LPs are starting to lean in and write BIG checks into the BIG established VCs again
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“Andreessen Horowitz’s funds’ total was nearly 80% of the total raised in Q1. If General Catalyst closes its fund in Q2, established managers will have raised more in the first six months of this slow fundraising year than emerging managers have in total over the past 18 months.”
viapitchbook2024 midyear report
I’m sure billions more were raised, not announced and many billions more are in the works but just the sheer magnitude that one VC (with multiple funds) is commanding the lion share of LP committed capital is truly amazing!
The other top Tier 1 funds aren’t far behind and cant invest it fast enough. And that’s a good thing as the reports of our (VC) death has been greatly exaggerated… though it has been a rough few years.
Most were announced this year / added three in just the last week since I started writing this 🙂
Kleiner Perkins 21 $825M / Select III $1.2B
Basically 2022-2023 was very difficult and kind of a wash but there was still a lot of activity behind the scenes - mostly building and survival mode. But when OpenAi launched their GPT-4 model March 2023, that’s really when the Ai feeding frenzy started.
We’re starting to see cracks though in some of the very early Ai investments like Stability Ai ($1B+) Adept ($450M+) that got oddly acqui-hired… odd as in Microsoft and Amazon hired away the founders and most of the teams because they legally cant do a traditional M&A, which would have taken too long and probably would have been blocked anyways. We will definitely see legal issues later on but for now, shoot first, ask questions later / many more of these to come.
VC is dead lol 🤣Scott Kupor@skupor
(5) The "VC is dying" argument resurfaces everytime there is a market correction - post-2000, post-2008, 2015-2016, 2018-2020, 2022+. So far, the same patterns repeat - underwriting standards get tighter; return to focus on DPI, ... but few investors (at least historically) have…x.com/i/web/status/1…
(4) Nothing has changed wrt that thesis unless you believe that alternatives managers generally are no longer able to generate excess returns over equity markets beta. I don't think the data demonstrate anything new there.
2 Replies
We see this every few years that “VC is over,” startups should focus on bootstrapping and cash flow blah blah, which is fine but that’s a separate asset class. It’s easy to kick VC/startups when they’re down (we know who you are) for engagement tweets and to sell your courses. Also stop telling pre/seed startups they need to be profitable as well, that’s just crazy! Cash management with a controlled burn and being conservative is one thing but raising the bar that high is not the business we’re in. We’ll get back to our “normal” soon. $50-$500M seed rounds are not normal FYI / most of it goes to very expensive Ai researchers and compute costs.
I think and feel we’re near the bottom which will come in early 2025 once we get throughsomepolitical issues and there issomeclarify on how this country and the world will be run. So based on that I’m starting to see more investors advise their early pre/seed founders who are raising bridges to prep for a Q1 2025 push. Meaning build and strategize now, give it everything you’ve got in Q4 2024 and raise in a hopefully more favorable environment then (cant really get much worse). Get ready to play offense again!
Tom Loverro@tomloverro
IT'S TIME FOR OFFENSE. We’re on the cusp of a Great Reawakening for startups. Companies that survived the Mass Extinction need to move decisively or risk being beaten by competitors. Here’s what’s changed & how to get *responsibly* aggressive.🧵/1
PREDICTION: There's a mass extinction event coming for early & mid-stage companies. Late '23 & '24 will make the '08 financial crisis look quaint for startups. Below I explain when, why & how it will start & offer *detailed advice to founders* on surviving the looming die-off. /1
6 RepliesEmerging Managers and The Future of True Early Stage Investing
I’ve started multiples companies, ran PR/comms for dozens of startups when I had my agency in 2010 and have invested in 65+ viaNYVP. The early stages, 0-1 and helping the underdog is what I’ve been doing my entire career - it’s the most fun, volatile, rollercoaster of a ride you can experience. It has it’s highs and lows and I joke that I dont wish it on my enemies (which I dont have many of I think.)
When I started my first company in 2007, we had a tiny friends and family round + some alumni. There were some local angel groups over the years and some really early incarnations of some great VCs today just starting out. There were maybe a dozen VCs in NY at the time, diligence took 3 months and a priced preferred equity seed round of $500k-$1M was at a $4M valuation. So why am I saying all of this? Because the startups of the VC world are the emerging managers who are struggling right now, so I just want to keep highlighting and supporting them as many small funds are solo GPs which is beyond difficult and very often lonely.
Trace Cohen@Trace_Cohen
If you’re an emerging fund manager <$100M that closed a fund 1-3 in last year, can you comment with info below?
Not much data so trying to add up whatever I can find!
22 Replies
There are a lot of replies to this tweet of first funds, half committed and even closed funds but mostly <$50M funds who go out and hustle every day. They mostly raise from founders, operators, (U)HNW and Family Offices, many of which aren’t in the tech world, which is great to bring more people into our bubble and educate them as well. Unfortunately they’re all too small for institutions and endowments cant that cant write checks small enough to move the needle for them.
So if you wont/cant invest in them, reach out, make intros and help them like you would any other friend with a startup.
Trace Cohen@Trace_Cohen
Trying to run an Ai startup
Which VC do you think is winning the Ai wars right now?
Who is your favorite Emerging Manager right now?
Are you a Family Office looking to learn / invest in the tech world?
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