No, Not Every Venture Fund Needs to Cut Its Funding Target
late market Really broken. But it’s not just startups that are suffering.
Insight Partners, a dual-stock growth equity and late-stage venture investor, recently Lowered its fundraising target to $15 billion from $20 billion after raising one pitiful $2 billion pot.
Insight isn’t the only VC firm to have had to abandon its fundraising ambitions.It was reported that TCV eventually increased Only 55% to 75% Founders Fund halved its target from $1.8 billion to $900 million in March, after targeting $5.5 billion for the fund last year. We’ve also seen various companies, including Vibe Capital, return funds they didn’t believe they could invest.
What does that mean? While some are behaving like an ominous sign of fundraising this year, I think that view paints the industry too broadly. Let’s be realistic here: These companies cannot deploy all their capital in this environment, and it’s better to reset expectations now than to have to change course later.
According to PitchBook, only $11.3 billion was invested in late-stage companies in the first quarter of this year. This is the lowest quarterly total since the fourth quarter of 2017, when $8 billion was invested.
Now let’s look at Insight, which is trying to raise $20 billion.If it’s going to boost totals and the late-stage market doesn’t improve substantially over the next year or so, the company will have to invest a significant portion of the all Late transactions during the investment period. This will not allow them to pick investments based on quality. Instead, it sends them racing for capital.
Insight, which usually only comes out to back late-stage startups, is trying to raise absolutely ridiculous amounts of money so it can invest in the slowest category in the market right now. I don’t think it will be able to raise that much money in any year other than a boom in 2021.