Friday Letter: The VCJ 50 and how venture is surging

Our latest research on the top fundraisers worldwide shows how venture has swelled in the last year.

This week, we unveiled our annual report called the VCJ 50. Compiled by our research department, the VCJ 50 is a list of the top 50 fundraisers worldwide over the past five years. And the timing on this year’s list couldn’t have been better.

Just last week, Sequoia Capital announced that it was restructuring much of its funds (excluding those in China and India, for now) into a single fund called The Sequoia Fund, essentially changing how LPs are compensated.

Whether this is detrimental or advantageous for the LP community is uncertain at the moment. And whether more firms (likely similar multi-stage mega-funds like Sequoia) follow suit and similarly change their structures also remains to be seen.

But look at the list and where Sequoia sits. They’re ranked number 2, having raised $14.26 billion in the past five years. That puts them just a hair behind the growth-stage investor Insight Partners and above the hedge fund-turned-venture investor Tiger Global Management.

Speaking of which, Tiger Global filed a regulatory document this week, indicating the New York firm has raised more than $7.7 billion for Fund XV. Fund XV already ranks as the firm’s largest fund to date, although it remains open and is reportedly targeting $10 billion, with a final close expected in the spring. For comparison, Tiger closed on more than $6.6 billion for its prior fund at the end of March.

I remember in the late ’90s when venture firms were starting to raise billion-dollar funds and how much consternation that caused. Not anymore. No one blinks at a billion-dollar fund, especially as some firms regularly close on multi-billion-dollar vehicles year after year.

It takes something like Sequoia’s fund restructuring to rattle people’s nerves. But I’d argue Sequoia’s recent move is in line with the growth of the rest of the venture community.

That brings me back to the VCJ 50. This year’s version is once again dominated by large funds. This year’s top five (Insight, Sequoia, Tiger, Andreessen Horowitz and Accel) have each collected in excess of $10 billion during our research period. And the cumulative total of the top 50 grew nearly 30 percent, from $164 billion in 2020’s ranking to more than $211 billion in this year’s.

Last year, I predicted the overall numbers of the ranking would surge as firms raise larger funds. They certainly have, and they’ve added opportunity funds, stage-specific vehicles and sector-focused funds to increase their numbers. And now they’re starting to change how they’re structured.

Meanwhile, fundraising continues and I wonder how Tiger’s expected $10 billion fund that may close next spring will impact next year’s ranking.

Let me know what you think. You can hit me up at agoldfisher@buyoutsinsider.com.