H22025

3

IntroductionandKeyTakeaways

5

PerspectivesontheInnovationEconomy

7

MacroFactors

12

Capital:FundraisingandInvestment

19

VC-BackedTechBenchmarks

24

AI:BreakthroughorBubble?

29

Exits

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

STATEOFTHEMARKETSH220252

Aswesawwiththedot-com

era,earlyadoptersof

platformshiftsareoftennotthemarketwinners.Today’svaluationsarestartingto

stretchrationality.Itislikelymanycompanieswon’t

achievehighreturns,butthebestcompaniescouldgetsobigtheymakeupforthefailures.”

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

It’snotyourdad’sventureecosystem.Venturehasevolvedsincewestartedourcareers.Ithasgonefromamerecottageindustrytoa

pillarofprivatemarketsandtechnologicalinnovation.Inthe’80sand’90s,ahandfulofventurefunds—smallbytoday’sstandards—

locatedinBostonandonSandHillRoadweretheepicenterof

venture.TodayVCfundsoperatefromcoasttocoastanddrawonglobalpoolsofcapital.Fundsthemselvesaremoresophisticated,utilizenewstructurestotapdifferentpoolsofLPcapital,andoftenblurthelinesbetweenventure,privateequity(PE)andevenprivatedebt.AndthelevelofsophisticationwillonlyincreaseasmegafundplatformsdominatethetopendoftheVCindustry.

Amidstthisbackdropoflong-termevolutionthereisnoshortageoffast-pacedchanges.Tariffscontinuetoloomovertechcompaniessellingphysicalgoodsandthreatenfutureinflationaryheadwinds.

Beyondtariffs,changesinWashingtonareimpactingeverythingfromimmigrationandtalenttosecondarymarketsandLPtaxregimes.Thequicknessofthesechangesareaddingalayerofuncertaintyand

volatilityasfoundersnavigatethecontinuedrecalibrationoftheinnovationeconomy.

Sohowistheinnovationeconomyfaringtoday?Somethingshave

remainedconstantsincethestartoftheyear.Companiesare

graduatingfromoneseriestothenextatthelowestratesinhistory,andwhentheydograduate,ittakesthemfarlongerthanitusedto.AIisstillthedrivingforceofUSVCinvestment,accountingfor58centsofeverydollardeployedin2025.Unprecedentedfundingslikethe

$40BOpenAIdealaresendingVCinvestmentstotalshigher,but

whenwepeekbehindthecurtain,weseetheinvestmentnumbersremainedstubbornlylowfordealsunder$100M.

WhathaschangedsincethebeginningoftheyearisouroutlookonIPOs.OurbearishoutlookforIPOsin2025islookingmorefavorable,anditappearstheIPOwindowisatleastpartiallyopen—thoughthemanyhavebeendownrounds.

VC-backedtechcompanieshavereachedanewequilibrium.

Revenuegrowthratesremainlowandslowwhileprofitabilityhasremainedhigherthaninthepastascompaniesstayfocusedonefficiency.Theperiodofcostcutting,headcountreductionsandpainfulausteritymeasuresseemstobeover,andnowit’suptofoundersandCFOstostaythecourseandletcompaniesgrow.

Aswelooktothefuture,thepromiseofAIisabeacononthehorizon.GenerativeAIislikelythemostpowerfultooltocomefromthe

innovationeconomyinthelasttwodecades.Butinventinga

technologyisnotthesameascommercializingit.Aswesawwiththedot-comera,earlyadoptersofplatformshiftsareoftennotthe

marketwinners.Today’svaluationsarestartingtostretchrationality.Itislikelymanycompanieswon’tachievehighreturns,butthebestcompaniescouldgetsobigtheymakeupforthefailures.

Wedon’tknowyethowthiswillplayout,buthypercyclesarepartandparcelofventure.Eachnewinventionbuildsonitself,failuresspin

outintonewsuccessesandtheflywheelofinnovationkeepsturning.

