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Feast or Famine for Venture Capitalists

The VC space is starting to look a lot like our world, with a relatively small number of Haves, surrounded by way more Have Nots just trying to get by.

To be sure, the venture game has always been based on a small number of winners that do exceptionally well – both in deals and funds – surrounded by the masses that don’t quite get it right. Today, though, it’s looking even more acute than in the past.

With deal size creeping upward, the IPO window starting to shed some light on possible exits, and a handful of funds surpassing their targets with ease, one can be forgiven for thinking that the average VC is living on Easy Street (right next door to the entrepreneurs that are getting catered to with new financing sources, lower operating costs, and a host of eager Angel investors looking to invest in their companies).

But a closer look reveals the ugly truth … Larger deal sizes seem to be just a reflection of VCs trying to make safer bets and be less adventurous (even if that doesn’t actually work out). And more money doesn’t necessarily equate to more deals getting done.

The opening of the IPO window shows just how painted shut it had been over the past two years – and how much of a backlog has built up. The fundraising winners, rather than representing a bellwether, actually point to just how difficult it is for VCs to extract any money out of LPs – and that’s in turn having an impact on personnel.

And even in a time of low costs for startups, some regions still seem to be hurting for entrepreneurial zeal.

For a digest of today’s top dealmaking news, please check out the DealMaker Digest.

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