附近上门

There has been a remarkable flush of ginormous funds being announced or closed so far this year.

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A quick recap of some of this year鈥檚 highlights so far include the following firms:

• is raising with a minimum LP commitment of $250 million, according to CNBC sources.
• announced .
• raised for its , and .
• is .
• 听颈蝉 raising $1.4 billion across two funds, one of which is .
• closed a $1.37 billion venture fund, its ninth and largest to date.

And that鈥檚 just what鈥檚 been publicly disclosed so far.

But comparing current spate of supergiant funds being raised by North American VC funds to the recent past, you鈥檒l see just how anomalous the past few months have been.

In the chart below, we plot the number of billion-dollar funds closed by and in 附近上门.

In any recent year, five new venture capital funds larger than $1 billion wouldn鈥檛 raise many eyebrows. Indeed, VC firms like (IVP), (NEA), Khosla Ventures, , Sequoia Capital, , and a handful of others have years-long histories of raising VC funds starting out with $1 billion or more of dry powder.

However, between the time when Norwest Venture Partners filed its paperwork in mid-February and the time of writing, a new ten or eleven-figure fund has been announced every nine days in North America. That 颈蝉听abnormal. Still, there鈥檚 no way to predict exactly how things will shake out for the rest of 2018, but if past is prologue one can expect to see some continuation of this trend.

More And Bigger Funds Weigh On Small And Mid-Sized Funds

From a general partner perspective, the venture capital market appears to be experiencing two distinct trends:

1. The sheer number of funds being raised (both by first-time managers and established firms) is on the rise.
2. On the high end of the spectrum, more firms are raising their largest funds yet.

These two forces come together to result in a lot more capital in the VC market. Over time, that has led to a shift in the landscape. Just like the startup fundraising market is increasingly dominated by supergiant and other late-stage funding rounds, supergiant venture funds are accounting for an ever-larger chunk of the L.P. capital raised by general partners at VC funds. But it鈥檚 not enough to just talk about this phenomenon. Let鈥檚 see what鈥檚 going on under the hood using the data.

To the first point, the number of new venture funds being raised has been on a generally upward trajectory for the past eight years. The chart below plots new funds raised by U.S .and Canadian general partners per year, grouped by the amount of money raised for each fund.

And as the chart below shows, the surpassing majority of these funds are small or “micro” from the perspective of assets under management (AUM).

Although funds at the high end of the AUM spectrum grab most of the headlines lately, most of the new funds are fairly small, coming in at or below $250 million. According to 附近上门 data, only about 7 percent of the U.S. and Canadian funds closed in 2016 and 2017 were $500 million or larger, which was the largest such proportion since 2012.

Due to the rise of very large and supergiant funds on one end and micro-sized funds on the other, the “middle market” is getting squeezed. Roughly 33 percent of 2017-vintage funds came in between $100 million and $500 million, and that鈥檚 the smallest share this category has had since 2013.

But it鈥檚 not just in terms of raw counts that the middle swath of VC funds is getting squeezed; it鈥檚 happening with total capital raised too. As can be seen in the chart below, the ballooning size of very large and supergiant funds has been exerting pressure downmarket for years.

On a percentage basis, the amount of money that was invested into individual venture capital funds of $500 million or more was greater in 2017 than in any year since 2010. The amount of money invested in micro funds in 2017 is in the middle of 8-year averages. So, once again, the middle of the VC market is getting squeezed from above.

What To Make Of All This

In 2018, the amount of money being raised by venture capital firms for large funds is remarkable. Indeed, the six billion-dollar funds mentioned at the start set 2018 on pace to eclipse long-standing historical levels of supergiant fundraising. But it鈥檚 not without historical context; it鈥檚 an acceleration鈥攐r, more likely, the culmination鈥攐f a years-long trend.

What has changed? If are to be believed, there are a few factors involved. North American VCs are trying to counterbalance SoftBank鈥檚 $100 billion Vision Fund, which has lavished billions of dollars on late-stage startups and has the financial heft to price out other investors in competitive deals. And the startup fundraising pendulum has firmly swung in the direction of late-stage ventures, who continue to delay public debuts in favor of raising in cash-flush private markets.

It鈥檚 typically bad form to conclude with trite phrases like “only time will tell” or 鈥渨e鈥檒l just have to wait and see what happens.鈥� But in this case, there鈥檚 not much else to do. One thing is almost certain though: there will be more billion-dollar behemoths that emerge in the near future.

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