MarcCadieux

President

SVBCommercialBank

mcadieux@

MarkGallagher

HeadofInvestorCoverageSVBCommercialBank

mgallagher@

STATEOFTHEMARKETSH220253

Mega-dealspushVCtowardall-time

highs;smallerdealstrendflat.

JumptoPage

$

Amongthetop100unicorns,foreign-

bornfoundershaveanoutsizedimpact.

JumptoPage

VenturepodcastindextracksFOMOfrenziesandinvestorsentiment.

JumptoPage

Distributionsexpand:Thereisnotypicalseriestoday.

JumptoPage

Companieshavereachedanewequilibrium,balancinggrowthandprofitability.

JumptoPage

AIcompaniesarelessefficient:highburnmultiplesandlowprofitmargins.

JumptoPage

AIlabordisplacement:limitedfornow,butteamsareleaner.

JumptoPage

TheIPOwindowcracksopen,especiallyforlargercompanies.

JumptoPage

STATEOFTHEMARKETSH220254

STATEOFTHEMARKETSH220254

TheEvolutionofventurecapital

“Whatyou’reseeingtodayisthestartoftheinstitutionalizationofventure.

TheindustryiskindoflikeCro-Magnonontheevolutionaryscalefromapetohuman.We’resomewhereinthefirstthirdoftheevolution.Wewill

becomeanindustrythatlooksmorelikePEgiventhenumberofcompaniesandtheglobalscaleandambitionofthesebusinesses.”

IanSigalow

Co-founderandManagingPartner

Greycroft

Al:HighGrowthcompanieswithNewMetrics

“TheAIcategoryisseeingrevenuegrowthatanunprecedentedrate—literally

2-5Xforearly-stagecompaniesvs.whatwesawforpriorgenerationSaaS

startups.Thereare‘unknowns,’though,asinanyemergingcategory.KeymetricslikeNDR,TCV,grossmargins,barrierstoswitching,etc.1areinmanycasesalsoveryearlyintheirdevelopment.Investorsknowthisisahistoricalshiftinthe

technologylandscape—biggerthaninternet,mobileorcloud—butsomeofthetrustedmetricsinvestorshavecometorelyonarestillearlyintheirformation.”

JeffRichards

ManagingPartner

LOWGraduationRates

“Intuitively,everythingusedtobecool:consumer,crypto,fintech,etc.

Everythingwasfiringonallcylinders.Abignumberofstartupswere

generated.Cantheworldsupport100,000startups?YouhadtheCambrianexplosionofideas,nowyou’reseeingthenaturalselection.Peopletrieda

bunchofideasandnoteverythingisworking.Howcouldtheyallgraduate?”

JonSakoda

FoundingPartner

Advicetocapital-RichAlcompanies

“Myadviceisone,don’tover-raise.Two,ifyoudid,pretendyoudon'thavethatmoney.Sendittoabankaccountandforgetyouhaveit.Andthen,donothirerelativetotheamountyouraised,hirerelativetotheproductmilestonesthatyouneedtoachieveinsixmonths,12months,18months,24months,and

reallyonlyunlockthebudgetasyouhitthemilestones.”

MercedesBent

VenturePartnerlLightspeed

?RETURNTOTABLEOFCONTENTS

Notes:1)Netdollarretention(NDR)andTotalContractValue(TCV).

STATEOFTHEMARKETSH220255

Source:SVBInterviews.

LeadAuthors

MarcCadieux

President

SVBCommercialBankSiliconValleyBank

mcadieux@

MarcCadieuxispresidentofSiliconValleyBank’s

commercialbankingbusinesswherehefocusesontheneedsofinnovationcompaniesatallstagesof

development,includingtheinvestorswhobackthem.

MarkGallagher

HeadofInvestorCoverageSVBCommercialBank

SiliconValleyBank

mgallagher@

MarkGallagheristheco-headoftheinvestorcoveragepractice.Heandhisteamprovidetailoredservices,

industryinsightsandstrategicguidancetotopinvestorsintheinnovationeconomy.

Tolearnmoreabouttheleadauthors,seepage32.

