Thirteen percent of venture GPs don’t plan to raise another fund as the LP pullback spoils fundraising efforts, according to PitchBook’s semiannual VC Tech Survey. That’s double the rate in H1 2023, when 6% said they had no plans to raise another fund.
Nearly half of venture firms—44% of those surveyed in mid-2023—had previously pushed back their plans to re-enter the fundraising process, as institutional investors became increasingly concerned with overexposure to the asset class.
Many of those GPs were emerging managers who jumped into venture in 2019 or 2020 when the LP market was capable of supporting far more funds than today’s environment.
But with exits still relatively slow in the first half of 2024, many managers have been attempting to raise a second fund without significant cash distributions to their LPs.
That has driven activity in the secondaries venture market as GPs scramble to show returns. A quarter of GP respondents said that they were becoming “more active” in the secondaries market because of the current environment.
A small cohort has already packed up shop. Hard tech VC Countdown Capital shuttered its operations earlier this year, citing market conditions and heightened investor demand that have priced out smaller early-stage firms.
Others are quietly retreating from the limelight. In 2023, approximately 38% of VCs disappeared from dealmaking, according to PitchBook data, translating to approximately 2,725 firms actively making deals.
For those that have managed to raise fresh dry powder, investors are optimistic about the 2023 and 2024 vintages: GPs polled expect them to be the strongest vintage return years going back to 2019.
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