45 Cents of Every VC Dollar Goes to Mega Rounds

Is venture capital too concentrated in mega deals?

Lots of the talk around VC-backed startups focuses on pre-seed, seed, Series A — these early stages where the ideas are unproven and the dreams are big.

But if you look at where capital is actually being deployed, a rising share of total VC is going to companies in mega rounds where at least $100M is raised.

So far in 2024, 45 cents of every dollar pumped into VC-backed companies was invested in a $100M+ round (only 62 deals qualified).

Couple thoughts:

• This is the main reply to any question about dry powder. Founders should not read the headlines of $100B, $200B, even $250B waiting on the sidelines and expect much of that to go to small, early-stage deals. It's not happening.

• Some would probably question whether rounds of this size even qualify as "venture" rounds. Has the asset class change so much over the past decade that we need to concretize sub-segments as their own thing (early-stage, growth equity, pre-IPO)?

• Wild to watch the concentration of capital actually shoot back upwards this year - looks like it's a secular trend in both high and low fundraising periods (and yes, a lot of the change this year has been in major AI rounds).

It may not feel like it to many early founders, but there's actually a lot of capital sloshing around in private markets these days. Debatable whether it's "too much" but there's certainly enough to make the competitive dynamics of hot rounds detrimental to many funds economics.

And this trend is set to continue with so much of recent VC fundraising going into large funds. Check size dictates a whole lot of other factors.

Tale of two cities I guess.

#startups #founders #venturecapital