Within the venture capital landscape, a prominent player is on the verge of completing a fundraise that stands out due to its sheer volume. General Catalyst, a heavyweight on Sand Hill Road with investments in successful companies such as Snap, Warby Parker, and Deliveroo, is reportedly finalizing a new venture capital fund that could total $6 billion, according to the Financial Times. This development occurs even as many limited partners (LPs) have scaled back their venture investments.
Should General Catalyst seal the deal on this $6 billion fund, it would represent a significant portion of the LP capital allocated to U.S. venture funds this year. Alongside Andreessen Horowitz’s recent $7.2 billion across various funds, these two firms would account for roughly 44% of such commitments year-to-date, based on data from PitchBook.
The forthcoming fund from General Catalyst is expected to be its largest to date and plans to diversify its investments across different sectors and regions, including India and Europe. This ambitious fund size comes on the heels of the firm’s previous $4.6 billion Fund XI, which closed in early 2022 during a more favorable fundraising climate.
Amidst a cooling interest in backing new general partners (GPs), LPs have shown a strong preference for well-established venture firms. This trend is evidenced by the significant sums raised by the top-tier VC firms, with the five largest U.S. VC funds raising $10.7 billion of the $23.7 billion amassed by all new U.S. VC funds so far in 2024.
Despite the perception of reduced risk when committing to a renowned fund over an emerging manager, the data presents a nuanced picture. While returns from new managers can be more unpredictable, they can also yield substantial rewards for LPs who make astute choices. For instance, the top decile of emerging VC funds has outperformed, delivering internal rates of return (IRRs) that exceed those of established funds by over 3 percentage points, as indicated in PitchBook’s latest analyst note.
General Catalyst has yet to make an official statement regarding the status of their fundraising activities.
