Podcast Summary: How I Invest with David Weisburd

EP279: Why Size Becomes the Enemy of Venture Returns w/Logan Allin

Date: January 9, 2026
Guest: Logan Allin (Managing Partner, Fin Capital)
Host: David Weisburd

Episode Overview

In this episode, David Weisburd interviews Logan Allin, Managing Partner of Fin Capital, to explore the evolving dynamics of venture capital (VC), with a special focus on fund size, liquidity challenges, retail participation, the secondaries market, and why alpha generation in VC is so dependent on doing the "hard work" others neglect. Logan shares contrarian views—ranging from OpenAI’s sustainability to the best sectors and fund structures for outperformance—grounded in his experience building Fin Capital from a solo GP to a $1.5B specialist platform.

Key Discussion Points & Insights

1. Setting the Stage: Fin Capital's Approach and Growth

[00:20–01:07]

• Fin Capital has grown to $1.5B AUM, 130 portfolio companies, and 25 team members, focusing exclusively on enterprise software for financial services from “pre-seed to pre-IPO.”
• Started as a solo GP in 2018; initial hiring delayed by COVID but scaled rapidly post-2020.

“I didn’t plan to be solo... COVID made it hard to have in depth conversations and relationship building, but we got those hires done at the end of 2020.” (Logan Allin – 00:40)

2. What's Different About the Current Venture Market?

[01:07–02:38]

• Severe lack of liquidity is the biggest systemic stress for the venture asset class; companies are staying private longer and secondaries are now a key exit path.
• Power law returns remain, but timelines are longer (10–15+ years), and new vehicles challenge liquidity further.
• Late-stage/pre-IPO secondaries have become the “most inefficient and attractive” segment for alpha, with discounts as high as 50% now available.

“The late-stage pre-IPO secondary market is the most inefficient market in private markets broadly and the most attractive from an alpha perspective.” (Logan Allin – 04:38)

3. The Rise and Challenges of Secondaries

[04:51–06:43]

• Institutional secondary deals are increasingly process-driven, “closest to NAV wins,” driving returns down to more “beta-like” outcomes; inefficiency remains in individual late-stage company deals.
• Large portfolios changing hands: Examples include Yale and NYC both selling $5B portfolio blocks.

4. Diligence in Pre-IPO Secondaries

[07:05–09:09]

• Critical to avoid “shopping for brands” on secondary platforms without deep information.
• Success comes from pre-existing relationships, board seats, or close knowledge; rigorous valuation across cap structure and careful understanding of liquidation risks are required.
• Emphasis on narrowing focus to targets within two years of going public, with solid profitability and growth.

5. Consolidation, Fund Size & the Enemy of Returns

[09:09–11:37]

• Many VCs are running their “last fund without knowing it” due to lack of alpha, asset gathering focus, and intensified competition.
• Fund size is critical: performance drops off steeply after $400–500M. Benchmark, Kauffman Foundation, and academic studies all point to size constraints as vital for alpha.
• Large multi-stage funds (“beta”) are less likely to outperform, especially as they grow.

“Size is the enemy of performance in this asset class... every dollar you raise over $400 million has diminishing returns.” (Logan Allin – 10:48)

6. The Alpha vs. Beta VC Debate: Persistence, Performance, and Market Impact

[11:37–14:05]

• Studies on persistence (like Prof. Steve Kaplan’s) are historic; size expansion dilutes alpha, eroding reliability.
• “Barbell” market: opportunities are at pre-seed/seed and late stage; crowded growth equity offers “messy middle” with inflated valuations.
• Real pricing in venture is driven by competition, not fundamentals, perpetuating inefficiencies.

7. Retail Wave: Risks and Structural Misalignments

[14:05–16:35]

• Retail capital is pouring into private markets, but Logan warns venture is ill-suited due to the J-curve, long duration, and misalignment between funds and investors.
• Retail is better suited to late-stage, diversified secondaries or direct exposure, not blind pool venture funds.
• Concern over lack of investor education; draws a parallel to retail’s dramatic learning curve in crypto.

