TLDR:
- The number of VCs in US deals peaked at 18,504 in 2021 and fell to 9,966 last year.
- 2024 is predicted to be the year of the zombie VC reckoning.
The article discusses the current state of venture capital firms in 2024, highlighting how many VC firms are becoming inactive or “zombie” due to the inability to raise new funds. The article explains that unlike other businesses, venture firms do not suddenly go out of business but instead face a gradual decline over years. This has led to founders having to verify if the VC firms they are talking to are still actively investing. The article also provides examples of some VC firms that have been inactive in recent years.
The decline in active traditional VCs in US venture capital deals is also a key point, with the number dropping from 18,504 in 2021 to 9,966 in 2023. Limited partners funding VC firms have become more selective, cutting capital to firms with poor returns. Many VC firms are experiencing difficulties raising new funds, leading to closures or layoffs.
The article suggests that there may be a wave of “quiet zombies” in the VC industry that are not actively investing but are not publicly shutting down. The reticence of VCs to admit they are no longer investing is also highlighted, as it can impact their reputation and ability to raise money or find new opportunities.
