The fund model dominates venture capital—but it’s not the only way.
Venture capital is often painted as a power game: big funds, big bets, big wins. But behind the buzzwords and billion-dollar headlines, there’s another way to build value. At Paligan, we reject the legacy fund model in favor of something sharper: deal-by-deal investing.
This isn’t a contrarian stance for the sake of it. It’s a disciplined, conviction-led strategy that we believe serves both startups and investors better.
The Traditional VC Fund Model: Power Laws and Portfolio Math
Most VC firms raise blind pools of capital, committing to invest over a fixed period across a portfolio of startups. The underlying assumption: one or two companies will deliver the fund’s return, while the rest will underperform or fail. This is known as power-law investing.
It’s a model built on scale and statistical hope. The goal isn’t necessarily to back ten good companies; it’s to find one great outlier that offsets the rest. That mindset shapes how capital is deployed, how founders are supported, and how exits are pursued.
The consequences? Capital often moves fast, diligence can be thin, and decision-making is influenced by portfolio quotas rather than intrinsic merit. For startups, this can mean investors who are more focused on the fund than the founder. For investors, it means diluted influence, limited transparency, and pooled exposure to risk.
A Different Model: Deal-by-Deal Investing
Paligan operates differently. We don’t manage a fund. We don’t believe in betting on ten to hope for one. We take a high-conviction approach—sourcing, structuring, and executing each investment on its own merit.
Each deal is evaluated independently. Each structure is tailored. Each opportunity is chosen because it holds the potential to generate meaningful value on its own, not because it “fits the portfolio.”
Investors participate deal by deal, not through blind commitment. This gives them visibility, discretion, and strategic focus. Startups know exactly who’s backing them, and why.
Why It’s Better for Startups
Deal-by-deal investing gives startups a sharper edge. Instead of chasing a seat in a fund’s portfolio, founders engage with deal managers who are actively choosing them because they believe in the business, the numbers, and the people behind it.
Capital is more thoughtful. Terms are more flexible. Support is more intentional.
And because we’re not on a fund’s timeline, we don’t pressure founders toward artificial milestones. We focus on long-term value—not short-term optics.
Why It’s Better for Investors
For investors, the benefits are equally clear. Each opportunity is opt-in, fully visible, and structured with discipline. There’s no cross-subsidizing of weak deals. No blind exposure. No hoping the outlier emerges.
Instead, investors can:
Participate selectively in high-quality deals
Gain direct access to founders and key information
Shape deal structures alongside a dedicated manager
Build a portfolio on merit
It’s venture capital with accountability.
Myths and Misconceptions
Some see deal-by-deal investing as informal or unsophisticated. That couldn’t be further from the truth.
At Paligan, we apply the same level of rigor as any top-tier institutional investor. Our due diligence is extensive. Our structures are thoughtful. Our approach to deal management is repeatable, scalable, and built for long-term performance.
Why We Operate This Way
Because it works.
We believe every investment should be earned. We don’t outsource conviction to a fund strategy. We don’t rely on luck. We build each deal from the ground up—carefully assessing the company, the team, the structure, the timing, and the alignment.
That’s how we create value.
The Future Is Focused
The market doesn’t need more capital; it needs smarter capital. Less noise, more clarity. Fewer bets, better deals.
Deal-by-deal investing is not a workaround. It’s a blueprint for what venture capital should be: focused, transparent, and built on trust.
At Paligan, we operate behind the scenes to make every deal count. No fund, no fluff.
