Italians started building the Duomo in Milan in 1386, and didn’t finish for another 600 years.

Its marble comes from one quarry at Candoglia, near the Swiss border. For centuries, blocks of marble floated down rivers and canals into Milan, each one stamped AUF, short for ad usum fabricae: reserved for the cathedral. Boats carrying AUF stone paid no tolls. The Milanese will tell you that’s where a ufo, “for free,” comes from. (Scholars aren’t sure.) 

The reason I love this story is that it describes a cathedral precisely: something so important that the finest material travels directly to it.

The best venture capital firms are a lot like cathedrals.

The best founders come to them. They lead the round and keep enough money to buy more as the company grows. Economist Steve Kaplan found that about half of top-quartile venture funds stay top quartile with their next fund. The brand pulls in the founders, the founders polish the brand, and the marble keeps being delivered to the Duomo.

There aren’t many “cathedrals” in venture. Maybe ten. They take decades to build, and most people can’t invest in them.

The other way into great companies is the bazaar.

I’m borrowing the word from Eric Raymond, the pioneering software engineer and writer, who used it in 1997 to describe how Linux got built: in the open, by thousands of people, with nobody in charge. Venture has its own version of this model. 

Over the last 15 years, it’s become cheaper to start and run a venture firm. Thousands of people started small ones, and founders began filling their rounds with lots of different kinds of people – for example, the recruiter who helped them find their engineers, or an executive who found their first customers. In this example, you can imagine a small investment fund owning a significant piece of SpaceX because it happened to help them on a crucial task at just the right moment. None of these investors make the founders come to them, but each one has a reason for being there.

There are no gates in the bazaar, so most of the stalls sell junk. But a few sell things that you cannot find anywhere else.

The best “stalls” are incredible. They’re often the first money into a company, before any “cathedral” has heard its name. They get in because the founder asked for them, which puts them in the same rounds as Sequoia. And the bazaar is where new ways of investing get invented. One person runs a hacker house. Another backs only the engineers leaving one lab. On AngelList, some of the best-performing small funds are run by founders running companies.

Getting a seat

Venture is less about picking than people think. The companies that become enormous are usually pretty visible quite early, and the market prices them that way. Everyone at the table can see the good ones. The question is: who’s at the table? Venture is one of the only asset classes where you have to sell your money to the company.

The “seat” is worth a lot. In a given year maybe 25 companies matter, and maybe five of them return the whole vintage. If you’re not in one of the cathedrals, or you’re not in the right stall in the bazaar, you’re usually not there at all. 

This is the problem with firms in the middle. (I won’t extend the metaphor here.) A $500 million fund with a decent  reputation is in a tough spot. Founders don’t seek them out like they do a cathedral, and they don't get invited in like someone founders already know and trust. So it fights for allocation in crowded rounds and mostly gets things that others have passed on. 

Funds that follow the “bazaar” model have their own problems. They can get in, but they can’t always stay in. A typical seed fund holds 25 or 30 companies, with small checks and little money to buy more when one takes off. I know a GP who passed on his pro rata in a coveted Series B, not because he doubted the company but because he didn’t have the follow on capital to move fast enough. (The allocation went unclaimed.)  

Istanbul’s Grand Bazaar is a good example of what most bazaars are missing. At its center is the oldest building, the bedesten, a hall that four gates separated from the rest of the bazaar; it became the market for gold and precious stones, and today it also houses a bank. 

I launched USVC, so I’m not neutral, but that’s more or less what we’re trying to build - the bank at the center of the bazaar. We back the bazaar’s best managers to leverage their access. We build exposure in hard to access companies by backing their funds, buying out their investors who need liquidity, and investing in their follow-ons. We don’t lead rounds, and U.S. investors can come in for as little as $500.

Buying in

This piece is mainly about who gets a seat at the table with founders. There’s a second gate behind that one, for anyone who wants to back the people at the table. The cathedrals raise from endowments and pensions. Nearly every fund in the bazaar can only take money from accredited investors.

Most Americans are on the wrong side of that second gate. A growing share of the money in tech now gets made before a company ever goes public. OpenAI, Anthropic, and SpaceX built about $5.2 trillion of value while private, more than twenty years of IPOs produced combined.

About 13 million Americans are accredited investors, and I’d guess less than a million of them have real venture exposure. Everyone else waits for the IPO. Twenty years ago a teacher could own Amazon in her retirement account. Today she reads about Anthropic in the news.

Most of the Fabbrica del Duomo’s income now comes from tourism. Six hundred years after the marble floated in for free, the cathedral is kept standing by ordinary people buying tickets at the door. It was built for the few, but it lasts because it lets everyone in. Venture hasn’t made this transition yet. The best companies of this generation are being built behind gates, and by the time the gates open at an IPO, the private growth is gone. Nothing in venture comes a ufo. 

But anyone should be able to buy a seat.

USVC is open to U.S. investors, starting at $500. You can buy in at usvc.com, or through a SoFi brokerage or IRA account. Read the prospectus before investing.

— Erik Syvertsen, USVC Board Chair

Investors should carefully consider the investment objectives, risks, sales charges and expenses of USVC before investing. USVC's prospectus contains this and other information and may be obtained at http://usvc.com/prospectus or by calling +1 (888) 200-4361. Read the prospectus carefully before investing.

This communication is for informational purposes only, is not intended to be a recommendation for any investment or other advice of any kind and shall not constitute or imply any offer to purchase, sell or hold any security or to enter into or engage in any type of transaction. Any such offers will only be made pursuant to USVC's prospectus, which should be carefully reviewed before investing.

Investing in the USVC Venture Capital Access Fund involves significant risk, including the possible loss of principal. Venture capital investments are speculative, illiquid, and subject to a high degree of risk. Past performance does not guarantee future results.

USVC Venture Capital Access Fund is distributed by North Capital Private Securities Corporation (NCPS), member FINRA/SIPC. NCPS is not affiliated with USVC's adviser or its affiliates.

Investing in USVC's shares involves substantial risk, including the potential loss of your entire investment. Shares are not listed on any exchange, are illiquid, and liquidity is limited to periodic repurchases at the discretion of the Board, which are not guaranteed. This investment is speculative and suitable only for long-term investors who can bear the risks of limited liquidity. Certain conflicts of interest involving USVC and its affiliates could impact USVC's investment returns and limit the flexibility of its investment policies. Past performance does not guarantee future results. Fees, expenses, and conflicts of interest may reduce returns.

USVC's shares have no history of public trading. You should not expect to be able to sell your shares other than through USVC's repurchase policy, regardless of how USVC performs. USVC does not intend to list its shares on any securities exchange during the continuous offering, and it does not expect a secondary market in the shares to develop.

USVC invests in portfolio companies directly, through private funds and special purpose vehicles, which are subject to certain risks including those related to illiquidity, indirect fees, valuation, limited operating histories and limited information regarding underlying investments. As a result of the foregoing, an investment in USVC's shares is not suitable for investors that require liquidity, other than liquidity provided through USVC's repurchase policy. The amount of distributions that USVC may pay, if any, is uncertain.