How To Generate Alpha in Venture Capital | Albert Azout, Level Ventures
The Peel with Turner Novak
Turner Novak
4.6 • 11 Ratings
🗓️ 4 September 2025
⏱️ 81 minutes
🧾️ Download transcript
Summary
Albert Azout is the Co-founder and Managing Partner of Level Ventures, combining first-principles thinking with state-of-the-art data science to back and build top seed-stage firms and their breakout companies.
Venture investing is hard, and this conversation covers all their research unpacking exactly how to generate alpha.
We also talk about how Level picks and backs emerging venture managers to invest in, and Albert gives a demo of the custom internal software they’ve built.
Thank you to Jake Kupperman, Sasha Kaletsky, Nathan Benaich, Amanda Robson, and Dave Fontenot for helping brainstorm topics for the conversation.
Special thanks to Ramp for supporting this episode. It's the corporate card and expense management platform used by over 40,000 companies, like Shopify, CBRE and Stripe. Time is money. Save both with Ramp. Get $250 for signing-up here: https://ramp.com/ThePeel
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Timestamps:
(5:01) Top 3 forms of alpha in VC
(10:11) Other ways to generate alpha
(12:47) Avoiding false positives
(17:11) Optimal fund size and portfolio construction
(22:25) The role of Luck
(23:55) Spin-out vs outsider funds
(25:43) Level’s backchannel reference process
(29:29) Finding alpha in Criticality Investing
(34:45) Why capital flows drive all returns
(43:53) Early, consensus investing has the most alpha
(48:46) Networks are more persistent than performance
(52:03) The strongest and weakest networks
(58:41) Demo of Level’s internal software
(1:04:48) Building a Fund of Funds around their data
(1:10:01) Ideal LP GP relationship
(1:12:39) Benchmarks are relative
(1:15:39) VC funds using AI
(1:17:43) How venture will change in the next 10 years
Referenced
Level Ventures: https://levelvc.com/
Level’s Research Papers: https://levelvc.com/research/
Follow Albert
LinkedIn: https://www.linkedin.com/in/albertazout/
Newsletter: https://albertazout.substack.com/
Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/
Transcript
Click on a timestamp to play from that location
| 0:00.0 | what we're basically doing at any point in time is we're looking for where in the world |
| 0:04.2 | are there latent stresses that maybe the market hasn't perceived and trying to figure out |
| 0:09.3 | if those may change at some point in the future. Welcome to the Peel. I'm your host, Turner Novak, |
| 0:14.9 | founder of Banana Capital. Today's guest is Albert Azute, founder of Level Ventures, one of the |
| 0:19.6 | most interesting merging fund of funds investing in emerging venture capital managers of Level Ventures, one of the most interesting emerging fund funds |
| 0:21.6 | investing in emerging venture capital managers. |
| 0:23.6 | In Venture, there's a few areas where you can develop Alpha. |
| 0:28.6 | Some of it is structural and some of it is more strategic. |
| 0:31.6 | With high historical returns, Venture as an asset class has attracted more capital, which makes it more competitive. Albert and the team at level has spent the past decade studying how to generate Alpha, |
| 0:41.3 | and this conversation covers everything they've learned. |
| 0:44.3 | Not spoil too much, but the highest forms of Alpha include your network, your knowledge, and fund size, |
| 0:49.3 | with subcategories around analytical edge, information advantage, brand, and speed. |
| 0:53.3 | Some are more important others. |
| 0:54.5 | They work together and also the market's evolving underneath you, so you always have to |
| 0:57.7 | be kind of adjusting. |
| 0:58.7 | We also talk about consensus versus non-consensus investing, and why the highest form |
| 1:03.1 | of alpha is actually being the first to the new consensus and benefiting from follow-on |
| 1:07.7 | flows, a concept they called criticality investing. |
| 1:10.2 | You can do this chat of position capital that will benefit from future states of the world. |
| 1:13.8 | If you knew where capital flows were going, that's even more important than investing. |
| 1:17.7 | We talked about the importance of networks in investing and why they're more persistent |
| 1:20.8 | to performance. They end up organizing themselves in a way that they're both in a state of order, |
... |
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