Dow Jones VentureSource: 516 new US venture funds raised since 2013, with 133 in 2016 and 87 so far in 2017; firms raised $44B in 2016, most since dot-com crash
Eliot Brown / Wall Street Journal :
Context & Ripple Effects
The fundraising wave has been building for years: venture funds pulled in $29.8B in 2014, a 69% jump over 2013 and the highest total since 2007, before doubling down to $44B in 2016 — the most raised since the dot-com crash. Dow Jones VentureSource now counts 516 new US funds formed since 2013, with the pace still running hot at 87 through most of 2017.
What makes the count notable is its shape: it is not just incumbents growing. The same data trail shows a barbell forming, with 30 US VC funds raising $500M or more in 2016 — up from 17 in 2015 and the most since 54 in 2000 — while smaller managers keep multiplying underneath.
First-order effects
- Limited partners choosing among 133 new funds formed in 2016 alone face a crowded market, pushing newer managers to differentiate on sector focus or check size to win allocations.
- Founders gain more competing sources of first institutional capital as hundreds of freshly raised funds deploy into the same deal market.
Second-order effects
- Mega-funds respond by concentrating capital in fewer, larger checks — the jump from 17 to 30 funds above $500M signals the top of the market consolidating even as the fund count fragments below it.
- Crowded early-stage funding invites non-traditional capital further downstream, a shift that later showed up in non-VC funds participating in a record 42% of tech startup deals by mid-2021.
Third-order effects
- If the pattern holds, venture splits structurally into a concentrated mega-fund tier competing for proven winners and a long tail of small funds — Crunchbase data later confirmed the tail kept growing, with more sub-$100M US VC funds raised in 2018 than any prior year.
- A deeper pool of evergreen-style venture capital raises the stakes for fund differentiation and pushes the industry toward specialization, with capital concentration at the frontier becoming the defining feature of the asset class.
The trend: US venture fundraising is expanding on both ends at once — more funds than at any point since the dot-com era, with capital simultaneously concentrating into fewer giant vehicles.