VCJ 50: Extreme makeover edition

Take a deeper dive into the VCJ 50. Click the top right of the presentation to view full screen

You may be wondering why Insight Partners and Tiger Global Management, which ranked first and second on last year’s VCJ 50, do not appear on this year’s list. The answer is we refined our methodology to focus on capital raised for classic venture capital funds and excluded capital raised for growth equity. The result is Andreessen Horowitz was able to claim the title of biggest fundraiser with a total of $17.7 billion – less than half the amount that put Insight atop last year’s list.

The official definition of the VCJ 50 is that it is a list of the 50 largest venture fundraisers based on the amount of direct investment capital they raised from January 1, 2018, to March 31, 2023, for investing in seed-, early- and multi-stage deals (but excluding growth deals).

We believe the revised methodology more accurately reflects the VC industry. At its heart, venture capital is about investing in companies at the very earliest stages, often before there is a commercially viable product. It is a highly risky endeavor that, when done successfully, produces outsized returns. Growth investing is more akin to private equity. Its practitioners invest at much later stages to help mature companies accelerate their growth and reach an exit. Growth investing requires much less risk than early-stage investing, and that’s reflected in lower ROI.

Excluding growth capital from fundraising totals meant that several large, well-known firms that appeared on last year’s VCJ 50 aren’t on this year’s version. Besides Insight and Tiger, those firms include Chimera Capital, IVP, Oak HC/FT and TCV.

To be clear, we did not exclude firms that do growth investing. We simply didn’t include the capital they raised for growth funds in our calculations. For example, the fundraising total for Andreessen Horowitz, which invests across the spectrum, does not include the money it raised for growth.

Cutting growth capital out of our calculations meant that a host of well-known firms that didn’t make the cut last year are on this year’s list. Those firms include Canaan, Drive Capital, Headline, Kleiner Perkins, Madrona Venture Group, Northzone and True Ventures.

One final note: Sequoia Capital does not appear on this year’s list because it is breaking into three firms (HongShan, Peak XV Partners and Sequoia Capital) and none of those was large enough on its own to make the list, based on the fundraising data available to us.

How we ranked the firms on the VCJ 50

The 2023 VCJ 50 is based on the amount of direct investment capital raised by firms for the purpose of investing in seed-, early- and multi-stage deals (but excluding growth deals). For this fourth annual tabulation, we counted capital raised for funds that closed between January 1, 2018, and March 31, 2023.

What counts?

Limited partnerships, co-investment funds, separate accounts, capital raised by VC firms that happen to be publicly traded, and seed capital for GP commitment across seed, early- , late- and multi-stage strategies, but excluding growth funds.

Definitions

“Venture capital” is defined as capital raised for a dedicated program of investing directly into private businesses. Capital raised definitively means capital committed to a venture capital direct investment program.

“Fundraising” means a fund has had a final or official interim close between January 1, 2018, and March 31, 2023, as well as capital raised for funds that were in market at the end of the counting period, even if no official interim close was held but actual commitments by LPs were made. Capital raised through co-investment vehicles is also included.

What does not count?

Expected capital commitments, public funds, capital raised from retail investors, contributions from sponsoring entities, capital raised for funds of funds, secondaries vehicles, real assets funds, debt funds (including mezzanine funds), hedge funds, capital raised on a deal-by-deal basis, leverage and PIPEs.