Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The number of active venture capital investors has dropped more than a quarter from a peak in 2021, as risk-averse financial institutions focus their money on the biggest firms in Silicon Valley. The tally of VCs investing in US-headquartered companies dropped to 6,175 in 2024 \u2014 meaning more than 2,000 have fallen dormant since a peak of 8,315 in 2021, according to data provider PitchBook. The trend has concentrated power among a small group of mega-firms and has left smaller VCs in a fight for survival. It has also skewed the dynamics of the US venture market, enabling start-ups such as SpaceX, OpenAI, Databricks and Stripe to stay private for far longer, while thinning out funding options for smaller companies.More than half of the $71bn raised by US VCs in 2024 was pulled in by just nine firms, according to PitchBook. General Catalyst, Andreessen Horowitz, Iconiq Growth and Thrive Capital raised more than $25bn in 2024. Many firms threw in the towel in 2024. Countdown Capital, an early-stage tech investor, announced it would wind down and return uninvested capital to its backers in January. Foundry Group, an 18-year-old VC with about $3.5bn in assets under management, said a $500mn fund raised in 2022 would be its last.\u201cThere is absolutely a VC consolidation,\u201d said John Chambers, former chief executive of Cisco and the founder of start-up investment firm JC2 Ventures. \u201cThe big guys [like] Andreessen Horowitz, Sequoia [Capital], Iconiq, Lightspeed [Venture Partners] and NEA will be fine and will continue,\u201d he said. But he added that those venture capitalists who failed to secure big returns in a low-interest rate environment before 2021 were going to struggle as \u201cthis is going to be a tougher market\u201d. One factor is a dramatic slowdown in initial public offerings and takeovers \u2014 the typical milestones at which investors cash out of start-ups. That has staunched the flow of capital from VCs back to their \u201climited partners\u201d \u2014 investors such as pension funds, foundations and other institutions.\u201cThe time to return capital has elongated a lot across the industry over the last 25 years,\u201d said an LP in a number of large US venture firms. \u201cIn the 1990s it probably took seven years to get your money back. Now it\u2019s probably more like 10 years.\u201d Some LPs have run out of patience. The $71bn raised by US firms in 2024 is a seven-year low and less than two-fifths the total haul in 2021.Smaller, younger venture firms have felt the squeeze most acutely, as LPs chose to allocate to those with a longer record and with whom they have pre-existing relationships, rather than take a risk on new managers or those who have never returned capital to their backers. \u201cNo one gets fired for putting money into Andreessen or Sequoia Capital,\u201d said Kyle Stanford, lead VC analyst at PitchBook. \u201cIf you don\u2019t sign on [to invest in their current fund] you might lose your spot in the next one: that\u2019s what you get fired for.\u201dStanford estimated the failure rate for mid-sized VCs would accelerate in 2025 if the sector could not find a way to increase its returns to LPs. \u201cVC is and will remain a rarefied ecosystem where only a select cadre of firms consistently access the most promising opportunities,\u201d wrote 24-year-old venture firm Lux Capital to its LPs in August. \u201cThe vast majority of new participants engage in what amounts to a financial fool\u2019s errand. We continue to expect the extinction of as many as 30-50 per cent of VC firms.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Summarize this content to 2000 words in 6 paragraphs in Arabic Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The number of active venture capital investors has dropped more than a quarter from a peak in 2021, as risk-averse financial institutions focus their money on<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63],"tags":[],"class_list":{"0":"post-151732","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-tech"},"_links":{"self":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/151732","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/comments?post=151732"}],"version-history":[{"count":0,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/posts\/151732\/revisions"}],"wp:attachment":[{"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/media?parent=151732"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/categories?post=151732"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/globetimeline.com\/ar\/wp-json\/wp\/v2\/tags?post=151732"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}