PitchBook: VCs raised $30.4B globally in Q1 2024, a marked slowdown from 2023, which itself was the worst year since 2016, noting the end of the “megafunds” era
Data shows a ‘sustained slowdown’ has persisted in the first quarter of 2024 as a lack of exit options weighs on fundraising efforts
Context & Ripple Effects
The Q1 result extends a reversal from the 2022 fundraising surge, when firms collected $151B across the first three quarters of the year, much of it concentrated in large managers. By late 2022, quarterly fundraising had already fallen to $20.6B and its lowest fourth-quarter level since 2013, establishing the constrained fundraising environment described here.
The new data matters because PitchBook now characterizes the slowdown as sustained and ties it to limited exit options, rather than a one-quarter retrenchment. Its conclusion that megafunds are fading signals a change in which VC managers can reliably return to market.
First-order effects
- VC firms seeking new commitments face a tougher fundraising market immediately, as limited exits weaken the case for LPs to recycle capital into new funds.
- The fundraising advantage of the largest managers is less assured if the reported end of the megafund era persists, even though the corpus does not identify which firms are most affected.
Second-order effects
- Managers that cannot raise at prior scale are likely to adjust deployment pacing and reserve decisions, adding pressure to an investment market that had already seen US deal value and seed activity fall sharply in Q2 2023.
- LP capital is likely to be allocated more selectively among VC managers, reinforcing the relevance of the earlier concentration of fundraising among large funds while making realized exits more central to future fundraising.
Third-order effects
- If exit constraints remain prolonged, venture fundraising could shift from cycle-driven capital accumulation toward a market where demonstrated liquidity and manager differentiation determine access to capital.
- The result is consistent with a more concentrated VC industry, though whether capital consolidates in established firms or disperses to smaller, differentiated funds depends on the recovery of exit markets.
The trend: Venture capital is moving from the post-2021 fundraising boom toward an exit-constrained, more selective capital-allocation cycle.