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US VC fundraising is concentrating as returns lag expectations
Venture capital’s headline numbers look like a recovery, but the reality is more nuanced than that. The one-year horizon IRR hit 17.1% in Q4 2025, nearly triple private capital’s 6.2%, but that figure is a mirage built on unrealized markups, not cash reaching LPs. NAV grew 21.6%, while distribution yield sat well below its historical average. Strip out the AI-driven paper gains concentrated in a handful of megafunds, and the median 2025 vintage IRR is -2%, down from 17.4% just two years prior.
Fundraising tells the same story from a different angle. LPs are not spreading capital across a wide base of funds. Billion-dollar-plus funds now soak up 68.3% of every dollar raised, and just 12 firms account for nearly three-quarters of total commitments. Meanwhile, sub-$50 million funds have swelled to 67.7% of all fund count while collapsing to 4% of capital. They have become a segment being priced out of relevance by mega-managers writing early-stage checks.
Behind both trends sits the same broken mechanic of the market. Fewer than 50 VC-backed companies go public in a typical year against a backlog of more than 950 unicorns. Large exits now cost twice as much to produce as they did a decade ago and return barely more. The market is consolidating around a few managers, and we expect this trend to continue.
Recent vintages have provided poor returns to most LPs, and the spread has widened between the lower-performing managers and the top quartile.