Venture Capital Fundraising: Late-Stage Surges and Small Funds Struggle in 1H 2022

Sep 15, 2022 9:16:42 AM | Assure Analytics


Despite public market downturns and reporting of general cool-offs across the startup and capital markets, the venture capital ecosystem made headlines for a tremendous fundraising outing in the first half of 2022.

Pitchbook reported U.S. VC funds closed on $137.5B in the first six months, already approaching the record-breaking full-year total from 2021 ($142.1B). 

However, these headline numbers mask significant trends and evolution in the venture capital market. In this article, we’ll dive deeper into the fundraising figures for the first half of the year, looking at where capital is flowing and implications for the broader ecosystem. From a high level, a greater portion of VC dollars flowed to established managers, mega funds, and opportunity funds.

This analysis relies on U.S. VC fundraising data compiled by Assure Analytics, which covers over 2,000 firms and their 5,000+ funds raised. Keep in mind that VC and PE capital raises tend to lag: the vast majority of funds that closed on capital in the first half of the year began their fundraising sometime in 2021 (if not earlier). So while some LPs certainly made their commitments during the falling public markets of 2022, others had already committed in 2021.

Significant Growth in the Proportion of VC Flowing to Opportunity Funds

Although near-record levels of venture capital were raised in 1H 2022, there was a significant shift in the types of vehicles holding those assets.

Specifically, over a quarter of VC assets were raised through opportunity/growth funds, compared to 10% or less in prior years.

This is part of a broader trend in VC: firms are increasingly raising capital outside the traditional flagship core vehicle, more frequently leveraging SPVs, coinvestment funds, opportunity/growth funds, specialist funds, etc.

But more significantly, the flourishing of opportunity funds is noteworthy given the 1H investment slowdown at the later stages. 

Deal counts, deal volumes, and round valuations at the later stages have all declined throughout 1H 2022, and later stage startups are having a tougher time fundraising than in 2021. (Early-stage deals, in contrast, have continued to have a robust fundraising climate). Opportunity funds are typically reserved for maintaining pro rata in, or doubling down on, highly successful portfolio companies that have since progressed to these larger late-stage rounds.

With so much dry powder allocated to the late stage this year, but so little activity from VCs actually deploying that capital, the market could potentially be set up for a late-stage flood in the coming months. The huge chunk of VC pre-allocated to late-stage investments (via growth funds) will inevitably feel pressure to deploy; and the longer the current late-stage pause continues, the greater the likelihood that a whole lot of dry powder will start targeting these rounds when exit potential shows the first signs of improving.

Opportunity Funds

Venture Capital Flows More to Large Funds

The typical VC fundraise grew significantly in the first half of the year.

Whereas in past years, the median flagship fund raised $110M, in 1H 2022 that figure swelled to $150M – a 36% increase. Similarly, the average flagship fund size grew from around $350M in the last couple years to $470M in 1H 2022.

This is particularly notable because roughly half of all U.S. VCs are currently investing out of a flagship fund with $50M or less. This means those VCs are largely missing from fundraising activity since the pandemic began:  sub-$50M VC funds accounted for just 13% of the fundraising vehicle count for 1H 2022 and less than 1% of capital closed.

Further, with the average flagship fund in 2022 essentially being a mega fund – something considered rare just a couple years ago – it appears these massive players increasingly dominate flagship fundraising with LPs.

Fund Size


Continuing Trend of Increasing Numbers of LPs in VC Funds

In the first half of the year, U.S. VC continued the longer-term trend of raising flagship funds from an increasingly wide LP base

The median flagship fund in 1H 2022 raised from 87 LPs, up from 65 in 2021 and 43 in 2020. The average followed a similar growth trajectory, expanding nearly 2X since 2020 to 110 LPs.

This finding mirrors industry reports of growing LP appetite for alternatives, and venture capital specifically. It also suggests that this appetite remained strong in the first half of the year. But as the public markets sag and LPs re-evaluate their portfolio allocations across assets, sources are split on whether venture interest might wane in the second half of the year.

