That will be VC’s biggest fundraising question in 2023
Despite the tightening VC market, many startups are still finding success by appealing to investors with the promise of follow-on investment. Recently, opportunityfunded firms have been on the rise due to their ability to provide liquidity and support to companies at an early stage. However, as the fundraising environment becomes more difficult for both firms and investors, it seems that this trend may pause in favor of later-stage funding rounds.
The move by Lux Capital could be seen as an acknowledgement of how competitive the early-stage space has become. With so many venture capitalists looking to invest in start-ups, it’s increasingly important for investment firms to have a clear strategy when it comes to which stages they’re interested in. This approach may mean that Lux Capital is prioritising deals with higher potential and less risk, but it’ll still be able to invest in some high-growth companies.
It would appear that the opportunity fund trend is likely not going to continue in the way that it has been for the past few years. The indicators that were mentioned suggest that this could be the year when it ends. However, this does not mean that there will not be opportunities available to investors in the future, as there always are. Rather, it might just be a more selective and careful approach to finding these opportunities that is required in order to make sure they are profitable and successful.
While opportunity funds are a much more hotly debated topic this year, there will still be firms raising them with good reason. Khosla Ventures, for example, is raising an opportunity fund for new investments. Canaan Investments also just secured $850 million in new funding across two funds- its flagship early-stage fund and a late-stage strategy.
