Venture Capital Fund Vintage Raises $920 Million Amid Industry Consolidation

Venture capital fund Vintage has raised $920 million for two new funds: $580 million for a fund that invests in other venture capital funds, and $340 million for a secondary fund to acquire shares from investors or employees in private companies. This fundraising occurs against a backdrop of significant consolidation in the venture capital industry, driven by lower-than-expected fund returns and the disruptive impact of AI on portfolio companies.

Vintage partners acknowledged a strategic shift towards investing in a smaller number of top-tier venture capital firms that attract elite entrepreneurs. "This is the most concentrated market we've ever seen, with the majority of investors' money going into giant funds," stated partner Abe Finkelstein. His partner, Assaf Horesh, added that these large funds invest in a limited number of companies.

In line with this strategy, Vintage will not raise new funds for investments in biotech and health companies, as its existing portfolio companies are increasingly focusing on these sectors, partly due to AI investments. The fund plans to invest in 30 venture capital funds across the US, Europe, and Israel, a decrease from the 35 companies invested in its previous fund of funds. This marks a significant reduction from earlier funds, which at their peak invested in nearly 60 venture capital funds.

Vintage will allocate between $7 million and $30 million to each venture capital fund, typically those that have raised less than $1 billion. Since its establishment in 2003, Vintage has managed a total of $4.8 billion. The trend of consolidation and reduced fundraising is also evident in the Israeli venture capital market, which is experiencing its slowest fundraising pace in a decade, according to research firm IVC. The firm projects that Israeli funds will raise $2 billion by year-end, similar to the previous year.

Other firms are also adjusting their strategies. NFX has announced it is ceasing fundraising from external investors and reducing its workforce, with expectations that more funds will follow suit. In recent years, foreign venture capital funds like Sequoia, Lightspeed, and Bessemer have dominated early-stage funding for attractive startups in Israel, pushing Israeli seed funds to the periphery. They are being replaced by co-investment funds such as Swish, founded by Omri Casspi, and Wayne, founded by Eyal Reiner.

Data from the U.S. Venture Capital Association (NVCA) indicates that 26 large funds, representing 4% of total U.S. venture capital raised, account for 68% of all startup funding in the country. Vintage, an Israeli venture capital fund with operations in startup investment, fund investment, and secondary share purchases, is currently managed by partners Abe Finkelstein, Assaf Horesh, Amit Frankel, Iren Reznikov, and Leila Holterod. Several partners have departed Vintage over the years, including founder Alan Feld, Hamutal Merydor, and Turner, who is now a Knesset candidate.