How to Analyze Venture Capital Trends

Over the past +3 months, we've been researching how great VCs spot supertrends before the rest of the market. We've interviewed over a dozen elite investors to understand their strategies. Today, we're releasing our latest "Investors Guide" packed with all of the lessons we've learned. Along with our own insights, you’ll find wisdom from exceptional investors who who were years early to the opportunities in AI, crypto, computational biology, digital commerce, emerging geographies like Latin America, and much more. Here's exactly what you'll get: 📈 A +12,000 word deeply researched guide. 🎯 15 specific strategies to help you generate and test investment ideas. 📚 20 books recommended by great VCs to expand your mind. 💾 8 data sources to help you spot and understand emerging trends. ☕ +15 investors’ insights + strategies from 1:1 interviews. (A month of coffees in a single guide.) 📲 6 new technologies you should play with to understand the future. 👩🚀4 “fringe” movements that might spawn the next supertrend. ...And tons more! 🔗 Jump in here: https://lnkd.in/etAYdSVM 🙏 A huge thank you to Danny Rimer, Kirsten Green, Tomasz Tunguz, Rebecca Kaden, Firat Ileri, Jesse Walden, Kyle Samani, Zoe Weinberg, Nathan Benaich, Sarah Guo, Rex Woodbury, Scott Sobel, and Zavain Dar for sharing their insights!

Peter Walker, from Carta, delivered a data-driven analysis at NuFund Venture Group’s Meeting last week. His presentation covered the state of venture capital, key fund performance benchmarks, and the challenges and opportunities facing investors today. My Takeaways : For much of the last decade, venture capital was fueled by rapid fundraising and soaring valuations. But as Walker noted, “the market has fundamentally shifted,” with liquidity tightening and capital deployment slowing across funds. Three trends stand out: Liquidity remains scarce – Many funds from the 2019–2022 vintages have yet to return meaningful capital to LPs. Down rounds and bridge rounds are back – These nearly disappeared in 2021 but are now surging, especially at the seed stage. Reserve strategies matter more than ever – With longer timelines between rounds, funds are allocating capital more selectively. As Walker put it, “We’re dealing with the hangover of a venture frenzy in 2021 and early 2022.” Fund Performance: The Good, the Bad, and the Ugly 1. IRR & TVPI: Vintage Performance Disparities *2017–2018 vintages: Top-quartile funds show IRRs in the mid-teens and TVPIs exceeding 2.0×. *2019–2020 vintages: Performance is volatile, with some standout funds but many struggling to reach liquidity. *2021–2022 vintages: Median TVPIs are stuck near or below 1.0×, reflecting the impact of high entry valuations and a frozen exit market. Walker acknowledged the classic "J-curve" effect—where early-stage funds show negative IRRs before climbing to positive returns. But he cautioned that the 2021 cohort may take longer than usual to recover: 2. DPI: The True Measure of Success 2019 vintage funds: Only ~40% have returned capital. 2020 vintage funds: Even worse—only ~20% have distributed anything. 2021–2022 vintage funds: DPI remains near zero. Walker summarized: “Fully 50% of funds from six years ago have failed to return a single dollar to LPs.” Carta’s benchmarks reinforce what we at NuFund already know: our investment model works. ✅ Returning capital earlier than peers – NuFund has achieved meaningful DPI ahead of most comparable funds. ✅ TVPIs above market medians – While many funds struggle to reach 1.0× TVPI, our funds show consistent performance above industry benchmarks. ✅ Diversified and resilient portfolios – By investing across SaaS, biotech, deep tech, and multiple geographies, NuFund is positioned to navigate market shifts effectively. Peter Walker left investors with a few critical lessons: 🔹 “DPI is king – Paper gains don’t matter if funds can’t return capital.” 🔹 “Be cautious of bridges – They often indicate deeper startup struggles.” 🔹 “Patience is key – Fund cycles are extending beyond 10 years.” As Walker concluded: “The next two to three years will favor the discerning over the ambitious, and the patient over the reckless.” 📌 Disclaimer: This analysis is for informational purposes only and does not constitute an offer or solicitation to invest.

