A couple of months ago, Samir Kaji from First Republic Bank wrote a great guest post on CB Insights about where the Micro-VC market is going. We wanted to use CB Insights data to see the actual growth in the Micro-VC arena, and how funds of other sizes are comparing.
Across the board, more funds than ever are being raised in the US. Compared to 2013, this year has already seen nearly 200 VC funds form. The data shows that there has already been a 180% increase from 2013 in funds being raised under $50M as many new firms enter the very popular Micro-VC space.
But the growth is not only at micro VC stage.
The increase in funds between $51M and $150M has been even more drastic with more than 50 funds being raised so far in 2014. Many of these funds had previous funds that were in the <$50M range. But several of these funds have gone onto raise larger funds including Data Collective, Lerer Hippeau Ventures, and Forerunner Ventures.
This a common trend we’re observing and we hear from our LP clients. While small funds talk a good game about staying small and the benefits of their micro-VC size, those that can raise larger funds generally go upmarket if they can.
And the growth continued even at the larger end with those larger than $450M also growing significantly. There have been 8 separate billion-dollar funds already raised (not including Khosla Ventures or New Enterprise Associates, which are in the process of fundraising). This is often referred to as a venture capital fund barbell where the growth is at the lower fund sizes and at the larger end thereby leading to a thin middle (funds with several hundred million under management).
Overall, there’s a lot more capital ready to be deployed. This, of course, doesn’t consider all the investment capital rushing into the private markets from corporate VCs, hedge funds and mutual funds. More VC funds, however, does not mean that the power law of venture capital is going to change. But we can be sure to see many more early stage deals across the board thanks to the growth in Micro VCs.
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