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

MarketInsightsAuthors

EliOftedal

TheSVBMarketInsightsteam

leveragesSVB’sproprietarydata,

deepbenchofsubject-matter

SeniorAnalyticsResearcherSVBMarketInsights

SiliconValleyBank

eoftedal@

JoshPherigo

SeniorAnalyticsResearcherSVBMarketInsights

SiliconValleyBank

jpherigo@

expertsandrelationshipswith

world-classinvestorsandfounderstodevelopaholisticviewofthe

innovationeconomyforourStateoftheMarketsReport.Wepartnered

withleadauthorsMarcCadieuxandMarkGallagher,whobringovera

JakeLedbetter,CFA

SeniorAnalyticsResearcherSVBMarketInsights

SiliconValleyBank

jledbetter@

half-centuryofindustryknowledgeandexperienceworkingwithmanyofthetopcompaniesandinvestorsacrosstheinnovationeconomy.

Together,we’reproudtopresentthis30theditionofSVB'sStateofthe

MarketsReport.

AnjalikaKomatireddy

AnalyticsResearcherSVBMarketInsightsSiliconValleyBank

akomatireddy@

STATEOFTHEMARKETSH220256

?RETURNTOTABLEOFCONTENTS

STATEOFTHEMARKETSH220257

VCFundraising

USVCFundraising1

H1ActualJanuary2025Outlook

$28B

$71B

$80B

2024Actual

2025Outlook

InJanuary,weexpectedventure

fundraisingtoclimbabove2024lows,

fueledbylowerinterestratesandhigherexitactivity.Instead,USfundraising

continuedtotrenddown.AvolatileH1

filledwithinflationarytariffpoliciesledtoinvestorswaitingtoseehowtheFed

mightmoveratesandhowtheeconomywouldrespond.Now,withpublicmarketsnearall-timehighsandIPOactivity

pickingup,wecouldseetailwindsinH2.

Early-stage

USSeriesATechDeals2

H1ActualJanuary2025Outlook

729

1,345

2024Actual

2025Outlook

SeriesAtechdealactivityhasexactly

trackedourbeginningoftheyear

expectations.Themoderateuptickin

activityoff2024lowshasbeenfueledbyarobustcohortofseedcompanies

seekingtoraiseSeriesA.Thisisthefirstgrowthininvestmentactivitythatwehaveseensince2021.However,thenumberofSeriesAfinancingsisstillthelowestin

overadecade.

1,450

Late-stage

USLate-StageTechValuations3

H1ActualJanuary2025Outlook

$90M

$80M

2024Actual

2025Outlook

Late-stagetechvaluationsareontracktohitourexpectationsbyyear-end,butthe

medianvaluestellusverylittle.AI

companiescommandasignificant

premium—thevaluationpremiumfora

SeriesDAIcompanyis85%abovenon-AIcompanies.4Thedistributionofvaluationsisalsofarwiderthanitusedtobe,makingthismetriclessusefultoanindividual

company.Wewilllikelysunsetthismetricinfuturereports,givenchangingdynamics.

$95M

Exits

USVC-BackedTechIPOsonMajorUSExchanges5

H1ActualJanuary2025Outlook

10

7

2024Actual

2025Outlook

Wedidn’texpectmuchfrom2025IPOs,

butperhapsweshouldhave.Equity

marketsarenearall-timehighs,andinthefirsthalf,10techcompaniestestedpublicmarkets.ItappearstheIPOwindowis

opening,andpent-updemandfrompublicandprivateinvestorswilldrivecontinuedactivitythoughthebackhalfoftheyear,

assumingtherearenosignificantmacroeventsshakingpublicmarkets—onebigassumptiontomakethisyear.

10

Notes:1)ForfundsheadquarteredintheUSbydateclosed.2)TechdefinedbroadlyasVCexcludinghealthcare.3)Late-stagedefinedbyPitchBookData,Inc.asSeriesC+oraroundthatoccursmorethanfiveyearsafteracompanyisfounded.4)Medianvaluationpremium.5)NasdaqandNewYorkStockExchange.