One person's loss is another person's gain. We have hit the lowest VC distribution environment since the global financial crisis. This is creating urgency for VCs to return cash to LPs. This is leading some investors to make short-term sacrifices to make their LPs happy and create some liquidity. Usually, VCs preach patience, waiting for the long-term massive exits. But already extended horizons for LPs have forced some hands early: - To generate liquidity, VCs are selling secondary stakes in top portfolio companies at discounts as high as 60% compared to the valuations set by previous funding rounds. - A cash-flow positive high-growth startup is even running a small primary fundraise with a large secondary component where early VCs exit at a discount - Eager for returns after 14 years of drought, some VCs accept leaving cash on the table versus chasing maximal gains The dynamics reflect changed attitudes about the viability of outsized returns in the long run versus securing cash for LPs now. With distributions at 14-year lows, locking in 2-3X return now starts to appeal more even if 25X seems possible someday. In summary, despite aiming for home runs, VCs are shifting strategies in this environment to get singles and doubles multiples on their investment. Smaller funds and syndicates that are buying the secondaries at discounts and have the patience to wait are the ones really winning. #vc #investing #invest #founder #angelinvestor #venturecapital

CB Insights State of Venture 2024 report just dropped. The data shows where tech is headed. Top takeaways: *AI is eating venture capital — capturing a record 37% of funding and 17% of deals in 2024. The top 5 deals of the year are all AI infrastructure players (Databricks $10B, OpenAI I $6.6B, xAI with two $6B rounds, Anthropic $4B). *Global dealmaking hit an 8-year low. The drought is notable in China (-33% YoY), Canada (-27%), and Germany (-23%). But watch Asia — Japan, India, and South Korea are bucking the trend with slight gains. *Early-stage resilience: Despite market uncertainty, early-stage valuations hit an all-time high median of $25M in 2024. Investors are packing into early-stage rounds to ride the next major wave of value creation in tech (aka AI).  *IPO timelines are stretching — companies now wait a median 7.5 years from first funding to IPO, up 2 years from 2022. Late-stage players like Stripe and Databricks are opting for additional funding rounds instead of public debuts. *Growth markets to watch: Enterprise AI agents, genAI for customer support, industrial humanoid robots, and autonomous driving systems are among markets seeing the fastest deal growth. The message: While overall venture activity cools, AI and automation are reshaping both how we build companies and where capital flows.   What trends are you seeing in your corner of the tech ecosystem? 273 pages of #venture data in the full report linked in the comments.

𝐒𝐦𝐚𝐥𝐥 𝐕𝐂 𝐅𝐮𝐧𝐝𝐬 𝐚𝐧𝐝 𝐋𝐚𝐫𝐠𝐞 𝐕𝐂 𝐅𝐮𝐧𝐝𝐬 𝐬𝐡𝐨𝐮𝐥𝐝𝐧'𝐭 𝐛𝐞 𝐜𝐨𝐦𝐩𝐚𝐫𝐞𝐝 𝐬𝐢𝐝𝐞 𝐛𝐲 𝐬𝐢𝐝𝐞 Most LPs know that small VC funds can potentially drive higher top-end returns compared to their larger counterparts. However, what deserves a bit more analysis is the why from the lens of portfolio exposure and risk. The truth is that these small and large funds are different products that operate under different business models within the massively broadening category of "Venture Capital". Let's illustrate. Fund A - $100M Seed Fund (30 investments, 40% reserves) The business model for this fund is to maximize initial ownership at seed and follow on to maintain or increase ownership in one more round. Data from Primary Ventures shows that about 30%-40% of seed-funded companies progress to Series A, but only around 15% reach Series C. • Average seed check: $1.5M for 10% ownership. • Follow-on: 10-15 companies at Series A. • By Series C: 5-6 companies may still be active (others have either exited or failed) • With minimal dilution (ideally less than 50% from inception to exit), a $1B exit for a VC with a 5% ownership position at exit (initial $1.5M seed + $2M Series A with 50% dilution) yields $50M, or ~15x on investment, 0.5x of the fund. Fund B - $800M Early Stage Fund (30 investments, 65% reserves) For larger funds, core positions typically start at Series A, with ongoing investment to maintain or increase ownership through multiple rounds of each company. The theory is that follow-ons at the mid-growth stage should come with less risk and shorter times to liquidity for LPs but also bring lower return multiples. • Average Series A check: $12M for 15% ownership. • Follow-on: Multiple rounds to maintain ownership. • By Series C: 10-12 companies still active • In a $1B exit where the VC maintains 15% ownership (initial $12M Series A + $17M total in B/C rounds to maintain ownership), the return is $150M (~5x on investment, 0.2x of the fund). Thus, larger funds must aim for very large outcomes given cost-dollar averaging up, and typically require $5B+ exits to return the fund. This is why many larger funds have started to be more active in seed (larger return on initial check + more shots at goal). In summary, the products are very different, with different business models. Our data supports that smaller fund come with more risk/volatility, but can produce higher end returns when successful, while larger funds present a tighter band of returns, with less range on the upside/downside.

