American VCs are in no hurry to spend money

According to Pitchbook, at the end of 2023, American venture capital companies had $311 billion in dry powder.

The capital of the so-called “dry powder” reached a record level. American venture capital firms were able to spend only half of the $435 billion raised from investors between 2020 and 2022.

Investors are in no hurry to spend money given the current economic climate. The main reason is that you shouldn’t invest if you can’t make money on it. Last year, investors were able to distribute only $21 billion to LPs. As a result, there is growing pressure from investors to either waive management fees or return some of their capital.

Sequoia Capital has already begun to waive fees for unused capital. Some investors, including Lightspeed, are transferring portions of their portfolios to a new continuation fund, from which LPs can withdraw at any time.