STATEOFTHEMARKETSH220258

Source:Preqin,PitchBookData,Inc.,S&PCapitalIQandSVBanalysis.

Forallthetalkabouttariffsdrawingcostshigher,inflation

remainedremarkablylowinthemonthsafter“Liberation

Day.”Thatmaybechanging.TheJuneinflationreading

tickedupto2.7%,thehighestinfourmonths.Companies

thatavoidedraisingpricesinthebeginning,itseems,couldonlyeatthecostsforsolong.Now,somearepassinghighercostson.TheeffectiveUStariffratehasoscillatedbetween10%and20%+inthelastfivemonthsasshiftingpolicies

andtradeagreementshavecreateduncertaintyforUS

companiesandtheirtradingpartners.Anunstable

geopoliticalsituationintheMiddleEastaddsfurther

inflationrisk,withthepotentialtoincreaseenergycosts.

Forinvestorshopingforlowerinterestrates,thesefactors

signaldisappointment.TheFedwillhaveadifficulttimedeliveringlowerinterestratesinthefaceofrising

inflation.Thebondmarketisassertingitself,withinvestorsdemandingahighertermpremiumduetopersistentdeficitconcernsandinflationuncertainty.ForstartupsandVCs,

eveniftheFedresumescuttingrates,thismeansthatlong-termcapitalisnotgettingmeaningfullycheaper.HighbondreturnsarealsoluringsomeLPsawayfromventure.Ifyou

canmake5%riskfree,whykeepsuchhighVCallocations?Theseongoingeconomicuncertainties—particularly

aroundtradepolicy—arecausinggreatervolatilityinpublicmarketsaswell.Thismakesitmoredifficultforexit

opportunitiesinprivatemarketsasIPOdifficultytricklesdowntoM&A.

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

7911689years

EffectiveusTariffRate1

consumerpriceIndex(CPI)overTime2

30%

25%

20%

15%

10%

5%

0%

16%

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

“LiberationDay”

30%

20%

10%

Electronics一exemption

25%

Cartariffs

Chinatariffs

reducedto30%

0%

10%

9%

8%

7%

6%

5%

4%

3%

2%

1%

0%

Jan.,20

Jul.,20

Jan.,21

Jul.,21

Jan.,22

Jul.,22

Jan.,23

Jul.,23

Jan.,24

Jul.,24

Jan.,25

ExpectationsfortheYear

Consumers3

Forecasters4

FederalReserve5

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

2020

6%

5%

4%

3%

2%

1%

0%

-1%

-2%

Fed'SHandsAreTiedbyInflationandDeficitconcernsTreasuryyieldsandspreadBetween2-yearand10-year

2-YearTreasuryYield10-YearTreasuryYieldSpread

ZIRPEra:Withnear-zero

returnon2-yeartreasury,

VCreturnsareattractive.

ZIRP6EraStarts

FirstRateHike

LastRateHike

FirstRateCut

WhatIstheBondMarketTellingUs?

Flat10-yearyield:Ratecutshaven,tloweredlong-termborrowingcosts.

Higherrates:

High“risk-free”rates

maketoughermathforstartupsraisingcapital.

Increasingspread:Bondmarketflashinginflationpersistence.

Jan.,20

May,20

Sep.,20

Jan.,21

May,21

Sep.,21

Jan.,22

May,22

Sep.,22

Jan.,23

May,23

Sep.,23

Jan.,24

May,24

Sep.,24

Jan.,25

May,25

Notes:1)Asof7/29/2025.2)CPIforallurbanconsumers.3)UniversityofMichiganSurveyofConsumers,medianpricechangeinnext12

months.4)SurveyofProfessionalForecasters,headlineCPIatyear-end.5)MedianprojectionofFederalReserveBoardmembersandbankpresidentsforPCEinflationin2025.6)Zerointerestrateperiod.

