Go Big or Go Home: Giant VC Funds Hunt for Unicorns in New Startup Landscape

There are more $500 million-plus venture capital funds in the US now than at any point since the dot-com boom, a new report reveals.

According to Dow Jones VentureSource, VC firms launched 30 funds worth half a billion dollars or more each in 2o16—the most since 2000, which saw 54 funds of that size. In 2015, for comparison, just 17 funds reached that dollar size.

With a median fund size of around $100 million, these super funds—some of which reach one or even two billion dollars—stand out in VC ecosystem, even as they become legion.

So why are VC funds getting bigger? Because startups are getting bigger.

The number of billion-dollar startups, or “unicorns” in industry parlance, has reached 100 in the US. This figure has tripled in just three years, according to The Wall Street Journal’s Billion Dollar Startup Club.

However, many of these unicorns are not going public. Even as investment in VC firms rose 18 per cent last year, funds investing startups dropped 29 per cent. This has left an excess of venture capital waiting to be invested.

Today, funds are looking to make bigger, bolder bets, doubling-down on promising winners. This trend is reflected in Canada, too, where the amount being invested rose 10 per cent earlier this year even as the number of deals dropped.