Authors: Moses Capital & Lev Leviev
Compiled by: Deep Tide TechFlow
Introduction: Moses Capital, a fund of funds focused on early-stage VC, reviewed over 2,000 funds in two years, ultimately investing in only 46, a success rate of 2.3%. This article recounts the four GP archetypes they discovered during the screening process, the specific reasons for the 97% rejection rate, and a due diligence method that unexpectedly became a source of the highest quality deal flow. It offers a high information density for readers interested in the VC ecosystem and LP perspectives.
When I founded Moses Capital, I thought I had a general understanding of the emerging fund manager market. There were hundreds of funds, concentrated in a few common cities; you could find them as long as you knew where to look.
This assumption lasted for about three months.
Over the past two years, we've reviewed more than 2,000 funds for Fund I. We conducted 553 initial communication calls, completed 276 full due diligence processes, and ultimately added 46 funds to the portfolio—a 2.3% approval rate. After sitting down and going through so many conversations, patterns naturally emerge.
Here's what we learned.
This market is bigger than anyone thinks.
Before we established a systematic sourcing system, our deal flow was like most fund of funds: relying on personal connections and inbound connections. VCs recommended VCs. This logic worked, but it also meant that your vision was limited by "who knows you".
When we started scraping SEC filings in real time, the picture changed completely. Dozens of new funds were being launched every week, many of which didn't even appear on anyone's radar until months later—by which time they were already raising capital. By 2025, we covered approximately 95% of U.S. VC funds. The sheer number of new funds was astonishing, even to ourselves.
The key point is that most of these funds are invisible to most LPs. Not because they're bad, but because they're too early-stage and too small to have built the kind of network that puts you on the shortlist. That's precisely the gap we need to fill.
The four prototypes of GP
After 553 initial communications, patterns began to emerge. We roughly categorized the managers we encountered into four types:
- Entrepreneurs transitioning to investors
Former founders or former senior executives typically have a successful exit experience before deciding to start a fund. They have a reputation among founders and a strong deal flow in their specific areas. The challenge lies in the fact that managing a fund and managing a company are completely different things—portfolio building, follow-on investment strategies, and post-investment management—many people learn on the job. Some get up to speed quickly, while many others don't truly excel until Fund II or Fund III.
- VC firm exodus
Former partners or principals from established funds (top-tier or second-tier) who have left to start their own businesses. They have brand prestige, demonstrable track records, and typically strong networks. Our main focus is on: how much of that performance is their own, and how much comes from the platform? After leaving the large fund, do they still have a competitive edge with the founders?
- Community native manager
A type that has emerged significantly since 2020 is the manager who builds a reputation through community building, writing articles, creating podcasts, and managing social media. They have inbound deal flow, brand recognition, and usually a real community moat.
This category actually falls into two types: one where investors first build a community, using it to drive deal flow and create network value for portfolio companies; and another where community operators start investing because deal flow is already naturally present. The distinction between these two is crucial. For both types, we look at two things—the investment discipline itself, and whether the community can create real value for the founders they want to invest in.
- Quiet tech geek
This is usually my personal favorite type. GPs have deep technical or industry expertise in a specific field, and have spent years cultivating it. They are the people founders consult when they encounter problems, and over time, more and more founders want them on the shareholder list early on—not for branding, but to help build the business from day one.
These individuals deliberately maintain a low profile, building their reputation on expertise and accumulated relationships. They almost never reach out to us. We find them through systematic external searches, or more commonly, through founder references while conducting due diligence on other funds. We ask each founder: "Who has been the most helpful on your shareholder list?" The answer is usually someone like this.
What does a 97% elimination rate look like?
We rejected over 97% of the funds we reviewed. Every pass decision is made with the same care as an investment decision, and this process is continuously refined during the review of each fund.
- Approximately 30% of eliminations are related to the GP or team. These include insufficient fund management experience, a lack of clear differentiation from existing players, or an inability to translate their network into unique project acquisition capabilities.
- Approximately 25% fail due to portfolio construction issues. Excessive exposure in later stages, a lack of discipline in follow-up investment strategies, insufficient target stock holdings, or over-diversification—mathematically kill the possibility of power-law returns. If a fund isn't designed to generate concentrated big winners, it's highly unlikely to succeed.
- About 20% of the issues stem from performance history. This includes weak or insufficient investment history, or performance that doesn't align with the current strategy (due to differences in region, sector, stage, and check size).
- Approximately 15% is due to strategy mismatch. The fund's current strategy does not align with our investment themes and is unrelated to performance—it's because the fund is too large, its investment scope is too broad, or it involves areas and regions we deliberately avoid.
- The remaining 10% can be attributed to factors such as fundraising progress. If a manager cannot raise funds, they cannot execute their strategy.
The best sourcing channels we didn't plan for
Our sourcing process evolved in stages. Initially, we relied on personal connections and inbound channels. Then, we built a systematic outbound engine that captures every newly established fund in the US in real time, automatically filtering them by size, strategy, and GP background. At its peak, this channel accounted for 70% of our meetings. We were able to connect with managers before most LPs even knew the fund existed.
But the sourcing channel that ultimately proved to be the most valuable was not one we designed. It came from our due diligence process itself.
We conduct blind founder reference calls for each GP, sometimes up to 10 times if their track record allows. In these calls, we don't just ask the manager we're evaluating. We go through the shareholder list, talking to each of the other investors, asking the founders for honest feedback on their early investors. Those names that are repeatedly mentioned become our targets for the next round of proactive contact.
This has proven to be our highest quality source of deal flow.
Building a reputation
Moses Capital's reputation first spread through our investments and the relationships built around them. Now we receive numerous outreach offers from GPs who have heard of us through the VC ecosystem. We strive to live up to that trust.
We're not anchor LPs, we don't sit in LPACs, and our checks aren't large. But we do our homework. Before communicating with a GP, we usually track them for a while—monitoring their online activity, making references, and forming our own judgment. Our questions are prepared. We understand how fund economics works. We don't bother the manager unnecessarily. If a fund isn't a good fit for us, we'll say so directly and explain why.
Managers highly value this and therefore recommend other managers to us.
What have we learned in the past two years?
Two years, 2,000 funds. We've gained a deeper understanding of this market and the people behind it. Every type of manager has the right to win; the key is knowing what to look for. It's a continuous learning process, relying on our ability to see a sufficiently wide funnel and our constantly improving dynamic sourcing mechanism.