Of note, the typical amount of capital contributed by each LP declined moderately – about 13.5% – over the last couple years. In 2020, the median flagship fund raised $2.2M from each LP; in 1H 2022, that figure was $1.9M.

VC Perspectives LPs

A Shift Back to Established Managers

Since 2018, first-time funds have been declining. Whereas over 160 debut VC funds were raised in 2018, by 2020 that number fell to less than 90.

But last year, data suggested debut funds might be on the rise, and several sources predicted an impending comeback for new managers. And indeed, first-time funds marginally increased their share of the fund count in 2021, up to 30% from 26.5% in 2020, and raised more capital than in prior years.

Yet so far in 2022 the shift away from emerging managers has begun again.

Fund Number

Looking at capital raised rather than fund count paints a starker picture. 

The percent of VC assets being raised by first-time managers dropped to 6% in 1H 2022. Established managers (Fund IV+), meanwhile grew their share to 72% of the capital raised in 2022. This points to a clear preference among LPs to back well-established managers with long track records, and suggests a solid entrenchment of established VCs in the fundraising landscape. This has major implications for the monopolization of capital in VC.

Of course, these figures don't take into account that new managers may be opting for non-traditional approaches to VC, using rolling funds or SPVs in lieu of flagship vehicles. (Many aspiring VCs are opting to use these more flexible investment vehicles to get started and build track records. And in some cases, they’re adopting SPVs or rolling funds as their core investment approach, in part due to deal-by-deal choice resonating with LPs.)Fund Number Capital

More VCs Positioning as Early-Stage Only

We’ve seen more VCs raising funds targeting exclusively the seed or early-stage and a decline in VCs adopting multi-stage investment strategies. 

While multi-stage VCs accounted for 35% of the flagship fund count in 2020, they accounted for just 22% in the first half of the year. Exclusively early-stage VCs, on the other hand, expanded from 61% of the flagship fund count in 2020 to 71% in 1H 2022.

These trends persist when looking at the share of VC dollars flowing to firms with each strategy. Early-stage-only VCs accounted for 19% of assets raised in 2020 but 30% in 1H 2022; multi-stage VCs accounted for 77% of assets raised in 2020 but 62% in 1H 2022.

This is likely a function of the growth in opportunity funds being raised alongside flagship funds. VCs may be splitting their strategies into separate vehicles dedicated specifically to the strategy: rather than raising a single multi-stage flagship vehicle, they raise an early-stage flagship vehicle and a late-stage opportunity fund, and in some cases leverage SPVs as well. 


For VCs that are raising multi-stage funds in 2022, we can see they’re clustering among more established venture firms on their 3rd, 4th, and subsequent funds. While first-time funds overwhelmingly target seed and early-stage deals. 


Growth in VCs Targeting Web3, Crypto

Lastly, a few of the top sectors targeted by VCs raising flagship funds in 1H 2022 are those on the fringes just a couple years prior.

Specifically, Web3, Crypto, and Blockchain focused VCs grew from less than 4% of fundraising firms in 2020 to 10%-15% in 2022. EdTech and Cyber have also become more common sectors for VCs raising so far this year.



Although venture fundraising records are on track to be broken in 2022, the flow of capital is not equal across venture managers. Sub-$50M funds comprise nearly half of America’s VC firms, but so far this year represent less than 1% of capital closed. Large established VCs have raised much more investment capital than in prior years. Firms have leaned away from multi-stage vehicles in favor of more discrete, specialized funds. And this has resulted in an outsized portion of capital allocated specifically to late-stage opportunity funds. 

This shift came as the late-stage startup investing market slowed, with declining valuations and deal activity. Combined, these trends may have spawned a significant capital overhang targeting late-stage startup companies. At some point, this capital will begin to deploy and may flood the market. 

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