The Arbitrage of 'Elsewhere': Why Endeavor Catalyst is Betting Against the Bay Area Bubble

In the current venture climate, San Francisco has become the center of a gravitational crush. The rush toward AI companies in Silicon Valley has created a saturation point where the competition for deals is fierce and valuations are often decoupled from traditional fundamentals. In this environment, the most sophisticated play is not to fight for a sliver of the Bay Area pie, but to seek alpha where others aren't looking.

This is the precise thesis driving Endeavor Catalyst. As TechCrunch first reported, the venture arm of the New York-based nonprofit Endeavor has closed its fifth fund with $320 million in capital commitments. This brings the firm's total assets under management to over $850 million. While the broader VC industry crowds into the same few zip codes in Northern California, Endeavor Catalyst is doubling down on what it calls "elsewhere."

In my view, this is more than just a philanthropic effort to support underserved regions; it is a calculated bet on geographic arbitrage. When the majority of capital chases the same trend in a single hub, the risk-adjusted returns of high-quality founders in emerging markets become far more attractive. By operating in markets that are frequently overlooked by the Silicon Valley machine, Catalyst is positioned to capture value at a lower cost basis while backing founders who possess the same—or greater—resilience as their US counterparts.

The track record suggests this strategy is working. According to data provided to TechCrunch, Endeavor Catalyst has backed 437 companies across 44 markets over its first five funds. The impact is significant: 83 of these ventures currently hold valuations of $1 billion or more. The portfolio includes some of the most significant global wins of the last decade, such as the Italy-based Bending Spoons, which went public in July with a $26 billion market cap, and the AI voice tool maker ElevenLabs, which was founded in Poland and recently saw a secondary sale valuation of $22 billion.

Other high-value holdings include Reflection AI, valued at $25 billion (founded by former Google DeepMind researchers, one born in Greece), the Swiss-founded Checkout.com at $12 billion, and Replit, co-founded by Palestinian-Jordanian Amjad Masad, which reached a $9 billion valuation earlier this year. Even in the fragmented African market, the firm has found success with the payments infrastructure company Flutterwave, valued this summer at $3.2 billion.

Crucially, the fund's structure is designed to mitigate the risks typically associated with emerging markets. Managing partner Allen Taylor and managing director Jackie Carmel lead a 16-person team that doesn't lead rounds. Instead, Catalyst only participates once a founder has secured at least $5 million from another institutional lead investor, matching the terms of that lead. With checks typically ranging from $1 million to $3 million—and capped at 10% of the round—Catalyst effectively uses other institutional investors as a first layer of due diligence.

Furthermore, the firm leverages a rigorous filtering mechanism. As TechCrunch reports, the group screened over 10,000 candidates last year and selected only 88. This selectivity, combined with a network of over 3,100 entrepreneurs in more than 50 countries, allows them to identify the top 1% of talent globally before the rest of the venture world catches on.

The backing for this strategy is equally telling. The new fund includes 400 limited partners, featuring heavyweights like Bill Ackman, Reid Hoffman, and the Dutch investment group Prosus. Perhaps most significant is that roughly 30% of these backers are former Endeavor founders, including those from Revolut, Nubank, and Checkout.com. This creates a virtuous cycle of capital and mentorship that is nearly impossible for a standard SF-based fund to replicate.

As the firm looks forward, it is expanding its footprint. While Latin America remains its largest region, Europe is currently the fastest-growing, with 12 new investments in the first half of 2026—nearly matching the 14 investments made in all of the previous year. The team also plans to make 40 to 50 investments annually, targeting up to 150 companies with this latest fund. Additionally, they are leaning into the "repeat founder" trend; Allen Taylor told TechCrunch that while 14% of the fourth fund went to second-time founders at the seed or Series A stage, they expect that number to rise to 20% with the new fund.

From a deals perspective, the most compelling aspect of this model is the alignment of incentives. Linda Rottenberg, co-founder of Endeavor, told TechCrunch that half of the fund's profits return to the Endeavor nonprofit, ensuring that every exit funds the next generation of founders "building elsewhere."

Ultimately, the concentration of capital in San Francisco creates a vacuum of opportunity everywhere else. By systematically identifying high-alpha founders in 44 different markets and utilizing a disciplined, non-leading investment strategy, Endeavor Catalyst is not just diversifying—it is exploiting a market inefficiency. In a world where everyone is betting on the same AI cluster in the Bay Area, the real winning trade may be the one that looks everywhere else.