Venture capital firms are "extending olive branches," such as lower management fees, to limited partners to ward off their skepticism following a spate of recently failed venture bets.
The Information's Kate Clark recently attended an annual general meeting at an undisclosed VC firm where she found that LPs were questioning VCs' ability to diagnose and learn from recent failures and even showed apprehension about investing in future funds.
- LPs' trust is critical to a successful fundraising campaign.
- However, LPs are concerned that VCs are entering a new hype cycle — making big bets on generative AI startups — despite not fully understanding the lessons learned that have led to the current venture funding winter.
- To regain LPs' trust, VCs such as Tiger Global Management and Alexis Ohanian's Seven Seven Six are offering lower management fees, less than the industry standard of 2%.
- Some VCs, on the other hand, are scrapping their fundraising plans altogether.
