Delian Asparouhov on venture's K-shaped funding curve, SPVs replacing traditional VC, and the upcoming IPO wave

Summary

Venture capital fundraising fell 35% in 2025, but the headline obscures a structural bifurcation rather than a broad collapse. Delian Asparouhov of Founders Fund argues the industry is reprising private equity's consolidation arc, where a cottage-industry phase gives way to concentration around a handful of mega-franchises. Deal count has been on a strict linear decline since the 2021 peak, with total transactions above $5 million falling every year globally.

The K-Shape in Practice

Capital is not leaving venture, it is pooling. SpaceX, OpenAI, Anthropic, and xAI collectively absorbed roughly 60% of all VC dollars deployed in the most recent year tracked, leaving the rest of the market to compete over a shrinking pool of logos. Companies staying private longer compounds the effect: public-market liquidity is being captured by an ever-smaller set of private giants, and regulatory caps on cap-table participants — approximately 6,500 institutional holders before a mandatory public filing — structurally force aggregation.

SPVs as Shadow Infrastructure

A larger share of late-stage capital is being deployed through fee-free, carry-free SPVs than is publicly acknowledged. Multi-stage funds use these vehicles not for direct economics but as relationship currency: they serve as outsourced IR for capital-intensive companies like OpenAI that cannot afford to run a full fundraising process while managing operations, customers, and government relationships simultaneously. For the VC, running a feeless SPV builds proximity to a marquee name, enhances LP deal-access offerings, and supports the mark on any existing position. Asparouhov frames it as a stepping stone — funds demonstrate execution on growth SPVs before graduating to formal opportunity or multi-stage vehicles, growing AUM without diluting fund economics on the core portfolio.

The Coming IPO Wave

Asparouhov sees 2026 as structurally positioned for the largest IPO cohort the public markets have ever absorbed, driven by stable inflation, a growing economy, and an absence of near-term geopolitical shocks severe enough to close the window. The scenario he flags as market-moving: if SpaceX files ahead of the AI labs, and xAI is folded into a combined entity alongside a data center business and a historically profitable launch operation, the S-1 scrutiny that follows will force comparisons across every other AI company still private.

The longer-term consequence of successful exits at these valuations is that staying private past $100 billion becomes the default rather than the exception. That in turn makes deploying a $10 billion fund viable when average entry points sit around $200 billion post-money and a 3x to 5x return is still achievable on a path to public markets. Fund sizes will increase materially as a result.

Defense Tech and Salary Cap Policy

Trump's True Social post targeting defense contractor executive compensation — and specifically calling out Raytheon by name for non-delivery — is read as directionally significant even without legislative force. The Secretary of Defense can reshape acquisition preferences unilaterally, making the post a potential procurement signal rather than just rhetoric. Defense tech stocks rallied on the prospect of a 50% increase in the defense budget, but Asparouhov notes the more interesting question is whether primes adapt quickly enough to absorb incremental spend or whether startups capture the margin. He points to BAE Systems as an example of a legacy prime already running structured collaborations with companies like Applied Intuition, suggesting some incumbents are moving faster than the narrative implies.

Miami as Capital Hub

Miami's venture identity has settled into something durable and specific: a fundraising destination rather than a startup formation center. The presence of D1's Dan Sundheim, Citadel's Ken Griffin, and Peter Thiel established a circuit where a later-stage founder can take five meaningful LP meetings in a single trip. The current California regulatory environment — characterized as increasingly hostile to property rights — is accelerating a second migration wave among GPS, reinforcing what Asparouhov argues Miami was always better suited for: serving as the capital of capital rather than the capital of engineering talent.