Has Venture Capital Died? A Satirical Open Letter Says Smaller Funds Are Being Squeezed Out

PANews published a satirical open letter by Michael Dempsey, translated by TechFlow, that takes aim at the current state of venture capital. The letter argues that large funds are moving down into seed-stage deals and will win the best transactions because founders prefer brand-name firms over small funds that may not survive for another decade. The piece says a $500 million fund can compete for 10% to 15% of a two-person company, and that larger firms will always win those deals. It also argues that only a few companies matter in any given year, so missing names such as OpenAI, Anthropic and Anduril makes a fund irrelevant. From there, the letter suggests that managers should stop trying to hunt for uncertain seed-stage winners and move up into growth investing instead. It says the seed investing skill set now fits a world where the winners are easier to identify from existing data, and where the higher prices may still look cheap years later if those companies go public and keep climbing. The letter also says the strongest founders are often the most legible ones: people from elite institutions, top math competitions, or elite company spinoffs. It describes anything else as adverse selection. On capital allocation, it says managers should put everything into AI, comparing the theme to 2020 SaaS or 2021 crypto, and warns that a fund that does not fully commit will be irrelevant. The final section argues that big companies usually crush later entrants, money is the ultimate differentiator, and innovation comes from large ships that move slowly but hit hard. It closes by mocking the idea that a small fund can compete through branding, influence, or clever positioning.