Source:Bloomberg,USBureauofLaborStatistics,UniversityofMichigan,FRED,FederalReserve,S&PCapitalIQandSVBanalysis.STATEOFTHEMARKETSH220259

AstheWhiteHousepullsupthedrawbridgeon

immigration,wemaybeindangerofstiflinginnovationinunseenways.TheUStechindustryisheavilyproppedupbyforeign-borntalent,especiallyamongthehighest

valuedcompanies.Atleast59ofthetop100highest

valuedUSunicornshaveaforeign-bornfounder.Thisgroupincludestransformativecompaniessuchas

OpenAI,SpaceXandStripe—thethreehighestvaluedUSunicorns—andcollectivelyaccountsformorethan$1.5Tofaggregatevalue.Infact,19ofthetop20USunicorns

haveatleastoneforeign-bornfounder.

ManytechfoundersinitiallycometotheUSunderstudentvisas(F-1s),1yetthispipelinehasdwindledinrecent

years.ThenumberofF-1visaapplicationspeakedin

2015,andhasdropped20%inthelastnineyears.Of

thosewhoapply,fewerarebeingadmitted.Added

scrutinyonapplicationshascuttheissuanceratedownby37percentagepointsfromitspeak.Federalfunding

cutstouniversitiesandincreasedvettingonstudentvisaapplicantscouldfurthersqueezethispipeline,potentiallydivertingwould-befounderstoothercountries.Fornow,theUSretainsadominantpositionintheglobaltech

industry,generatingmorethanhalfofnewlycreated

unicornsinthelastfiveyears.Butthatdominancehingesonasteadysupplyofglobaltalent.Ifthespigotisturnedoff,itmaytakeyearsfortheimpacttoregister,orwemayseeothersrisefaster.

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

shareofTopusunicornsandvaluationbyFounderstatus2

US-BornFounders

TotalValuation

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

$0.4T

$1.5T

0K

Foreign-BornFounders

NumberofUnicorns

41%

59%

59%of

Companies

77%of

Post-MoneyValue

slowerBrainGain:studentvisasDropUSF-1studentvisaApplicationsandlssuances

ApplicationsReceivedVisasIssued

900K800K700K

600K500K

400K300K

200K100K

$81B

$200B

71%of

FundsRaised

TopCountriesfor

TotalFundsRaised

Foreign-BornFounders3

9%

8%

6%

5%

4%

4%3%

3%

3%

Israel

India

Russia

China

S.Africa

Canada

Ukraine

UK

Iran

USDominatesinunicorncreation

percentageofNewGlobalunicornsBasedintheus

GlobalUnicornsCreatedPercentageBasedinUS

631

57%

53%49%

364

38%

207

157160

88

2016201720182019202020212022202320242025

31%

65

41%

41%

53%

54%

63%

129

117

73

Notes:1)Asmanyas72%offoreign-borntechfoundersarrivehereonstudentvisas,accordingtoonestudybytheUniversityofGeorgetown.

2)IncludescompanieswithanylistedfounderwhowasbornoutsidetheUS.Top100arethehighestvaluedaccordingtomostrecentvaluation.3)Percentofthetop100mostvaluedUSunicornsbyfounderorigins.

Source:USStateDepartment,PitchBookData,Inc.andSVBanalysis.STATEOFTHEMARKETSH2202510

podcastsentiment

VChasavibeproblem,andintheVCworldvibesmatter.Intheinnovationeconomy,wherereal-time,transparentdatais

scarce,behavioraldynamicsplayanoutsizedrole.

WeconductedaVCvibecheckusingtranscriptsfrom3,200

podcasts,quantifyingtheindustry’semotionalarcsinceCOVID-19inourPodcastSentimentIndex.Theresult?Threedistinct

eras:TheStimulusSurge(’20-’22),TheHypeHangover(’22-’23)andtoday’sVCVibecession,wherethedollarsareflowingbuttheenergyismuted.

