- Venture capital industry faces significant downturn.
- Layoffs increase, promotions become scarce.
- Many investors seek exit, questioning the industry’s long-term prospects.
The party’s over
The venture capital industry is experiencing a sobering reality check. After years of explosive growth, rising interest rates and market downturns have hit the sector hard.
PitchBook forecasts a 48% drop in venture firm fundraising by 2024 compared to 2021’s peak. This downturn has led to notable layoffs across the industry.
Greycroft parted ways with five investors after missing its fundraising target, Y Combinator cut 20% of its staff, and many firms are quietly telling senior and midlevel investors they have 6-12 months to find new jobs.
Promotion woes
Career growth opportunities have dwindled significantly. Promotions, once accelerated during the pandemic boom, have become scarce.
An early-stage partner noted, “The bar is just so high – you’d need to find the next Snapchat or something. It’s kind of unrealistic.”
The process has become increasingly subjective and competitive. Some investors resort to threatening to leave or securing outside offers to compel promotions.
Even for those who make it to the top, poor fund performance has rendered carry worthless for many, especially from pandemic-era funds.
Exodus in progress
Frustrations are mounting, leading to an industry-wide exodus. A growth-stage principal observed, “I know a ton of people looking to get out everywhere.”
The increased competition for deals, particularly in AI, has intensified daily frustrations and office politics.
Many investors are done with venture entirely, realizing it may not align with their career goals or desire for impact.
A recruiting firm reported a fourfold increase in inbound inquiries from principal and partner-level candidates seeking new roles compared to 2.5 years ago, signaling a significant shift in the industry’s landscape.
