms in 2006–2010, 38.2% in 2011–2015 and 37.5% in 2016–2020, as managers moved toward either end. The median sector HHI fell from 4,429 to 3,772 over the same span, while the median industry-group HHI rose from 6,265 to 6,790. The note reads this as firms spreading across more sectors while narrowing which industry groups they back within each one.
A section on the 333 “veteran” firms active since 2006 finds a median sector-HHI change of −191, with generalist and specialist shares both rising. Tables list the ten largest drifts in each direction: Atlas Venture (+5,241, after its 2014 split into separate life-sciences and technology firms) and Sofinnova lead the drift toward concentration, and Trilogy Equity Partners and Stage 1 Ventures lead the drift away from it. New entrants lean targeted and specialist. In fundraising, 678 specialist firms raised a record $100.0 billion in 2016–2020. Whether any style performs better is left to a later note.
What it is: a 12-page descriptive data note from a commercial data vendor. Its value is PitchBook’s classification of the industry and the direction of the drift. The categories come from PitchBook’s own HHI thresholds, and the explanations for the drift are offered as speculation, not tested.
Where this came from
- Saved in a Roam daily note, June 2021, under a note on bifurcation in investing
- Published as a free download by PitchBook: report page · PDF
12 pages. A copy is archived locally against link rot; the header links the original source.