Kingmakers

ℹ️(2026-02-06T17:42.518Z)
Perplexity Query
(2026-02-06T17:42
.518Z)
Question:
In Venture Capital, what is meant by the concept of "Kingmakers"?
Which VCs can be considered Kingmakers?
Why do startups want capital from Kingmakers?
Is there any evidence that Kingmakers actually make kings?
Model: sonar-pro

What "Kingmakers" Means in Venture Capital

Kingmakers are venture capital investors who wield disproportionate power and influence over which startups succeed or fail in the tech ecosystem. [6gjdtr] The term refers to VCs' ability to fund and shape tech startups, fire CEOs, manipulate company valuations, and ultimately determine which companies become industry leaders. [6gjdtr]
More specifically, the "kingmaking strategy" is a modern funding tactic where VCs deploy unusually large capital rounds into selected startups at early stages—typically Series A or B—to create an insurmountable financial advantage that overwhelms competitors. [swgm5p] [ysl7y0] Rather than letting market forces determine winners, VCs attempt to manufacture dominance through sheer financial force. [swgm5p]

Key Characteristics of the Kingmaking Strategy

The approach has four defining features[1]:
  • Early Stage Deployment: Massive funding at Series A or B rounds rather than later stages
  • Category Selection: Focus on AI application categories with clear market potential
  • Valuation Disconnect: Funding amounts that far exceed traditional revenue multiples
  • Competitive Pressure: Designed to create market dominance through financial superiority
What distinguishes modern kingmaking from traditional VC investing is timing. As Jeremy Kaufmann of Scale Venture Partners explains: "Venture capitalists have always evaluated competitors and bet on who they think will win a category. What's different is that it's happening much earlier." [swgm5p] [ysl7y0]

Which VCs Are Kingmakers?

The search results identify specific investors participating in kingmaking strategies[1]:
  • Jeremy Kaufmann - Partner at Scale Venture Partners
  • David Peterson - Angular Ventures
  • Jaya Gupta - Foundation Capital
More broadly, top-tier VC firms employ kingmaking tactics, though the results note that "not all VCs agree that kingmaking is a sound investment strategy". [ysl7y0] The power dynamics within the VC ecosystem also depend on asset owners—endowments, foundations, pension and state funds—whose capital VCs manage. [6gjdtr]
To contextualize scale: in 2021 alone, VCs invested $734 billion globally, predominantly in software and tech startups, [6gjdtr] demonstrating the enormous influence of kingmaker capital.

Why Startups Seek Capital from Kingmakers

Startups pursue kingmaker funding for several strategic advantages[1]:
  • Market Dominance: The capital grants them a financial advantage so significant it creates the appearance of market leadership
  • Enterprise Credibility: Well-funded startups are perceived as more likely to survive by large enterprise buyers, making them preferred vendors for significant software purchases. [ysl7y0] This helped legal AI startup Harvey attract major law firm customers [ysl7y0]
  • Competitive Survival: In winner-take-most category dynamics, being the kingmaker's chosen competitor provides essential resources to outpace rivals
  • FOMO Avoidance: Startups risk being left behind if competitors receive kingmaker backing

Evidence That Kingmakers Actually Make Kings

The evidence is mixed and contested.
Supporting evidence: Historical precedent suggests kingmakers shaped today's tech giants. VCs financed the companies that grew into "big tech"—Apple, Amazon, IBM, Microsoft, Google, and Meta—as well as more recent successes like Uber, Coinbase, and Airbnb. [6gjdtr] This demonstrates that VC capital historically correlates with dominant market positions.
Contradicting evidence: Recent case studies challenge kingmaking's effectiveness. When Polymarket raised at a $9 billion valuation and competitor Kalshi immediately followed with a $5 billion round from Andreessen Horowitz, the outcome contradicted kingmaking theory. As analyst Rory O'Driscoll noted: "I don't think anyone betting on Polly or Kalshi gives a damn how much money they have, provided they can pay their bet, and gives a damn who that money came from." [aky5jd] In prediction markets specifically, user loyalty is driven by liquidity and payout reliability, not VC pedigree. [aky5jd]
The distinction matters: kingmaking requires either massive capital advantages that overwhelm competitors or brand-name VCs creating customer preference through their backing. [aky5jd] When neither applies—as in markets where network effects or product reliability dominate—kingmaking loses its power.
Risk factors: The strategy carries significant risks including "potential valuation bubbles and high-profile failures," [swgm5p] suggesting that kingmaker capital alone doesn't guarantee success. The broader venture ecosystem also shows that massive early-stage funding can create unsustainable valuations disconnected from actual business fundamentals.

Citations

[swgm5p] 2026, Feb 02. How VCs Are Crowning AI Winners Before They Prove Themselves. Published: 2025-12-04 | Updated: 2026-02-02

[6gjdtr] 2026, Jan 24. Who Picks the Next Kings of Tech? - Public Books. Published: 2023-09-14 | Updated: 2026-01-24

[ysl7y0] 2026, Feb 04. VCs deploy 'kingmaking' strategy to crown AI winners in their infancy. Published: 2025-12-03 | Updated: 2026-02-04

[aky5jd] 2026, Feb 02. 20VC x SaaStr is Back!! The New Rules of Venture: Portfolio .... Published: 2025-10-16 | Updated: 2026-02-02

[5]: 2025, Jun 18. The Rise of the Financial Kingmakers: Private Equity's $21B+ Bet on .... Published: 2025-06-03 | Updated: 2025-06-18
[6]: 2026, Feb 04.
Or Just Momentum Chasers? #venturecapital #startup #podcast
. Published: 2026-02-04