Venture's Broken Product Is the 10-Year Fund. A Publicly Traded Closed-End Fund Is the Replacement, Powerlaw's Black Argues

What's New

Venture capital's core product no longer matches its asset: companies stay private for well over a decade while the industry keeps selling a 10-year illiquid fund. Ben Black, founder of Akkadian Ventures and of Powerlaw Corp (Nasdaq: PWRL), argues this in a podcast on How I Invest. Every other private asset class built a secondary market once duration outran investors' patience, and venture has followed with 875 Akkadian secondary transactions since 2010. Black's next step is a 1940 Act closed-end fund that holds late-stage private names, lists after a year, and lets each holder choose their own exit. Allocators exhausted by unfunded blind-pool commitments now have a wrapper that trades.

Why It Matters

The position under attack is the entire venture fund industry, which Black says has not innovated on its product in decades and knows the 10-year term is fiction. Also on the other side are late-stage secondary buyers crowding onto platforms like Hiive and Forge, bidding common stock at or above the last round and eroding the discount the strategy requires. Black manages the vehicle he is describing and has told investors he wants a hundred more to exist, so a bigger category serves him. He also names the cost: 18 months of work before first fees, a full compliance build, and public-market restrictions on what he can say about his own portfolio.

Big Picture Drivers

• The IPO moved from year 5 to never: Black recalls companies listing at $30 million of revenue and a $500 million market cap. Mega-funds, late-stage vehicles, and sovereign wealth now keep compounding businesses private almost indefinitely, which cuts roughly 90% of the world's investors out of the growth period.

• Duration creates secondaries in every asset class: Private equity, REITs, and private credit each built a secondary market once holding periods stretched. Venture is on the same path, with the same forces.

• Institutional capital is leaving on time, not return: A longtime LP told Black that a 3x DPI over 11 to 12 years compares poorly with lower middle market buyouts delivering 3x in a fraction of the time, and stopped allocating to venture. Endowments would rather take direct deals than carry blind-pool liabilities.

• Late-stage secondary pricing has collapsed as an edge: Akkadian's model bought a year after a primary at roughly a 40% discount. Platforms have brought every family office and sovereign fund into the biggest names, and nobody sells those at a discount now.

• Information asymmetry remains the alpha in smaller companies: Buyers and sellers in a multibillion-dollar market often do not know how the company is performing. Black passes when he cannot reach information parity, and finds discounts in $200 million companies growing 30% that no one follows.

• The closed-end wrapper is a better business, not only a better product: Fees scale with net asset value, the capital is permanent, and a listed fund can raise more through ATM offerings, private placements, or debt. A 10-year fund fixes committed capital, decays fees, and forces a fresh raise every few years.

By The Numbers

• 875: Secondary transactions Akkadian has completed since 2010.

• $48 million: Capital raised for the first Powerlaw fund, roughly double the original target, after Black lost value-oriented LPs who objected to buying names like Stripe at full price.

• ~40%: The discount Akkadian's secondary model historically captured one year after a primary round.

• 18 months: Time from launch work to charging the first fee on a closed-end fund, during which Black hired a full-time CFO, a chief compliance officer, a second general counsel, and two law firms.

• 600: Shareholders in Powerlaw, mostly via wealth platforms and family offices.

• $30 million revenue, $500 million market cap: The IPO profile Black describes from the start of his career, versus companies that now stay private through their growth.

Key Trends to Watch

• Regulatory clarity as the unlock: Black compares today to secondaries in 2011, before Facebook normalized them. Each closed-end filing educates the SEC, and once rules settle, launch costs fall and copycats follow. Watch the pace of new 1940 Act venture vehicles.

• Company attitudes to public wrappers: Stripe accepts it; a small group resists, with executives at Anduril and Anthropic disavowing SPVs. Watch whether the retail-access argument, pitched as three years of pre-IPO marketing, moves the holdouts.

• SPV interests as a supply source: Pent-up liquidity demand inside SPVs lets Black buy LP interests rather than compete for direct shares. A growing SPV overhang widens that channel.

• Discount migration down-market: With top names bid to par, expect secondary alpha to concentrate in mid-sized private companies with few followers, where information work still pays.

Memorable Quotes

• "Does anyone believe that the 10-year fund is going to actually end at the 10th year?" The question Black says no venture conference audience would answer yes to.

• "We spent 40 years sort of protecting ordinary investors from the best performing asset class in modern history." His framing of exclusion as a policy failure rather than investor protection.

• "Part of being an investor is you got to have a flexible mind." His answer to a team that accused him of violating every pricing rule he taught them when he switched from deep-value secondaries to full-price growth names.

• "They're fundamentally better businesses than 10-year funds." The economic case for the closed-end structure, once the regulatory pain is paid.

The Wrap

The thesis holds if listed closed-end venture funds keep attracting capital from allocators who have quit blind pools, if enough top private companies accept them on cap tables, and if NAV-based fees on permanent capital prove more durable than a decaying 10-year fee stream. It also holds if late-stage assets bought at full price still deliver through a liquid exit that a traditional fund cannot offer. It fails if Powerlaw trades at a persistent discount that blocks the ATM and growth mechanisms, if the SEC tightens rather than clarifies, or if the IPO window reopens and shortens duration on its own. Two months of poor post-listing trading are noise; the next 3 years, through the first wave of portfolio IPOs Black plans to market, are the test.