What You Can Do With $5 Million? Start a Rebellion

Last year I was invited to speak at the Cleantech Forum Europein Sitges.

It gathers some of the largest resources companies, banks, and venture firms. Substantial investment tickets. Colossal budgets.

I met a senior partner of a legacy multimillion dollar European fund. I told him about Savia. He nodded with interest.

“What is the size of the fund?”, he asked

“5 million”, I said.

His eyebrows tightened. I was suddenly shrinking five centimeters for every second we stood there in silence.

“What can you do with 5 million?”, he asked.

Right there, I was facing one of the most viral misconceptions in Venture Capital (VC):

Larger funds are necessarily better than smaller funds.

The “small fund myth” is like the evil Empire in Star Wars. An omnipresent villain most emerging managers have to battle against.

It usually shows up in three forms: size, speed and returns. There is a fourth one, hardly spoken about, and much more dangerous than the rest. Especially in the case of Latin America.

Back in the Sitges hotel, the senior partner was still standing in front of me. I tried to come up with something clever.

Have you watched Andor?, I thought.

What the VC Industry Can Learn from Star Wars

Star Wars’ prequel series Andor tells the story of a bunch of startup founders and small fund managers in emerging markets.

It takes place during the early days of the Rebellion against the Empire. There was no rebel army yet. These rebels ate roots, smuggled, and were backed by an older VC rebel who was constantly hustling for funding.

Next to the overwhelming budget of the Empire, the rebels would often doubt themselves. What difference could they make with only second-hand blaster guns and a few small space ships?

Turns out the rebels knew a lot about VC.

You don’t need a big space cruiser to cross the galaxy

My first encounter with the small fund myth was in 2017. It was at the Latin American Forum of Impact Investing in Mérida. Fresh out of my MBA.

I shared with the manager of a multilateral bank my aspiration of raising a $10M climate fund.

“Generally, we don’t back funds under $20M”, she said. “You need partner salaries, analysts, back office, travel… we’ve seen small funds run out of budget”.

I pictured an office with a marble reception desk. Analysts dashing around tables, accountants typing up tax reports. I was wearing a fitted suit, busily contemplating our 10th floor views.

At the time, the picture made sense to me. In 2026, not so much.

End-to-end fund administration services are now available from several firms, including Decile Group or Carta. Our team works remotely from four countries. We use AI to draft memos, source and pre-assess deals.

I’m writing this in a t-shirt.

In the words of a post by Adeo Ressi, CEO of Decile Group:

“Funds are getting smaller. And that’s a feature, not a bug […] The average fund size is now $9.4M. The best-performing bracket is under $5M.”

A small spaceship can certainly hold enough fuel for the journey. I’m not saying it’s easy. I’ve eaten roots for breakfast.

“What we consistently see across I4C is that smaller, emerging managers are often the first to act—long before the rest of the market pays attention.” — Helena Wasserman, co-founder of Investors for Climate (I4C).

You don’t need a large spaceship to hit hyper speed

For Savia I, we prepared a funding application from the Chilean government, which could potentially triple the size of the fund. After weeks of paperwork, our application was almost ready.

I could already see myself sitting in the starship command center.

“Take us to high returns”, I’d order.

We decided not to apply.

Until then, Savia’s ability for fast decision making had, and still is, one of our superpowers. Government funding meant more money, but slower processes. Without speed, we would have lost some of our best companies.

This also applies to adaptation.

LatAm is facing a shift from decades of software-first solutions, to a galaxy of science-based / advanced-engineering / hard-to-grasp tech.

This isn’t just SaaS anymore.

Adaptation is a messy, volatile asteroid field. Small funds with domain expertise and velocity hold an advantage.

The larger the spaceship, the more money you’ll make

This is the most viral version of the small fund myth: The larger the fund, the higher the returns.

The logic behind this misconception is that bigger size means bigger investment resources, bigger budget and therefore bigger returns. “Leading” funds are usually listed by size, not performance.

Raising and managing hundreds of millions is a massive feat. I get it. But soccer teams don’t boast about money spent on players, they do about goals scored. In VC, the game is about money returned. Shots on target.

The reality is that smaller funds statistically score more goals than larger funds.

Based on data from 2000+ funds, Carta’s “VC Fund Performance 2024” stated that the top decile sits in funds between 1M to 10M in assets.

How is this possible? Several reasons, but the main one is math.

A $100M fund may have an imperial-class budget, but to provide 4x returns, it will need to hit a few billion dollar exits. Not easy. In LatAm, where exits are smaller, this is even harder. A smaller fund doesn’t depend on big-ass exits.

I’m not against large funds. They play a key role in the rebellion. And while over performance of small funds is real, it does not apply to all of them. In the VC galaxy, any of us can get hit by a meteorite.

“Emerging managers consistently outperform. The real challenge for LPs is not whether to invest, but which ones to back.” — Adriana Tortajada, Managing Partner at 1200 VC.

We don’t just allocate money, we allocate belief

Despite losing friends, suffering from imperial abuse and killer droids, Andor’s rebels kept going.

They were not driven by the “force”, or high salaries. Their driver was the belief that the rebellion is systemic. A borderless movement, spread out across the galaxy.

A $1M ag-tech fund in San Jose.

A $5M climate-industrial fund in Mexico City.

A $10M life sciences vehicle in Puerto Varas.

Collectively, we are pushing the frontiers forward.

This is especially important in emerging markets. Every new fund, every early allocation, every founder backed before the world notices, is an act of insurrection.

Like in Andor, the day will come when there are too many success stories to ignore. LatAm’s leapfrog will look obvious in hindsight. The success of small, emerging funds, inevitable.

We need more emerging managers to drive this momentum. Diverse, specialised, and ready to do things differently. As long as the small fund myth lingers throughout the ecosystem, it will hold them back from joining the ranks.

Or, just like in Sitges, it made me forget for a few seconds the importance of what we do.