So I don’t think founders need to understand everything about how VC works, but is is helpful to understand the key drivers and metrics,
And this one is interesting. Per Pitchbook, the “top” 30 VC funds raised 75% of all the VC capital raised this year:
And really, they consumed it. Because there is just only so much capital available for VCs to raise from LPs, to then give to founders. It’s a finite pool, and it’s large, but not as large as many founders might think.
Now, at the earlier stages, seed especially, there are a ton of funds, often < $100m in size. They don’t consume all that much capital, and are bunched under “other emerging managers.” That’s still a lot of money.
But as you grow, and look to raise more capital, understand it’s a relatively small community of VCs at that stage. May as well get to know them early.
More from Pitchbook here.
