📶 what if venture doesn't recover ...

Firms shut down and capital consolidates: The “zombie fund” phenomenon will likely accelerate. Firms without dry powder might look alive but won’t make new investments, eventually fading away. Meanwhile, the big names will absorb a disproportionate share of LP dollars, leading to even more power concentration at the top.

The downsizing of funds & fees (‘Right-Sizing’): This is a back-to-basics moment for the industry. Raising smaller funds will force GPs to focus on the fundamentals—fewer deals, tighter theses, and higher-quality opportunities. Don’t be surprised if more firms follow CRV, Sequoia, and Tiger Global in returning capital or trimming fees.

A generational transition happens – by choice or force: These moments create tremendous opportunity for up-and-coming investors. Those who are adaptable and can raise smaller funds—or create value in new ways—are poised to rise to prominence over the next decade.

Firms shift to other asset classes: The line between asset classes is blurring. PE-style investments, secondary markets, and even strategic acquisitions are becoming more common among top-tier firms. It’s a natural evolution but raises questions about focus and expertise.

The rise of funding non-technical businesses: This is where creativity comes in. VCs still want to fund innovation, but they’ll be more focused on retooling existing markets than creating entirely new ones. This strategy may feel “safer,” but it could also miss out on the next wave of disruptive startups.

Foreign investors swoop in: Foreign LPs have already been increasing their presence in U.S. VC. Sovereign wealth funds from the Middle East and Asia, in particular, are poised to double down, further globalizing the venture landscape.

Finding opportunities in the ruins: This trend will likely intensify given the sheer number of overvalued unicorns that raised in 2021-22. Investors who can sift through the wreckage and find diamonds will see outsized returns in the next few years.

The elbows come out – worse terms and less patience with management: While some GPs may avoid harsh terms to preserve their reputation, others will lean in. Founders need to be prepared for harder negotiations and tighter oversight as investors prioritize downside protection.

Disproportionate impact on CVCs: This time might be different. CVCs are benefiting from increased strategic focus on AI and deep tech, which could help them weather the storm better than in past cycles.

A potential for geographic re-shuffling – especially in Tier 2 & 3 markets: The rise of remote work and decentralized tech teams could change this historical trend. While coastal hubs will remain dominant, smaller cities with thriving ecosystems might hold their own better this time around.