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The Story: The venture capital fundraising environment has been nothing short of woeful in 2023. Raising has seen 10-year lows, and returns have plummeted to -20%. VC silver linings are few and far between right now, so when there’s fundraising news that is actually positive in 2023, it stands out.

And there is some positive news: three unrelated venture firms recently announced each is raising large new funds, the combined total of which is nearly $5 billion.

Coatue Management, based in New York, raised $1.4 billion. Menlo Ventures in the Bay Area raised $1.3 billion. And Khosla Ventures, also in the Bay Area, is closing in on raising $3 billion.

Large funding rounds are a welcome sight for venture markets that have tanked this year. According to a recent PitchBook report, fundraising expects to close around $57 billion dollars, a 67% decrease from the record $172.5 billion last year. Fund count is also down dramatically, decreasing by 64%.

The reason for Coatue’s large fundraise could have to do with the unconventional approach its new fund takes. The firm decided to cut management fees for its LPs, opting out of taking the 2% fee firms typically enjoy. This is a rare, but seemingly effective, tactic not seen much since the early-2000s post-internet hype.

Menlo’s new fund will focus on AI investments, of which the firm has already backed with companies like Anthropic, Typeface, and others.

Khosla’s raise is expected to be the largest of any firm this year, that is if it closes in 2023. It would also be one of the only VC funds to actually grow this year, as it has seen more than a 60% increase from $1.85 billion last year.

Expert Take: Rob Biederman, managing partner at Asymmetric Capital Partners, believes the “tide is beginning to turn” in venture markets. He says:

Rob isn’t convinced the AI “boom” will be the thing that saves venture markets, however. He says:

“AI is a world-changing technology that’s going to have a huge impact in many different businesses—I’m less convinced that broad-spread returns to AI are going to be very attractive, and I think that the reality is 1) a lot of AI’s benefits are going to disproportionately accrue to top incumbents like Google, Facebook, and Microsoft, and 2) the reality of any underlying AI space is if there’s an idea in that space that feels very obvious, there are probably going to be 50, 60, 70 firms that are running at it.”

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