In venture capital, finding the needle in the haystack is everything - only 39 out of 392 Series A deals in LatAm actually moved the needle for fund returns. I analyzed Series A deals across LatAm from 2014-2024, and the power law is even more extreme than Silicon Valley. Only 10% of companies achieved $1bn+ valuations, proving that in emerging markets, the handful of winners truly make or break entire fund vintages. The analysis focuses on 2014-2021 outcomes since 2022-2024 deals are still too early to assess. What's fascinating is how different fund strategies played out. Sequoia Capital and GIC ran extremely concentrated approaches - Sequoia made only 2 Series A deals but achieved a perfect 100% hit rate with Nubank becoming their $61B crown jewel. GIC followed a similar playbook with just 2 deals and 100% success rate. These global funds treated LatAm as a careful, opportunistic market where they could afford to be incredibly selective. In stark contrast, local specialists adopted portfolio-based strategies with broader market coverage. KASZEK made 63 Series A deals with a 10% hit rate, while Monashees led with 81 deals but only a 5% success rate. These firms bet that their deep local market knowledge would help them capture more winners, accepting lower hit rates for broader market exposure. We're seeing dramatic strategy shifts among major players. A16Z started with extreme selectivity - just one deal in 2016 (Rappi) - but made 3 deals in 2024 alone. Tiger Global and Valor Capital Group represent the most striking pivots. Tiger remained highly selective before exploding into high-volume deployment, making 8 Series A deals in 2021. Valor followed similarly, scaling up to 17 Series A investments in 2021 - nearly triple their previous peak year. The 2016 vintage stands out as the golden year with 15 out of 33 deals becoming unicorns - companies like Creditas, QuintoAndar, and Kavak.com (all from Kaszek), plus Rappi (a16z), Bitso, and Cornershop. This vintage benefited from perfect timing as mobile adoption accelerated and digital-first business models found product-market fit. Here's the most striking insight: 18 out of 39 companies (46%) that achieved $1bn+ valuations are fintech companies - from Nubank and Creditas to dLocal and Bitso. This dwarfs every other vertical: proptech had 3 winners (8%), e-commerce had 4 (10%), and logistics had 4 (10%). Fintech's dominance in LatAm reflects the massive underbanking opportunity and the region's leapfrog potential in financial services. We're now in the golden rush era of AI. It will be fascinating to see if LatAm AI companies from the 2022-2024 vintage can reach $100M ARR as quickly as Cursor and other global players - potentially breaking the traditional slower scaling pattern of emerging market companies. Which companies will reach to $1bn+ valuations in the 2022-2024 vintage? Let me know in the comments. Like, share and subscribe for more insights about startups in emerging markets

Just published our 2025 VC Forecast Mid-Year Update, analyzing Q1's $121 billion in venture funding—the highest quarterly total since Q2 2022. Key findings from analysis of PitchBook, CB Insights, Carta, and National Venture Capital Association data: -Seed-to-Series A progression has declined to 9% (from historical 15-20%) -60% of 2019 vintage funds report zero distributions after 5 years -46% of seed-stage investments are now bridge rounds -First-time fund formations dropped 64% year-over-year (77 vs. 215 in 2023) The data reveals significant structural shifts. While firms like Andreessen Horowitz, New Enterprise Associates (NEA), and Tiger Global deploy capital into large AI rounds, analysis projects the early stage funding gap could reach $30B by 2026. This concentration—with the top 5% of firms controlling 73% of capital—creates both challenges and opportunities. Historical precedent suggests market dislocations often catalyze innovation in funding models. Y Combinator emerged during the 2005 downturn, while Techstars launched amid the uncertainty of 2008. Full analysis: https://lnkd.in/dqkhuDBP Share your thoughts and observations about the state of early-stage startup funding! #VentureCapital #StartupFunding #MarketAnalysis #Innovation #InvestmentTrends #VentureStudios

Full data on Q2 2024 for US startups - are thing getting better? Cautious yes on that one. Highlights from our State of Private Markets report below, but you should read the full thing for 25+ charts and thoughtful analysis: https://lnkd.in/g5vjXgTJ 𝟭𝟬 𝗞𝗲𝘆 𝗧𝗿𝗲𝗻𝗱𝘀  1. Total fundraising grew from $18.7 billion in Q1 to $20.9 billion in Q2 across all US startups on Carta. Not a major shift, but steady improvement.       2. The percent of all rounds that were down rounds fell from 24% to 17% quarter over quarter. This is an good signal as down round percentage had been climbing since mid-2022.       3.  Percent of bridge rounds fell for every stage except seed. More capital betting on new companies vs supporting current ones from VCs (so good for some, bad for others).       4. Number of total acquired companies hit the highest mark since Q3 2022. Animal spirits flowing again?       5. Capital more concentrated in major markets, but strong showings from TX, FL, CO, and WA outside of the traditional Silicon Valley / NYC axis.       6. Dilution per round for primary fundraising either held steady or fell in Q2. Good deals to be had for the founders who can raise them.       7. Strong median valuations at Seed and Series A: $15M pre-money and $40M pre-money respectively.       8. Percent of deals with a liquidation preference over 1x fell in Q2.       9. Percent of deals with participating preferred stock fell in Q2.      10. Time between rounds still very high compared to the prior 4 years. This isn't a 2021 boom time - but it's a good deal better than 2023 🙏 #startups #fundraising #founders #venturecapital  

