Moses Capital Reviews 2,000 VC Funds, Identifies 46 Worthwhile Investments

Author: Moses Capital & Lev Leviev

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DeepOcean Summary: Moses Capital is a fund-of-funds specializing in early-stage venture capital. Over two years, it reviewed over 2,000 funds and ultimately invested in only 46, yielding a selection rate of 2.3%. This article reviews the four archetypes of GPs identified during their screening process, the specific reasons for the 97% rejection rate, and an unexpected due diligence method that became their highest-quality deal flow source. Readers interested in the VC ecosystem and the LP perspective will find this article highly information-dense.

When I founded Moses Capital, I thought I had a general understanding of the market for emerging fund managers—hundreds of funds concentrated in a few common cities, easy to find if you knew where to look.

This assumption lasted about three months.

Over the past two years, we reviewed more than 2,000 funds for Fund I. We conducted 553 initial outreach calls, completed 276 full due diligence processes, and ultimately added 46 new funds to our portfolio—resulting in a selection rate of 2.3%. After sitting through so many conversations, patterns naturally emerge.

Here is what we have learned.

Before we built a systematic sourcing process, our deal flow was like that of most fund-of-funds: reliant on networks and inbound referrals. VCs recommended other VCs. This approach worked, but it also meant your perspective was limited by who knew you.

When we began real-time scraping of SEC filings, the picture changed completely. Dozens of new funds were forming each week, many of which didn’t appear on anyone’s radar until months later—by which time they were already raising capital. By 2025, we were covering approximately 95% of U.S. venture capital funds. The sheer volume of newly established funds even surprised us.

The key point is that most of these funds are invisible to the majority of LPs—not because they’re poor, but because they’re too early-stage and too small to have built the networks that land them on your shortlist. That’s precisely the gap we’re here to fill.

After 553 preliminary conversations, patterns began to emerge. We broadly categorized the managers we encountered into four types:

1. Entrepreneurs transitioning into investors

Former founders or former operational executives often have a notable exit under their belt and then decide to launch a fund. They carry credibility within the founder community and have strong deal flow in their niche. The challenge lies in the fact that managing a fund is entirely different from managing a company—portfolio construction, follow-on investment strategies, and post-investment management—many are learning on the job. Some pick it up quickly, but most only truly get it right by Fund II or Fund III.

1. VC institutional exiters

Former partners or principals from established funds (Tier 1 or Tier 2) who have left to start their own ventures. They bring brand recognition, trackable performance, and often strong networks. What we primarily assess is: how much of their past performance was due to their own skill versus the platform they were on? And once they leave the large fund, are they still competitive with founders?

1. Community-native manager

A type that became significantly more common after 2020—managers who built their reputation by creating communities, writing articles, producing podcasts, and managing social media. They have inbound deal flow, visibility, and often a genuine community moat.

Within this category, there are two types: one where investors first build a community and use it to drive deal flow and create network value for portfolio companies; the other where community operators, because they naturally have access to deal flow, begin making investments. The distinction between these two is important. For both, we evaluate two key factors: the quality of their investment discipline, and whether the community can deliver real value to the founders they aim to invest in.

1. Quiet tech enthusiast

This is usually my personal favorite type. GPs have deep technical or industry expertise in a specific field and have spent years mastering it. They are the people founders turn to when they encounter challenges, and over time, more and more founders want them on their cap table from the very beginning—not for the brand, but to help build the business from day one.

These individuals deliberately maintain a low profile, building their reputation on expertise and long-term relationships. They rarely reach out to us directly. We find them through systematic external searches, or more commonly, through founder references during due diligence on other funds. We ask every founder: “Who among your shareholders has been the most helpful?” The answer is often one of these individuals.

We have rejected over 97% of the funds reviewed. Each approval decision is made with the same care as an investment decision, and this process is continuously refined with every fund evaluation.

• Approximately 30% of failures are related to the GP or team—insufficient fund operation experience, lack of clear differentiation from existing players, or an inability to convert networks into unique deal flow capabilities.
• About 25% fail due to portfolio construction—too much exposure later on, lack of discipline in co-investment strategies, insufficient target ownership stakes, or excessive diversification—all of which mathematically eliminate the possibility of power-law returns. If a fund isn’t designed to generate concentrated big winners, it likely won’t.
• About 20% are performance record issues—investment histories are too weak or insufficient, or the performance does not align with the current strategy (differing in geography, sector, stage, or check size).
• Approximately 15% are due to strategy misalignment. The fund’s current strategy does not align with our investment thesis, regardless of performance—this may be because the fund is too large, its investment scope too broad, or it involves sectors or regions we deliberately avoid.
• The remaining 10% is attributed to factors such as fundraising dynamics; if a manager cannot raise funds, they cannot execute their strategy.

Our sourcing has evolved in phases. Initially, we relied on personal networks and inbound inquiries. We then built a systematic outbound engine that continuously scrapes newly launched funds in the U.S., automatically filtering them by size, strategy, and GP background. At its peak, this channel accounted for 70% of our meetings. We were able to connect with fund managers before most LPs even knew the funds existed.

But the sourcing channel that ultimately proved to be the most valuable was not one we designed—it came from our due diligence process itself.

We conduct blind founder reference calls for each GP, and if the performance record allows, we may conduct up to ten such calls. During these calls, we don’t just ask about the manager being evaluated—we review the shareholder list and go through each investor one by one, asking the founder for honest feedback about their early investors. Names that are repeatedly mentioned become targets for our proactive outreach in the next round.

This has proven to be our highest-quality deal flow source.

Moses Capital’s reputation initially spread through our investments and the relationships built around them. Today, we regularly receive proactive outreach from GPs who have heard of us through the VC ecosystem. We strive to earn and live up to that trust.

We are not anchor LPs, we don’t sit on LPACs, and our checks aren’t large. But we’ve done our homework. Before engaging with a GP, we typically track them for some time—monitoring their online activity, conducting references, and forming our own assessments. The questions we ask are well-prepared. We understand how fund economics work. We don’t unnecessarily disturb managers. If a fund isn’t right for us, we say so clearly and explain why.

Managers highly value this, and as a result, they recommend other managers to work with us.

Two years, 2,000 funds. We’ve gained a deeper understanding of this market and the people behind it. Every type of manager has the right to win—the key is knowing what to look for. This is an ongoing learning process, dependent on maintaining a broad enough funnel and our continuously improving dynamic sourcing mechanisms.