Like how many food delivery apps that are actually profitable can the economy handle?
LPs that let their money get tied up in such nonsense are also about to head into a world of pain. I fear the present AI bubble will only exacerbate the pain as both sets of bad investment decisions come crashing down around the same time.
Founders might get a little something and most shareholder employees get nothing.
LMAO, true. A "friend" from that space was making money introducing VCs to "entrepreneurs", lol. He was fully booked!
I doubt they'd return my call today.
1) This Fund+Roman Numeral notation is universal among funds. Meaning this data isn't VC. It's use of fund structures. Real estate, PE, private credit maybe bit of hedge funds etc...and yes also VC.
2) Filling trends are affected by jurisdiction fashions so to speak. One of the big fund jurisdiction makes a small rule tweak and everything pivots there. Or away. The funds we're setting up today are structured differently and in different jurisdictions than 2 years ago. Same for regional focus. Think about what that does to a single jurisdiction trend analysis like this.
3) The spike coincides pretty neatly with covid, lockdown and that sudden injection of cash trillions into the financial system. So a spike in fund entities registered makes sense. Haven't looked at who got those trillions, but I'd wager it was bigger institutions not young VC operations starting their first fund.
Still the core hypothesis seems sound for funds overall. Regardless of type a lot of these funds will indeed be on a 2-4 year investment period. So it does broadly check out that there might be a softening of funding supply coming up.
Interest rates are one of the biggest factors, because of how they create indirect pressure on cash availability (which is the whole point of raising interest rates).
Everyone is bracing for tariff recession as well, which may cause a lot of investment capital flight.
On point 3, I think both large and small investment groups saw large growth. This is lightly supported by the spike in filings related to SPV as a service companies like Angellist.
But VCs, especially in those days, bordered on antipathy for sensible business plans. They didn't want small businesses that would turn profitable quickly and grow sustainably. They wanted something with infinite growth ASAP that they could pump-and-dump on Big Tech or IPO suckers.
The business model is 1) "Have artificially low prices to push all competing business into bankrupty", 2) "Now that we're a monopoly, raise prices massively", 3) Massive profit, so long as no government starts doing anything about the fact that both steps #1 and #2 are illegal.
That business model fails the moment you have multiple startups dumping the market, none can move to step #2 because they'd bleed all their users to whichever competitor is still in step #1.
Would it be possible to confirm the trend using Form ADV instead of Form D filings?
2021-2022 was a total blip on the screen zero interest rate era thing.
i'm not seeing considerable slowing of new startup development, quite the opposite actually w/ AI. this is for a few reasons:
- accelerators are filling the gap; the accelerator model is actually quite efficient in the early-stage spectrum (it needs some further innovation). there are a huge number of AI accelerators and programs now; and further
- most of the capital going into VC is just being further concentrated into the large Multistage firms like A16Z, Accel, Sequoia, General Catalyst, etc... all of these firms are realizing they need to win deals as early as possible so have multiple seed programs: accelerators, incubations, scouts, fund-of-fund allocation, geographic funds, university focused sub funds, etc...
- overall great founders & startups are truly just exceptional so statistically there just won't ever be that many. venture will always be a cottage industry of sorts. in this form - "venture" equates with "growth"; there can only be 1 category leader by definition and venture is meant to capture this. 2021-2022 overall venture market was too big.
- AI is making startup creation many multiples more efficient. we saw this w/ the advent of the cloud, where startups used to need $2-3M "to buy servers" and 2-3 years to ship a product in 2010, by 2015-2020, they really only needed $3-500k to get a product to market. we're going to see that number come down considerably (unsure if it will be 30-50k, but definitely a lot lower).
- we're also seeing the new wave of the 10-person unicorn (billion $ company); these companies will raise a lot less cash, so will result in higher multiples on the original investment.