Later today, I'm giving a private presentation on the state of venture capital; but in the meantime, I thought I'd share some interesting findings: Early-Stage VC Q1 2023 vs. Q1 2024 (% Change from Quarter 1 Year Ago)* 𝐕𝐚𝐥𝐮𝐚𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐑𝐨𝐮𝐧𝐝 𝐃𝐲𝐧𝐚𝐦𝐢𝐜𝐬 📈 Pre-Money Valuations: • Seed (Priced): $13.3M (🟢+15%) • Series A: $42.7M (🟢+23%) 📈 Round Size • Seed: $4M (🟢+21%) • Series A: $10.6M (🟢+33%) 📉 Dilution • Seed: $20% (🔴-9%) • Series A: $20% (flat) 📈 Down Rounds • 23% (🟢+19%) 📈 Time Between Equity Rounds • Seed (Priced) to Series A: 2+ years % (🟢+4 months) • Series A to Series B: 2.25+ years % (🟢+7.5 months) 𝐂𝐨𝐧𝐯𝐞𝐫𝐭𝐢𝐛𝐥𝐞𝐬 📈 Pre-Money Valuations on Safes/Notes • Seed (Bridge): $20M (🟢+33%) 📈 Median Interest Rate on Convertible Notes • 8% (🟢 +33%), trending up to 10% 📈 Prevalence of Bridge Down Rounds** • 29% (🟢 +118%) 𝐋𝐞𝐠𝐚𝐥 𝐓𝐞𝐫𝐦𝐬 📉📈 Non-Market Legal Terms • Liquidation Preferences >1x: 8% (🟢+8%) • Participating Preferred: 6% (🔴-42%) • Cumulative Dividends: 10% (flat) Analysis: The state of early-stage venture capital in Q1 2024 shows growth in valuations and round sizes, reflecting investor confidence, but there are cracks showing in the system. The increase in down rounds, reduction in deal count, and rising interest rates highlight challenges and a more cautious approach by investors. Legal term changes also suggest a mixed negotiation environment, with some protections for investors and favorable terms for founders. Zooming out, the data would suggest what we already know: there's a flight to quality as capital recedes and Fed interest rates stay stubbornly high. *All figures are from Carta's data for Q1 2024. Percentages in parentheses represent the change from Q1 2023 to Q1 2024 (i.e., 🟢 +8% means an increase of 8% from Q1 '23 to Q1 '24 ignoring Q2, Q3, and Q4 2023). Median values are used instead of average or mean where relevant. (Q1 '23 vs. Q4 '23) **From Aumni's data for Q1 2023 vs. Q4 2023. #venturecapital #startups #funds

I've been questioned about my departure from Venture Capital as the landscape shifts. It's no longer just about a solid idea and team, but also about the seed stage company's ability to secure the next funding round. According to Axios article (citing Carta) this morning, there's a notable slowdown in the progression of venture capital series at the seed stage. In Q1 2024, 46% of seed deals were bridge rounds, marking the highest rate since data tracking began. This contrasts with 31% in 2022 and 39% for the full year 2024. One perspective suggests that market uncertainties are causing startups to postpone new priced rounds until their valuations are more certain. Another view is the impact of the "Series A crunch," possibly influenced by VC fundraising challenges post-2022. The dwindling Series A deal count by 79% between Q1 2022 and Q1 2025, as per Carta, indicates a significant shift. This trend could reshape ROI expectations for startups progressing through funding rounds, affecting investors in Series A or B-focused funds. Noteworthy findings from Carta include a decrease in median founder dilution from seed to Series D, alongside a record 2.8-year gap between Series A and Series B rounds. The rise in participating preferred shares underscores investors' quest for enhanced safeguards. In conclusion, the venture capital realm is experiencing a deceleration in series progression. I prefer to invest in cash-flowing, profitable "boring, good" companies. #searchfunds #eta #agatehoundfund