The top quartile returns among large VC firms often reinforce this perception. According to Cambridge Associates, early-stage venture capital returned over 30% annually for top-performing funds between 2010 and 2020—figures dominated by the names we all know. The flywheel of success continues: exceptional exits draw LPs, which results in larger funds, more firepower, and access to the next breakout round.
Yet the story is not closed. Having been on both sides of the table—as an investor and operator—I believe this is precisely where the next wave of opportunity lies for angels and smaller funds. While capital may be unevenly distributed, insight, focus, and agility remain abundant and deeply underleveraged by the institutional titans.
Here are five pragmatic ways in which smaller investors can compete—and even thrive—alongside the giants.
1. Out-niche the generalists
Large VCs must deploy hundreds of millions per fund. This necessitates generalist portfolios. In contrast, smaller investors can go deep: into sectors, technologies, founder personas, or even regions. Hyper-specialisation builds credibility. It signals insight. If you’re the go-to for Web3 gaming infrastructure or climate fintech in Southeast Asia, founders will seek you out.
In the UK, several micro-VCs have done this well—Seedcamp in fintech’s early years, or LocalGlobe in geospatial and health. Similarly, angels with sector expertise (e.g., ex-founders of AI start-ups) now write £25k cheques that carry more weight than £2M from a generic fund.
2. Exploit geographic dislocation
Global VCs still operate with a heavy Silicon Valley bias. Yes, they have satellite offices in London or Bangalore, but their boots-on-ground operations often lack the cultural intimacy required to back founders early. This is where local capital shines.
In undercapitalised ecosystems—Northern England, Eastern Europe, Sub-Saharan Africa—angel networks and nimble seed funds play a gatekeeping role. They build trust first. And increasingly, large VCs now syndicate with them or follow their leads. The asymmetry is slowly shifting.
3. Move faster and earlier
Large funds have investment committees, partner consensus models, and layers of due diligence. Smaller investors don’t. That speed is an edge. Particularly in pre-seed and seed stages, decision velocity often trumps capital size.
If a small VC or angel can say “yes” within days, offer founder-friendly terms, and bring valuable intros within the first week, they become indispensable. Being first believer is something money alone cannot buy.
4. Be a platform, not just a cheque
Large VCs tout platforms—but many founders find their support impersonal or generic. Small VCs can over-deliver by tightly curating value: specific hires, GTM playbooks, warm intros, and founder therapy at 10pm.
By being highly relevant and available, smaller players turn modest capital into disproportionately high influence. Especially post-COVID, emotional intelligence and founder chemistry matter more than ever.
5. Partner with the giants, don’t fight them
Competition isn’t always zero-sum. Many angels and small VCs are thriving because they collaborate with bigger players. Co-investment, scout programmes, and syndicates are creating new pathways.
For example, angels who build early relationships and derisk the first £100k in a round often get pro-rata in later stages. Some even earn carry or co-GP positions on larger funds. By aligning incentives, small investors can ride the wave without being drowned by it.
Final Thoughts
The size of your fund no longer dictates the size of your impact. The venture landscape is recalibrating, driven by fragmentation, remote-first relationships, and increasingly global founder pools. While Sequoia and Founders Fund will continue to dominate headlines, the most interesting value creation in the next decade may well come from those flying just below the radar.
To all angels and emerging managers: your leverage lies in agility, depth, and founder alignment. Don’t mimic the big funds. Beat them by playing a different game.
