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December 30, 2023
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2023: VC funds feel the heat; churn rises with performance.

According to a recent article in The Economic Times, the venture capital (VC) industry experienced heightened churn in 2023, with at least 38 partners and top executives moving out of VC funds. This trend is said to be a result of the challenges in the technology sector. The article highlights some of the major movements within the industry, including the departure of partners from Lightbox Ventures, Orios Venture Partners, and SoftBank Vision Fund.

Of the 38 professionals who left VC funds, 25 were in the investments team across various funds. The increased movement within the VC industry is attributed to the non-performance of portfolio companies. This is said to be more noticeable in India compared to more mature markets.

The article also mentions the predictions made by January Ventures’ cofounder and partner Maren Bannon for the coming year. Among these predictions is the expectation that 2024 will see “the great VC resignation,” with new managers starting VC firms increasingly being spin-outs from big firms. Additionally, Bannon predicts that record amounts of dry powder will put downward pressure on returns.

The article concludes by stating that the increased churn within the VC industry reflects the challenges faced by startups and the technology sector as a whole. It suggests that investors and operators need to reassess their strategies and focus on performance to ensure long-term success.

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