Despiteareboundininvestmentnumbers,sentimenthasn’t

recovered.ItspikedwithChatGPTandagainwithGPT-4but

fadedeachtime.Podcaststodayfeelmorecautious,more

cynicalandfarlesseuphoricthaninpastcycles.VCsdon’thavetobeoptimistictoinvest—theyjusthavetofearmissingout,

likeintoday’sfrothyAImarket.Thepodcastdatacapturesthattension:Sentimentismuted,butAIhypeisstilldriving

investment.

Topictrendstelltheirownstory.Cryptohaditsboomsand

busts.AIisinasustainedupswing.EnergyhasquietlyclimbedasAIdemandgrows.Defense,onceoff-limitsinpoliteVC

conversation,surgedafterthe2024election.Theseshifts

reflectmorethanheadlines.Theysignalchangingappetitesandthe“FOMOfactor”withintheventureecosystem.Takedefense:Theculturehasshifted,andthepodcastmiciswherethatshiftshowsupfirst.Whatgetstalkedabouttodaygets

fundedtomorrow.

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

FromBoomtoBummer:ThepodcastsentimentIndex

AveragesentimentAmongasampleofTech-andvc-Focusedpodcastsfrom2020toJune2025

60

40

20

0

-20

-40

-60

TheStimulusSurgeTheHypeHangoverTheVCVibecession

COVID-19

ChatGPT

Regional

VC

USfederal

measuresbegin

launched

bankingcrisis

activity

bottoms

elections

out

PeakVC

Fed

starts

investment

rate

hikes

GPT-4

released

Mar.’20

Jun.’20

Sep.’20

Dec.’20

Mar.’21

Jun.’21

Sep.’21

Dec.’21

Mar.’22

Jun.’22

Sep.’22

Dec.’22

Mar.’23

Jun.’23

Sep.’23

Dec.’23

Mar.’24

Jun.’24

Sep.’24

Dec.’24

Mar.’25

Jun.’25

TechTrends:TheErasTour

2020

2021

2022

2023

2024

2025

2020

2021

2022

2023

2024

2025

AverageNumberofMentionsofEachTopicperpodcastEpisode2

16

14

12

10

8

6

4

2

0

Crypto:TheBoomandBust

Bitcoinhits$50K

Trump

elected

35

30

25

20

15

10

5

0

ChatGPT

released

AI:TheEnduringUpswing

12

10

8

6

4

2

0

IRAintroduced3

EnergybecomesconstraintforAI

Energy:FuelingtheAIGiant

12

10

8

6

4

2

0

Defense:Today’sHotTrend

Republicans

sweepUS

elections

2020

2021

2022

2023

2024

2025

2020

2021

2022

2023

2024

2025

Notes:1)ThePodcastSentimentIndextracksthetoneof3,200podcastepisodesusingFinBERT,afinancialsentimentmodel.Scoresreflectthethree-monthmovingaveragepositivelanguageineachepisode.Zeroisthemedianpositivescoreacrossepisodes.2)Topicmentionsarebasedonkeywordfrequencyacrossthesame

sampleusingathree-monthmovingaverage.3)InflationReductionAct.ThisdateiswhenBuildBackBetterwasintroducedtotheHouse,whichlaterbecametheIRA.

Source:RSSfeedsofpodcasts,OpenAIWhispertranscriber,FinBERT(ProsusAI)andSVBanalysis.STATEOFTHEMARKETSH2202511

?RETURNTOTABLEOFCONTENTS

STATEOFTHEMARKETSH2202512

Fattest

BifurcationisthewordofthemomentforVCfunds.

FundraisingintheUSisontracktohit$56Bthisyear,a21%dropfrom2024andthelowestlevelsince2017.Yetthebig

fundskeepgettingbigger,stretchingtheverydefinitionof

ventureinvestmentaswehaveknownit.Among

conventionalVCfundcapitalraisedintheUSoverthe

lastthreeyears,over36%wenttofundsatleastabilliondollarsinsize—that’supfrom22%fortheperiodendingsixyearsago.MegafundmanagerssuchasAndreessen

Horowitz,GeneralCatalystandCoatuearechangingtherules(andthemath)ofVCinvestingwithincreasinglylargefundsstructuredindynamicways.