- i think the overall distribution of returns will look different on a portfolio basis in 2025-onwards. with power law, we expect to see super long-tail concentration on the 1-2 companies that yield 99% of the return to a portfolio, but i suspect we'll start to see some mitigation of that effect with more companies yielding positive outcomes. this might mean that there's less of a reliance on portfolio construction to generate risk-adjusted returns and that there could be more of a democratization of early-stage investing where we see 10-100x the number of startups and founders. that warrants a longer analysis, but as someone just bullish on startups and everyone being a founder that possibility is very exciting to me.
If you are a profitable unicorn who can raise money in the private markets when needed, is there really a benefit to going public? Maybe I am missing something, but going public doesn't really seem to be as important as it used to be.
Decades of programmers scoffing at the "idea man" with his new app idea and now this...
It's very common for these single-asset SPVs to be titled, "[Abbreviation] Fund I" -- but these aren't really the same type of "Fund I" as a multi-security venture fund run by a professional manager.
E.g.: (1) These are entities that are sort of arbitrarily titled "Fund I" as part of a template naming convention, but there's not as much of a direct expectation that they'll have a corresponding Fund II, III, etc. (2) Whether they do is more of a function of the underlying portfolio company raising a subsequent financing and giving the same SPV manager an allocation (which small time SPV managers often don't get pro rata for), rather than the fund manager's ability to raise a subsequent blind pool fund II.
I've edited it to use what I think is representative language from the article itself. (This is to allow it to spend more time on HN's frontpage, because the article itself deserves it.)
I googled “xml startup business example” their AI summarized an “xml startup” as “a business using XML as a core technology” and gave the business below as an example startup.
https://databridgesolutions.io/
I didn’t see any reference to the hacker news comment.
Most of the links google provided below the AI summary were about how to configure various XML tools to… startup. Standard link farm stuff. :)
What you may be measuring is the formation of naïve funds. And yes, anecdotally, we saw a lot of novice managers emerge in '21 and '22. (Many of whom are now winding down.) But that doesn't mean they're concentrated in VC. In my experience, RE and--novelly--crypto, lead the charge.
If you want to prosecute this question, better data will be found in Pitchbook and the VCFA.
https://www.sec.gov/edgar/search/#/q=Fund%2520I%252C%2520a%2...
https://www.congress.gov/bill/119th-congress/house-bill/4431
You seem to be editorializing because of your bias and financial interest in YC. "No one is talking about" is an idiom you allow onto the front page relatively frequently (check Algolia), and you allow speculation pointing up for industry trends.
> "No one is talking about" is an idiom you allow onto the front page relatively frequently
I just went through all cases of this since April 2014, when we started logging these things. During that time, only two such titles spent more than an hour on HN's front page.
In one of those two cases, we edited the title to make it less baity: A tech antitrust problem no one is talking about: US broadband providers - https://news.ycombinator.com/item?id=24967472 - Nov 2020. (Submitted title was "The tech antitrust problem no one is talking about".)
You have to go back to June 2015 to find a "no one is talking about" which spent more than an hour on HN's frontpage without getting mod-edited: How for-profit prisons have become the biggest lobby no one is talking about - https://news.ycombinator.com/item?id=9749393 - June 2015. (Still not sure how I would edit that one.)
In all other cases, mods either edited out "no one is talking about", or users flagged it off the front page so quickly that mods probably never saw it. That happened 3 times, btw; here they are if anyone is curious:
The Internet's Time Is Flawed–Why No One Is Talking About It - https://news.ycombinator.com/item?id=43054616 - Feb 2025 (23 minutes on the frontpage)
Browser Permissions on Android: What No One Is Talking About - https://news.ycombinator.com/item?id=23556055 - June 2020 (38 minutes on the frontpage)
The Crisis No One Is Talking About - https://news.ycombinator.com/item?id=17175969 - May 2018 (14 minutes on the frontpage)
Over this time period (i.e. since April 2014), users submitted 4.3M articles to HN. Of those, 392k appeared on the front page. Everyone can decide for themselves what counts as "relatively frequent", but to my mind, 1 or 2 cases (or 5 if you really want to stretch it) out of 392k titles over 11 years doesn't clear that bar.