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\n\t\tOpinions expressed by Entrepreneur contributors are their own.\t<\/p>\n
For most of the last decade, \u201cfinancing strategy\u201d for a startup meant one thing: Raise the next round on schedule, at a higher price, from a recognizable name. That approach worked when capital was free and every fund needed to deploy. <\/p>\n
It doesn\u2019t work now, and founders who are still building around a single fundraise as the entire plan are exposed in a way they may not realize yet.<\/p>\n
Venture didn\u2019t just get slower. It got structurally different, and the causes are worth naming plainly because they explain what to do next.<\/p>\n
Rates did the first damage. Global VC fundraising fell to just under $70 billion in 2023, a 60% drop <\/a>from the prior year and the lowest total since 2015. Every model that justified a 40x revenue multiple on an unprofitable company was built on a near-zero cost of capital. When that cost went to 5%, the multiple went with it, and so did the pace of new unicorns, most of which were already valued at 2020-2022 peak prices<\/a> and hadn\u2019t grown into them.<\/p>\n Second, VCs themselves got stuck. Funds raised in 2021 and 2022 are now four and five years into their life and still haven\u2019t returned money to their own backers. 2021-vintage funds have distributed roughly 8 cents back for every dollar committed<\/a>, and LP distributions across the industry are running at about 6% of assets versus a historical average near 14%<\/a>. A partner asking for three extra meetings before writing a check isn\u2019t being difficult for its own sake. Their fund\u2019s own investors are asking why they haven\u2019t seen a return in half a decade.<\/p>\n Third, the exit valve stuck shut for years before easing in 2025, when IPO activity and secondary volume both picked up <\/a>meaningfully after a prolonged drought. That recovery is real but narrow, and it\u2019s concentrated in a small number of large, late-stage names rather than spread across the market.<\/p>\n