The Venture Capital Model Is Being Rewritten

Some of the most well-known venture capital firms in the world—Lightspeed, Andreessen Horowitz (a16z), and General Catalyst—have made a quiet yet fundamental change to how they operate. They’ve restructured themselves as Registered Investment Advisors (RIAs). On paper, that sounds like a minor regulatory update. In practice, it’s a clear sign that the old rules of venture capital no longer work the way they used to.

For decades, venture capital followed a predictable model. Raise a fund, invest in early-stage startups, help them scale, and exit through an IPO or acquisition within about ten years. But over the past decade, everything about that model has been stretched to the point of breaking. And these RIA conversions are the strongest signal yet that some of the world’s most astute investors are taking action to stay ahead.

Why the Traditional VC Model No Longer Fits

At the heart of the change is the fact that great companies are no longer going public as quickly as they used to. Look at Stripe, Databricks, and Canva—all multi-billion-dollar companies with massive market presence. None of them are public. They don’t need to be. With easy access to late-stage capital, healthy cash flow, and strategic control over their operations, staying private has clear advantages.

This shift toward long-term private ownership is beneficial for companies. Still, it poses a significant challenge for venture capital (VC) funds. Most are structured around a 10-year lifecycle, with extensions of a few years. That means they need liquidity events to return capital to their limited partners (LPs). When exits get pushed back or become less common, that capital stays locked up longer. LPs start to question the return profile. GPs can’t recycle capital into new bets. The system stalls.

RIAs are a solution to that. They provide VC firms with the regulatory clearance to engage in a broader range of investments beyond the traditional path of startup equity. Think secondaries, crypto tokens, public equities, debt, and even buyouts. It’s a shift from “we only do early-stage” to “we back companies wherever the opportunity is.”

What Becoming an RIA Unlocks

Becoming an RIA is more than just a compliance move. It fundamentally changes the kinds of capital deployment VC firms can engage in. Here are a few examples:

• Secondaries: VC firms can purchase equity from existing shareholders, including founders, early employees, or other investors. This lets them build positions in later-stage companies without having to lead or price a new round.
• Crypto and Tokens: As interest in web3, blockchain, and decentralized networks grows, RIAs can participate in token purchases or other crypto-native deals that traditional funds often avoid due to compliance constraints.
• Public Markets: RIAs can hold public equities, allowing them to continue investing in a company even after it goes public or establish early positions in emerging public tech firms.
• Private Equity and Buyouts: With fewer initial public offerings (IPOs), some firms are eyeing partial or complete buyouts of companies. An RIA structure provides them with more flexibility to conduct these types of transactions.

This broadens the aperture. VC firms are no longer boxed into a narrow definition of tech investing. They can follow companies across their entire lifecycle and even get involved in adjacent opportunities that were previously off-limits.

What This Means for Founders

For founders, this is mostly good news. It means that your options for capital are expanding. You’re no longer restricted to the standard-priced equity round every 18 to 24 months. Instead, there’s room for:

• Creative Deal Structures: Whether it’s a structured equity round, a mix of equity and debt, or a quiet secondary transaction, there are more tools on the table.
• Early Liquidity: Founders and early employees can get partial liquidity without having to go public or raise a big new round. That helps with retention, morale, and strategic flexibility.
• Longer Runways: You don’t have to raise money on someone else’s schedule. If your business is doing well and you want to focus on product or growth instead of roadshows, you can do that.
• Deeper Relationships: As investors build out platforms that span the early stage to public markets, the firms that believe in you can support you at every step. That kind of alignment wasn’t always possible in the old model.

That said, there’s a flip side. If capital is more flexible, relationships need to be stronger. Founders should expect more from their investors—more support, greater transparency, and longer-term thinking. But investors will also expect more from founders. The days of taking a Series A and disappearing for two years are fading. You’ll need to stay in sync, especially as deals get more complex.

Why This Is a Bet on the Long Game

Firms making the RIA shift aren’t doing it for short-term gains. This is a bet on a new future—one where capital and company-building are increasingly intertwined over longer cycles.

These firms are reorienting themselves for a world where:

• Companies stay private longer.
• Exits are less predictable.
• Tech investing goes far beyond software.
• Liquidity can come from many places.

The game has changed. It’s not just about picking winners early and hoping for a quick exit. Today, it means backing founders through cycles, across stages of growth, and in markets that move slowly. Having the ability to buy when others need to sell. Staying steady when others panic. Supporting companies without relying on a specific kind of financing event.

This takes patient capital and a flexible playbook. That’s what RIA status enables.

The Broader Implications for the Venture Industry

This isn’t just about a few firms getting creative. It signals something deeper: venture capital is becoming more professionalized.

For a long time, venture investing was an elite club. Access was limited. Strategies were straightforward. Now, as more firms transition to RIA, they begin to resemble asset managers. That brings more responsibility, more regulation, and more sophistication. It also brings more competition.

Traditional private equity firms, hedge funds, and even sovereign wealth funds are moving into earlier stages. At the same time, venture firms are moving later. The boundaries are blurring. And the firms that adapt fastest will be the ones that win.

There will be growing pains. Some firms may lack the necessary infrastructure or discipline to manage complex portfolios. Others will chase shiny objects. However, the leaders in this new wave recognize that the best founders seek more than just capital. They want partners who can grow with them.

What Founders Should Watch For

As this shift accelerates, here are a few things founders should keep an eye on:

• Ask how your investor is structured. Are they an RIA? What does that mean for the way they support companies?
• Understand what kind of capital you’re getting. Is it a standard equity investment? A secondary? A token purchase? These details matter.
• Get clear on time horizons. Some investors may be willing to wait a decade or more for liquidity. Others may not.
• Look for alignment. The more flexible the capital, the more critical it is that your vision aligns with your investor’s vision.

Not all capital is created equal. As the venture evolves, the founders who understand the new dynamics will have a real edge.

Conclusion

The RIA conversion trend among top VC firms is more than a regulatory footnote. It’s a sign that venture is shifting to meet a new market reality—one where great companies stay private longer, where liquidity is harder to find, and where founders need support across a broader set of scenarios.

For founders, this brings more options and greater flexibility—along with a higher bar for choosing the right partners and approach. Investors are being pushed to rethink what it truly means to be a venture firm. Across the startup ecosystem, the shift is toward something more dynamic, more mature, and more focused on long-term outcomes.

This is the next chapter of venture capital. And it’s already being written.