Venture capital investors, or limited partners (LPs), are grappling with significant changes in the industry. Funds are lasting much longer than anticipated, making it challenging for LPs to retrieve their investments. Many startups, once highly valued, are now facing difficulties, trapping billions of dollars. This uncertainty is causing LPs to reevaluate their investment strategies.A panel of five prominent LPs, managing over one hundred billion dollars, recently discussed these issues. They noted that venture funds are now living fifteen to twenty years, significantly longer than the typical ten to twelve years. This extended timeline makes the asset class less liquid than previously thought.This shift is prompting LPs to reconsider their investment allocation. For instance, one firm now plans for an eighteen-year fund life, expecting most of their capital to return in years sixteen through eighteen. Another institution is becoming more cautious with new investments to avoid overexposure. This change also highlights the importance of selling shares in the secondary market for managing long-term investments.Valuations of some startups are causing concern. A company previously valued at twenty times its revenue is now offered only two times its revenue in the secondary market, a ninety percent discount. This discrepancy between past valuations and current market realities is particularly evident for companies in the messy middle that grew during the twenty twenty-one boom but are now struggling to adapt to new technologies like artificial intelligence.Raising capital is particularly challenging for new fund managers. Established managers are raising significantly more money than emerging ones, as institutional investors are focusing on quality and concentrating their funds with larger, well-known firms. However, this also means that some less serious tourist fund managers from the boom years are being weeded out, leaving a more focused and dedicated group of new managers who are hustling to find innovative ways to connect with founders and secure investments.

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