Opportunity Funds: Should You Raise One?

by Ana Lopez

That will be VC’s biggest fundraising question in 2023

One of the The biggest venture capital trends in recent years have seen early-stage companies pooling “opportunity” funds to make follow-on investments in their most successful bets. But will that trend continue in a tougher fundraising market hitting both VCs and startups, a muted exit environment, and a slowdown in late-stage funding?

Earlier this week, businessupdates.org first reported that Lux Capital was raising money. Notably, the company dropped its opportunity fund and combined its early and late stage strategies into one vehicle that will primarily focus on closing early stage deals. This came just weeks after Y Combinator announced it was also pulling out of its late-stage strategy.

At first I thought these were just the first few indicators that 2023 would probably be the year the opportunity fund trend dies, but of course it’s not that simple.

I think raising an opportunity fund is going to be a much more debated question for companies looking to raise money this year. I think we’ll see significantly less of them, but there will still be companies throwing them up for good reason. Khosla Ventures and Canaan appear to be among them: In January, Khosla began raising money for a range of new funds, including an opportunity fund, and on Thursday, Canaan said it had raised $850 million in two funds, its flagship early-stage venture. and a late-stage strategy, my colleague Connie Lozios reported.

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