This edition of Allocator One’s Annual Alpha Industry Report explores how capital scarcity and conviction-led strategies are reshaping venture today, where alpha accrues to managers who move before consensus.
Key findings
Venture capital is at a turning point. In 2024, startups still attracted $368B in global funding, but this came largely from old vintages. New fundraising collapsed to just $76B raised by VC funds, the lowest in a decade and concentrated in a handful of firms. By early 2025, global funding rose to $163B, driven by mega-deals, even as capital formation sank deeper.
This paradox defines today’s market: abundant entrepreneurial activity, but scarce fresh capital. As Warren Buffett reminds us, “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.”
Capital scarcity raises the bar. The next wave of alpha will be defined by conviction-led managers—those who meaningfully differentiate and move before consensus.
From our review of 950 applications across 68 countries, three insights stand out:
Conviction edges are sharper – 77% demonstrate deep domain fluency, and two-thirds concentrate on a single sector.
Attributes compound advantage – founder-turned-investors, geographic anchors, community builders, and ultra-niche experts.
New frontiers are opening – secondaries, specialist buyouts, climate, defense, and applied AI—spaces where traditional funds hesitate, but asymmetric entry points emerge.
The implications for investors and boards are clear: signals come first. Alpha emerges where insight becomes conviction ahead of consensus. This year’s edition of Allocator One’s Annual Alpha Industry Report explores how capital flows, frontier sectors, and the rise of emerging fund managers are reshaping the global venture landscape—and why those who act early will define the next cycle.
