Oren Zeev: 50% of Funds Will Go Out of Business & Why GPs Shouldn't Tell LPs Their Strategy

Investment Philosophy & Market Dynamics:

• Oren Ziv operates as a solo GP managing over $1 billion, serving as the largest Limited Partner (LP) in every fund with a 13-14% personal stake and 30% carry.
• Ziv takes zero management fees, reinvesting 100% of any fees charged into the funds; he is not paid any economics until LPs have returned 100% of their capital.
• Ziv maintains a 20% capital concentration limit per company, exceeding the industry standard of 10%, believing diversification at the GP level creates no value for LPs.
• He predicts a market bifurcation where funds must be either massive "platforms" (e.g., Andreessen, Sequoia) or agile "boutiques" (solo GPs), with the "middle" being untenable.
• Ziv states that 50% of current venture funds are either unable to raise new capital or are stalling due to the difficulty of raising in the current cycle.

AI Impact on Investment Strategy:

• Since 2021, Ziv's primary filter for every investment is determining if a company is a likely "beneficiary" of AI, rather than a "victim" or neutral party.
• He argues that operationally complex businesses with significant data moats and regulated environments are hardest to disrupt by AI, citing Navan as a 100% beneficiary with zero disruption risk.
• Ziv predicts AI will drastically improve gross margins for companies like Navan by replacing support labor, moving from ~50% margins toward higher efficiency.
• Despite the "AI tsunami," Ziv believes the fundamental math of venture compounding remains unchanged; doubling revenue annually yields the same 32x growth over five years regardless of AI.
• He warns that "only growth" is a dangerous metric, citing circular deals (buying each other's products to inflate revenue) as unsustainable practices driven by growth obsession.

Market Cycle & Valuation Trends:

• Ziv admits to overpaying by 3-4x in the 2021 market peak, resulting in a "mediocre" Fund 11 that will likely not lose money but will not achieve top-quartile returns.
• He notes that Series A rounds are currently a poor entry point due to excessive pricing (150x-200x ARR) for minimal risk reduction or product-market fit validation.
• Ziv advises founders to accept preemptive capital rounds at high valuations but to behave as if they have no cash, avoiding burn based on boardroom pressure rather than market signals.
• He predicts a tsunami of liquidity from major IPOs (SpaceX, Stripe, Databricks) in 2026-2027, which will likely reshape the market and LP behaviors.

Governance & LP Alignment:

• Ziv identifies misalignment in large firms where management fees (often 2% annually) provide more risk-free income than carry in the early years, incentivizing managers to prioritize fundraising ability over long-term value.
• He notes that individual partners in large firms may prioritize personal career safety over fund longevity, leading to reluctance to admit failure or kill projects.
• Ziv advocates for radical transparency in reporting valuations, suggesting that GPs with secure fundraising ability have less motivation to inflate numbers than those struggling to raise.
• He believes LPs should focus more on the "character" and motivation of the GP rather than just methodology, as conservative reporting is correlated with fund stability.

Founder Dynamics & Personal Decisions:

• Ziv claims most founders seek advice from him specifically because he offers a "safe environment" with no intent to judge or force direction, provided they don't need to convince him.
• He rejects the notion that founders no longer want advice, attributing that view to poor delivery styles (e.g., judgmental or "know-it-all" approaches) rather than a fundamental shift in founder sentiment.
• Ziv describes his biggest missed opportunity as failing to invest in OpenAI due to a clerical error (wrong email address used by Asaf), though he admits the deal likely would have failed due to competitive dynamics.
• He acknowledges missing Facebook in his early career due to partnership veto but cites Audible as a past "miss" where he was unable to take the company private after it went public.
• Ziv expresses strong optimism that AI is the "biggest change ever in human history," creating opportunities to build massive value despite risks of labor displacement and political unrest.

Specific Investment Examples & Outcomes:

• Navan: Ziv holds a concentrated position, citing its operational complexity and data moat as protection against AI disruption; he is confident it will be a massive beneficiary.
• Descartes AI: Ziv invested $1.5M for 5% ownership via an uncapped SAFE (later capped) after founders offered to dilute existing investors; he maintained this position as the company became profitable and only accepted Sequoia/Benchmark capital for branding.
• PropTech Loss: Ziv lost capital on a prop-tech investment that grew from $2M to $30M but failed when interest rates spiked faster than his stress models predicted; he attributes this to luck and the difficulty of predicting "worst-case" scenarios.
• Secondaries: Ziv generally refuses to sell positions early via secondary markets unless necessary for fundraising, believing that buyers will only pay if they expect 2-3x returns, creating a discount Ziv is unwilling to accept.