Key Takeaways

  • Private tech companies now routinely stay private for 15 to 20 years, making the traditional 10-year venture fund structure obsolete.
  • Benjamin Black argues that marketing a 10-year closed-end vehicle while knowing liquidity takes 15 years borders on structural misrepresentation.
  • Institutional LPs and Ivy League endowments are shifting allocations toward direct deals and lower middle market private equity to escape unfunded liabilities and slow distributions.
  • A 3x gross return delivered in year 12 produces an IRR that fails to compete with standard buyout strategies executing on four-year exit timelines.
  • Akkadian Ventures addressed this duration mismatch by launching Powerlaw Corp. (Nasdaq: PWRL), a publicly traded closed-end fund under the 1940 Act for tech secondary exposure.

The Duration Mismatch Inside Closed-End Funds

Venture capital built its entire capital-raising machine on a single product: the 10-year blind-pool limited partnership. That product assumes a startup forms, scales, and exits via IPO or acquisition within seven to ten years. That timeline no longer matches how elite technology businesses operate.

Companies stay private for up to two decades. As a result, venture managers routinely push funds into perpetual one-year extensions, stranding LP capital well past original maturity targets.

Black points out the structural denial across the asset class:

“Ask the audience to raise your hand and say, 'Does anyone believe that the 10-year fund is going to actually end at the 10th year?' Like, we're now in the world of infinite extensions because the time duration from investment to liquidity has gone so far beyond 10 years.”

Selling a vehicle with a stated liquidation date that the GP knows cannot be met creates a credibility crisis. Black states plainly: “I'd argue the board is on fraud. Like, we're selling a product that we know is not going to work the way it's intended. And that's a real problem and that drives people away from venture capital.”

The Return Decay of Long-Dated Venture

The prolonged holding period directly damages LP returns. A fund returning 3x cash-on-cash across seven years delivers top-tier performance. Stretch that same 3x distribution across 12 or 14 years, and the annualized rate of return drops into the low teens.

Black experienced this pushback directly from long-standing investors while marketing his sixth fund:

“One of our longtime LPs when I went out to raise my sixth fund, he said, 'Ben, in VC, you guys think a 3x fund is a DPI, a 3x fund is win, but when it takes you 11, 12 years to deliver 3x, it's not really that great. I can much more reliably invest in a handful of lower middle market buyouts and generate a 3x fund in a fraction of the time.'”

David Weisburd notes that this frustration has reached the largest institutional allocators in the country. Ivy League endowments now express a clear preference for direct opportunities over blind-pool funds because traditional VC commitments create persistent unfunded liabilities and unpredictable cash flows.

To solve this structural friction, Black structured Powerlaw Corp. under the Investment Company Act of 1940. Operating as a publicly traded closed-end vehicle gives investors continuous public liquidity while holding late-stage private technology assets.

Why It Matters

Institutional capital is re-evaluating the liquidity premium it pays to traditional venture managers. As tech holding periods stretch toward 20 years, capital allocators will increasingly bypass standard 10-year blind pools in favor of secondaries, direct co-investments, and buyout strategies with predictable cash distributions.