ThesizesofthesefundsarechallengingthenormsofVC

returnprofiles.Coatue’s$8Bfundportfolio,wouldhaveto

achieveover$240Binexitvalueinordertoreturn3xto

investors2—theconventionalbaselineforagoodoutcomeinventure.ThatwouldmeanonefundlandingthreeIPOsthesizeofUber’sIPO—atallorderbyhistoricstandards.Thenagain,thestandardsarechanging.OpenAIisonpaceto

becomethemostvaluableprivatetechcompanyever,

currentlyvaluedthreetimesgreaterthanFacebook,the

largesttechexitinhistory.ThemassivescaleoftheAI

opportunityjustifieseye-poppingfundsizesforsome

investors.“Unlesstheinternetandthephonefailovernightandwerollbacktothe1990s,thesizeoftheseoutcomesisatleastgoingtobethatbig,andifnotbigger,”saidIan

Sigalow,Co-founderandManagingPartneratGreycroft.

svb》SBianck。nvaley

ADivisionofFirstcitizensBank

USVCFundsRaisedBYDateclosed(CPI-Adjusted)1

FundsRaisedDot-ComRecoveryPath

GrandslamsLOOKMoreLikeBaseHits

whatFundReturnMultiplesLOOKLikeforTopoutcomesbyFundsize(Assuminga10%stakeandoxReturnonothernvestments)2

$200B

$150B

$100B

$50B

$0B

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

Note:LogarithmicScale

60.0x

30.0x

15.0x10.8x

5.4x

21.6x

5.0x

1.8x

FacebookOpenAI

$500M$1B$2B$6B

FundSize

A$6Bfundwitha10%stakeinaFacebook-sizedexitwouldreturn1.8xifallotherinvestments

wenttozero.

TheshrinkingMiddleclassvcFundMegafundschangetheRulesofventure

FundSize:Under$200M$200M-$1BOver$1B

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

15%

36%

47%

70%

43%

20%

15%

30%18%

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

5%

22%

32%

47%

71%

50%

43%

24%10%

CPIAdjustedTotalusvcFundsRaised3(TrailingThreeyears)keyInnovationsinthevcFundstructure

Innovation

Firm

Year

Purpose/Result

RegisteringasInvestment

Advisors

al6z

2019

Unlocksinvestmentintonewassetclasses,suchascryptoandpublicmarkets

TheEvergreenFundModel

SEQUOIA

2021

Onemasterfundfeedsallsubfunds,poolingexit

sharestogether

Adding

Non-VentureProducts

CGENERRlCTAlysT

2024

Newrevenuestreamsfrombuyoutsandwealth

managementservices

OpeningtoRetail

Investors

COATUE

2025

CTEKfundlowersthresholdforLPsto$50K,opening

venturetonewinvestors

Notes:1)USfundsclosedthrough6/25/2025.2)Theoreticalanalysisthatassumesa10%stakeatexitandaccountsforOpenAI’slatestvaluation.3)Fundsizesadjustedto2025dollars.

Source:PreqinandSVBanalysis.STATEOFTHEMARKETSH2202513

LPshavelongembracedVCasasourceofstrong,long-termreturns.Pensions,endowmentsandfoundations—“l(fā)iquiditysensitive”LPs—contributenearly40%ofthetypicalVCfund’scommittedcapital.Theproblem?Muchofthegainsfromtheseinvestmentsaretrapped.

Paperreturnsarehigh,butrealizationsarelow.AsreportedinourH12025report,themajorityoftopquartilefunds’

valueremainsundistributed.Thisistruenotonlyforrecentfunds,butalsoforvintagesasfarbackas2014.Low

realizationsandastubbornlyslowexitmarketarecreatingtensionforLPswithrisingcashneeds.Takeendowments:Theiraverageeffectivespendingrategrewby4.3%in

2024,butindollarterms,annualwithdrawalsgrewby

over6%,accordingtotheNACUBO-CommonfundStudyofEndowments.Abouthalfofthatgoestostudentaid,

withanother18%directedtowar