Here Are The Venture Capital Firms That Are Investing Much Less
Tiger, Index & Insight Rank Among Firms That Most Dramatically Slowed Investing Pace. Y Combinator & Sequoia top resilient list.
It can be difficult to know which investors are really open for business.
As the startup slowdown drags into its second year, a number of investors have quietly gone dark, cutting down on their investments and taking long and lazy summer vacations.
Some venture capital funds will never raise another funding round. Venture capital firms die slow deaths.
Crossover funds can be fair-weather friends.
Other firms will live to fight another day, but are being much pickier about what checks they write.
I’ve got my hands on a list of ten investors that have slowed down the pace of their investing most dramatically.
I reached out to some of the firms who made the list to understand why they’d curbed their dealmaking of late.
Slow Ventures ranks third on a new list of venture capital firms that had most dramatically slowed down their pace of investing in the past six months relative to the 12 months before that.
Managing partner Sam Lessin wrote me an email about their high ranking with the subject line, “pace lol.”
He wrote, “it is easy to understand ... we think seed investing in AI is for suckers.”
Slow Ventures’ Kevin Colleran, who manages the firm’s relationship with its limited partners, hopped on the phone with me to explain Slow’s slowdown.
“We’ve made a specific choice not to chase AI right now and I think the majority of activity that other firms are doing are AI,” Colleran said. (Lessin has called generative AI “fools gold” and has written that “seed investing isn’t coming back ... at least not as it existed in the last decade.”)
Colleran explained that outside of artificial intelligence deals, “there’s little-to-no signal about what unlocks a Series A term sheet these days.”
“We like to do investments when we have good signal from the Series A market,” Colleran said.
Even as the NASDAQ Composite has climbed 35% so far this year, the startup ecosystem remains in a weird place.
Generative artificial intelligence companies — the sort of startups that Slow is avoiding — have raised humongous fundraising rounds, gobbling up a large share of the venture market. (The $25 billion AI companies raised in the first half of this year accounted for 18% of global funding, according to Crunchbase.)
Meanwhile, many other startups, including software startups and remote work-oriented companies, have seen investors sour on their high-multiples and aggressive cash burn.
Rising interest rates and limited partner scrutiny on venture capital firms has put a damper on much of the startup ecosystem. There are many startups valued in excess of $1 billion that seem ill-equipped to show profitability.
AngelList — which sees a large volume of early stage funding rounds, including deals that go unannounced for many months — is tracking investor activity closely. The number of active investors has fallen by roughly 20% compared to what was typical in 2019 and 2020.
For a firm to be considered active, they need only have invested in one deal visible to AngelList in the past six months. The percentage of active co-investors has fallen from about 75% active in 2019 and 2020 to about 60% active.
As I was looking into which firms slowed down their pace of investing, AngelList provided me with two lists that reflect the activity levels of individual venture capital firms based on the number of deals they’re doing.
One list shows the firms that have slowed down their pace of investing the most in the past six months relative to the 12 months before that. Global Founders Capital, Tiger Global Management, and Slow Ventures rank 1st, 2nd, and 3rd on that list. (Paying subscribers can see the full list below.)
Then, AngelList created a second list: the firms that have proved most resilient by maintaining an investing pace in the past six months most similar to their pace in the 12 months prior. Y Combinator, Sequoia Capital, and Unpopular Ventures came in 1st, 2nd, and 3rd. (Paying subscribers can see the full list below.)