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The number of active venture capitalists has fallen by more than a quarter from its peak in 2021, as riskier financial institutions focus their money on larger companies in Silicon Valley.
of VCs In the year Investing in U.S. headquarters fell to 6,175 in 2024 — meaning more than 2,000 have fallen asleep since a peak of 8,315 in 2021, according to data provider Pitchbook.
The trend has concentrated power among smaller mega-companies and kept smaller VCs in the fight for survival. It has distorted the dynamics of the US venture market by keeping startups like SpaceX, OpenAI, Databrick and Stripe private for too long. It’s going wrong. Financing options for small companies.
In the year More than half of the $71 billion raised by US VCs by 2024 will be pulled in by just nine companies, according to Pitchbook. General Catalyst, Andreessen Horowitz, Iconic Growth and Thrive Capital alone have raised more than $25 billion by 2024.
Many organizations Foundry Group, an 18-year-old VC with about $3.5bn in assets under management, said the $500mn fund raised in 2022 would be its last.
“There is absolutely VC consolidation,” said John Chambers, former CEO of Cisco and founder of startup investment firm JC2 Ventures.
“Great men (as) Andreessen HorowitzSequoia (Capital), Iconiq, Lightspeed (Venture Partners) and NEA will be good and will continue,” he said. But venture capitalists who failed to make big returns in the low-interest environment before 2021 were going to struggle because “this is going to be a much stronger market,” he added.
One reason is a dramatic slowdown in initial public offerings and offerings — the typical events where investors get their money from the start. That has led to a flow of capital from VCs back to their “limited partners” – investors like pension funds, foundations and other institutions.
“The return on capital has grown significantly in the industry over the past 25 years,” LP said in several large US companies. “In the 1990s it probably took seven years to make your money back. It’s probably over 10 years now.”
Some LPs have run out of patience. In the year The $71 billion collected by U.S. companies in 2024 is a seven-year low and less than two-fifths of the total travel volume in 2021.
Small, young venture firms have felt the squeeze the most, as LPs have preferred to allocate to people with longer track records and previous relationships with them, rather than risking new managers or those who have never brought capital back home. Supporters.
“Nobody’s going to get fired for spending money on Andreessen or Sequoia Capital,” said Kyle Stanford, a VC analyst at Pitchbook. If you don’t sign (to invest in their current fund) you might lose your place next time: that’s why you get fired.
Stanford predicts that mid-sized VCs will experience a decline by 2025 if the sector doesn’t find a way to increase returns to LPs.
“VC remains an unknown ecosystem where only select companies get the most promising opportunities,” Lux Capital, a 24-year-old venture firm, told LPS in August. “Most new entrants engage in the activities of money fools. We continue to lose 30-50 percent of VC firms.
