Why are fewer small venture funds able to close their deals this year
On November 5, 2024, the fundraising environment for smaller startup investors remains challenging with a decrease in new funds raised. In 2024, 118 small and midsized U.S. startup investors have raised funds of $500 million or less, marking a potential low point for new funds in recent years. This decline coincides with stagnant exits, as tech IPOs and significant merger and acquisition deals remain minimal. Many older funds remain well capitalized, impacting the entry of new funds. Overall venture funding is below the peak of 2021, and funds from 2022 show low deployment rates of committed capital, indicating a slowdown in seed-funded companies advancing to Series A funding. In 2024, funds below $500 million received $13.7 billion, one of the lowest totals in years, while average investment round sizes increased, favoring larger funds. Nonetheless, smaller funds continue to identify and support early-stage startups, often achieving favorable returns. Several new and follow-on funds focusing on cleantech, life sciences, and cybersecurity launched this year. Notable larger and follow-on funds include The Engine Ventures ($398 million), Clean Energy Ventures ($305 million), and Ballistic Ventures ($360 million). First-time funds such as Beta Boom ($14.5 million) and Create Health Ventures ($21 million) also emerged. Historically, funds raised during economic downturns have shown strong performance, but the future effectiveness of the current year's funds remains uncertain amid investor optimism.Learn more on this news visit us at:https://theweb3.news/news-bites/why-are-fewer-small-venture-funds-able-to-close-their-deals-this-year/ Hosted on Acast. See acast.com/privacy for more information.