Bradley Tusk, co-founder and managing partner of Tusk Venture Partners, told TechCrunch in an episode of today's episode that he knows the VC is dead. And that has been for the past four years.
“Maybe there are VCs who have never heard of liquidity over the past few years, but they haven't returned $1 in capital to LPS in four years,” Tusk says.
The VC has spent a rough few years thanks to crashing the startup valuation from the 2021 highs, and hampering IPO and M&A transactions.
Many investors were holding their breath as President Donald Trump rejuvenated the VC landscape with deregulation measures and reforms to the pro-business tax. But Trump's record-breaking executive order, the tariff fuel trade war, and uncertainty after the demolition of federal agencies eased the expected surge in VC activity.
Or, as Tusk said, “I don't know many serious economists who think the trade war is a good idea for anyone's economy.”
So Tusk has been bored from the traditional VC model and has decided not to raise a fourth fund. Instead, he shifts his focus to the “fair service” model. This allows Tusk to accept equity in exchange for helping startups navigate the regulatory environment, legislative communications and government procurement.
In the case of Tusk, fairness for the service returns to his roots. In 2010, when he was just starting up political consulting firm Tusk Strategies, a small transportation technology company called Uber enlisted his services. Uber had no cash to pay him, so they provided him with fairness. For the next few years, Tusk “was running campaigns across the US to legalize Uber and make its ride feel legal.”
Creating a disruptive technology regulatory framework to save startups from death by politics has been Tusk's bread and butter for many years, and expertise gained through his previous role as campaign manager for Michael Bloomberg's 2009 mayoral race and Illinois lieutenant governor.
All “real VC things” like fundraising from LPS and “compliance, boardsheets, portfolio construction” began to feel distracted from the type of work he actually does.
And while it feels like a shortcut to do the job he loves, in reality he makes more money than he can make as a classic venture investor.
“The traditional model didn't make much sense when I realized that I could easily access the cap table and get fairness from the startup I like in return for my expertise,” Tusk says.
“I made more money when I was actually being served, to maintain 100% of my revenue despite having less leverage than venture checks,” he said. “In traditional ventures, you have to return your investment capital to the investor. You have to pay back the fees. Then you have to give 80 cents in dollars,” he said.
Tusk Venture Partners will continue to support existing portfolio companies until the fund's lifecycle ends in 2031.