Fundraising

Navigating the flight to quality

Established managers led the way as LPs prioritized proven performance, while emerging managers faced significant headwinds.

Fundraising across the US venture ecosystem in 2024 reflected the market adjusting to tighter conditions.

Nearly $80 billion was raised across 508 funds, marking the lowest numbers recorded since 2019 and nearly 60% below the peak of 2022. Record-breaking commitments in prior years, paired with the limited liquidity of today’s market, have results in a more cautious venture environment. The shift to constraining capital has led LPs to prioritize established managers, concentrating capital among proven performers.

Established managers continued to dominate overall fundraising, with the top 30 funds capturing 75% of the year’s total, and just nine funds accounting for nearly half. Industry heavyweight Andreessen Horowitz alone secured close to 10% of the total capital raised, underscoring LPs’ flight to quality and comfort in well-established industry incumbents. This 2024 trend was further amplified by resource-intensive sectors like AI, where startups gravitated toward larger funds with robust resources to navigate the complexities of the emerging industry.

As established managers pulled away in fundraising rounds, emerging managers expectantly faced significant headwinds. Without the validation of strong exits, many struggled to raise follow-on funds, securing just 20% of total capital raised. First-time funds struggled the most to secure necessary capital, with fund counts and total capital raised falling to decade lows.

While traditional venture fundraising slowed, secondaries emerged as a growing segment of private market activity, with its share of fundraising materially increasing between 2022 and 2024. Within a market seeing meaningful price dislocations and a constrained exit market, secondaries funds were well positioned to capitalize and offer LPs the promise of early, alternative liquidity.

This shift in LP interest reflects a venture ecosystem reshaping itself around resilience and adaptability. As liquidity constraints ease and exit activity gradually returns, the balance between established and emerging managers could stabilize, paving the way for more equitable capital allocation. The increasing role of secondaries funds highlights how the market is innovating to meet the needs of all industry participants, including employees, shareholders, VC firms, and LPs alike. The path to recovery may be gradual, but the foundations laid in 2024 suggest a more resilient venture landscape ahead.