Venture Firm CRV Returns $275M, Citing Overvalued Mature Startups
In a bold move signaling caution in the venture capital landscape, CRV—a 50+ year-old Silicon Valley firm—is returning $275 million of its $500 million Select Fund to investors. The decision, first reported by the New York Times, highlights growing concerns about overvaluation in later-stage startup investments.
Why CRV Is Returning Capital
- Lower Expected Returns: CRV partners concluded that follow-on investments in many portfolio companies would dilute overall fund performance.
- Strategic Shift: The firm will focus on early-stage startups, with plans to raise a smaller early-stage fund and no additional Select funds.
- Market Conditions: The move reflects broader VC caution, following similar adjustments by firms like Peak XV, which recently trimmed fund sizes.
Historical Context: A Prudent Approach
CRV has navigated downturns before. In 2002, after the dot-com crash, it reduced a fund from \(1.2 billion to \)450 million. Other top firms like Kleiner Perkins, Accel, and Redpoint Ventures made similar cuts during that era.
What This Signals for the VC Industry
- Later-Stage Caution: Overvaluation fears are prompting VCs to reassess mature startup bets.
- Early-Stage Focus: CRV’s pivot underscores a preference for earlier, high-growth opportunities.
- Investor Discipline: Returning capital—a rare move—shows CRV’s commitment to preserving LP returns.
CRV’s decision marks a pivotal moment in venture capital, emphasizing selective investing amid uncertain market conditions. Will other firms follow suit?
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