Venture Capital’s Shifting Landscape
The venture capital industry is experiencing a seismic shift, as dozens of investors at top firms have either quit or been pushed out in 2024. This exodus is attributed to the prolonged startup downturn and a broader transformation in the role of VC firms.
A Changing of the Guard
In recent weeks, several high-profile investors have announced their departures. Matt Miller, a veteran of Sequoia Capital, is leaving to start a new fund focused on European founders. Bilal Zuberi, formerly of Lux Capital, is working on a new fund dedicated to artificial intelligence investments. Meanwhile, Sriram Krishnan, a general partner at Andreessen Horowitz, is joining the White House to advise on AI policy.
The Rise of New Firms
This year has seen an unusual number of investors striking out on their own, creating new firms that aim to disrupt the traditional VC model. Ethan Kurzweil, formerly of Bessemer Venture Partners, has launched Chemistry, a $350 million early-stage fund focused on out-hustling legacy firms. Mike Volpi, a veteran of Index Ventures, has started Hanabi Capital, an early-stage fund that invests his personal money as well as funds from friends and family.
Industry Pressures
The venture capital industry is facing unprecedented pressures, driven by the startup downturn and a shift towards larger, more institutionalized funds. Many investors are growing frustrated with the constraints of working at multibillion-dollar funds, which have become more common in the once-scrappy world of VC. As a result, some investors are choosing to start their own firms, where they can focus on spending more time with nascent companies.
A New Era for Venture Capital
The departures at the top could be good news for up-and-coming investors, as new firms emerge to change the way the industry operates. According to Ken Chenault Jr., a former partner at General Catalyst, the rise of megafunds has created space for new managers to launch smaller, more nimble firms. However, the process of raising capital for these new funds will be challenging, as limited partners prefer to invest in renowned firms with a proven track record.
A Tricky Environment
The venture capital industry is navigating a tricky environment, where funds are not growing, and partnerships are scaling back. This has led to layoffs and a more competitive landscape for emerging managers. As Eric Bahn, co-founder of Hustle Fund, notes, “When money is flowing less easily or less readily, naturally, there is a stress test that is put on a partnership.”
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