Alternative funds: Must you increase one?

That can be VC’s largest fundraising query in 2023

One of many largest enterprise capital traits of the previous couple of years was early-stage corporations elevating “alternative” funds to make follow-on investments into their most profitable bets. However amid a harder fundraising market that impacts each VCs and startups, muted exit setting and slowdown in late-stage funding, will that pattern proceed?

Earlier this week, TechCrunch first reported that Lux Capital was elevating cash. What stood out was the agency ditching its alternative fund and mixing its early- and late-stage methods into one automobile that can primarily give attention to early-stage deal-making. This got here simply weeks after Y Combinator announced it was pulling again from its late-stage technique too.

At first, I assumed these have been simply the primary few indicators that 2023 would possible be the 12 months the chance fund pattern dies, however in fact, it’s not that easy.

I believe whether or not to lift a chance fund will turn into a way more debated query for corporations seeking to increase cash this 12 months. I believe we are going to see considerably much less of them, however there’ll nonetheless be corporations elevating them with good purpose. Khosla Ventures and Canaan look like amongst these: Again in January, Khosla began fundraising for a slate of recent funds, together with an opportunity fund, and on Thursday, Canaan said it had raised $850 million throughout two funds, its flagship early-stage fund and a late-stage technique, my colleague Connie Lozios reported.


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