Turnover at the largest US venture capital firms is rising, a sign that years of unchecked growth among investment teams may finally be at an end.
The number of investors at the 500 largest US VC firms by assets under management swelled 77% from 2017 through the end of 2022. But over the past 15 months, that growth slowed to just 2%, according to an analysis for PitchBook by Live Data Technologies, which tracks job change data.
The largest VC firms added a net 124 investors in 2023. But relative to the 2021 boom times, annual arrivals have declined 27% and departures have climbed 30%.
“It got really quiet on the venture side in 2023, but I’m hearing more from VC firms in 2024,” said Diane Gilley, managing partner at executive recruiting firm Click Partners.
Venture firms rarely do layoffs, instead encouraging partners to move on in less direct ways. Those methods could include denying deals that more junior partners bring to the investment committee or reducing their ownership stake in future funds.
Because of how VC firms are structured, they are under less pressure to cut costs than the tech companies they back. VCs’ management fees are tied to the value of assets under management, which are relatively stable from year to year.
But investors may feel pressured to trim ranks if they come up short on fundraising targets. A change in a firm’s investment thesis can also lead it to cut in some sectors and hire more in others, PitchBook lead analyst Kyle Stanford said.
Greycroft cut several investors last year, departures that it attributed to a pivot toward AI, Axios reported. Tiger Global’s Scott Shleifer, who was instrumental to the firm’s startup investment push, reportedly left the firm late last year amid a fundraising effort that came up short.
Top-tier talent has also been moving firms or retiring. Keith Rabois left his post as general partner of Founders Fund to return to Khosla Ventures as a managing director late last year. A spate of heavyweights—from Sequoia’s Michael Moritz to Greylock’s Reid Hoffman—have stepped back from their leadership roles.
The stagnation of investor ranks at the largest firms mirrors trends in dry powder available to US VC firms. Dry powder nearly tripled between 2017 and 2022 to $310 billion, but grew just 2% in the first nine months of 2023.
Looking ahead, the growth of the leading VC firms will depend on their ability to raise ever-larger funds, a prospect dimmed by high interest rates and a subdued IPO market.
Correction: An earlier version of this article incorrectly stated that John Curtius left Tiger Global in late 2023. He left in 2022. (April 23, 2024)
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