The Alpha Thesis.
In venture capital, size is the enemy of returns. Yet, institutional allocators continue to pour billions into established “mega-funds” based on the safety of the brand rather than the reality of the math.
This is a fundamental misallocation of capital.
The Efficiency Paradox
A £500 million fund needs a massive exit to return the fund. A £50 million fund needs a few solid singles and one double. The data bears this out: emerging managers (Funds I-III) consistently outperform established firms by approximately 340 basis points annually.
Why? Hunger and Focus.
Emerging managers do not have the luxury of fee-stacking. They do not have legacy infrastructure to feed. They are specialists, often coming from deep operational backgrounds in specific verticals rather than generalist finance backgrounds.
The Arbitrage
The market treats emerging managers as “high risk” because they lack a twenty-year track record. We treat them as “high alpha” because they operate at the efficient frontier of fund size.
They enter rounds earlier. They secure better terms. They are closer to the ground. While the giants fight over the same overpriced Series C deals, the emerging managers are capturing value where the giants are too big to look.
We didn’t build Arosa to support the “little guy.” We built it to capture the returns the big guys are leaving on the table.