“I don’t think VC is the right asset class for retail. That is because of J-curve dynamics, the duration, and probably the misalignment that occurs... That herd mentality is ultimately going to hurt retail investors.” (Logan Allin – 14:43)

8. Hot Takes: OpenAI's Sustainability

[17:14–19:25]

• Logan predicts OpenAI will “go to zero,” citing a broken model: negative gross margins, tiny paying customer base, unsustainable commitments for compute/data needs, lawsuits, and no viable path to cover future “trillions” in compute spend.
• Suggests OpenAI’s setup (non-profit on top, benefit corp below) is unprecedented for going public, with Microsoft likely to absorb it.

“Our view is that if you are spending money on compute, you are then spending money on model training... The minute they come out with a new model, the spend that they just put to work in that past model and the models before it is all deprecated. That was just a sunk cost. And so those add up and I get very concerned that the business ultimately ends up in the hands of Microsoft... a bridge to nowhere.” (Logan Allin – 18:01)

9. Value of Contrarianism and Howard Marks’ Influence

[20:31–24:56]

• Credit investor Howard Marks’ writings heavily influence Fin’s “second order thinking”—going against market exuberance to find alpha in inefficient corners.
• Example: Fin raised a fund in 2021 but “didn’t want to deploy” due to ZIRP behavior, deploying instead in overlooked pre-seed/seed at low valuations, now well-positioned.
• Cautions that herding, style drift, or pursuing asset gathering over DPI damages long-term viability.

“You have to do something other people don’t want to do.” (David Weisburd – 21:43)

10. LP Communications, Anti-Herding, and DPI Focus

[24:56–28:15]

• Contrarian investing draws scrutiny from LPs; requires deep thesis communication and willingness to lose “weaker hands” in favor of long-term partners.
• Firm focus is on DPI, not AUM or asset gathering.

“We don’t care about AUM, it’s just not a metric we measure the firm by. We very much focus on DPI and our metrics on the performance side and the relevant benchmarks in our asset class.” (Logan Allin – 27:01)

11. Sector Bets: Cybersecurity and Quantum

[29:18–33:16]

• Fin Capital actively invests in the orchestration and application layers of AI, cyber, and is exploring quantum computing risks and opportunities (encryption, building “quantum ready” software).
• Hired a head of AI in 2021; aims to stay ahead of popular trends and focus on specialist edge.

12. The Fin Capital Differentiator

[33:16–34:52]

• Logan summarizes Fin’s stance: Contrarian, thesis-driven, all-weather, offering LP choice in duration and exit.
• Heavy focus on business/corp dev to help founders, partnering directly with sponsors, strategics, and secondary buyers to maximize exit options and liquidity.
• Emphasizes the importance of rigorous, “hard work” in diligence as core to generating alpha.

“If your only exit is through an IPO, you’re in trouble. You have to be able to sell through to sponsors, build relationships directly with strategics and corporate development departments. And then the third piece, you have to understand the secondary markets with a great deal of intimacy.” (Logan Allin – 34:25)

Notable Quotes & Memorable Moments

• On Venture Fund Size:

  “Every dollar you raise over $400 million has diminishing returns… size is the enemy of performance.”
  – Logan Allin [10:48]

• On Contrarianism:

  “You have to do something other people don’t want to do.”
  – David Weisburd [21:43]

• On OpenAI’s Business Model:

  “That was just a sunk cost… I get very concerned that the business ultimately ends up in the hands of Microsoft. They have built a bridge to nowhere.”
  – Logan Allin [18:06]

Key Timestamps

• 00:20 – Fin Capital current footprint
• 01:16 – Market illiquidity and private company staying power
• 04:38 – Alpha in late-stage secondaries
• 10:48 – Why fund size kills returns
• 14:43 – Why VC isn’t for retail investors
• 18:06 – Why OpenAI could “go to zero”
• 21:43 – Value of contrarian thinking
• 27:01 – “We don’t care about AUM…focus is DPI”
• 34:25 – Only exits beyond IPO create long-term winners

Host’s Tone & Episode Language

The conversation is frank, insider-focused, and sometimes provocative—but always grounded in market realities and professional experience. Logan explains his reasoning in accessible but thorough language, delivering contrarian views and actionable insights with a practitioner’s candor.

Summary

This episode is a masterclass in pragmatic, contrarian VC thinking: fund size discipline, liquidity engineering through secondaries, careful navigation of retail trends, and a sector focus bent on differentiation and alpha. For emerging managers, LPs, and founders alike, Logan Allin’s warnings and blueprints for building lasting value in venture capital are required listening.