The Great Venture-Capital Resignation Is Underway

• In recent months, some venture capitalists have been calling it quits at big firms.
• Those with distinct brands and deep networks, like crypto investor Katie Haun, can go on to raise their own funds.
• Record cash and the rise of influential investors will unleash a wave of emerging-fund managers.

A fiery job market has left many workers to rethink what they want their careers to look like.

That’s true even for venture capitalists. In recent months, investors like Katie Haun, Jeremy Liew, Sarah Cannon, Bijan Sabet, and Katherine Boyle, among others, have called it quits at some of the most respected venture firms.

Switching employers doesn’t seem to be the sole motivation behind the departures. Rather, some of these investors see a massive opportunity to strike out on their own to raise new funds, as individuals or teams.

A combination of record amounts of capital sloshing around the private markets and a surge of new companies to back has put venture capitalists in their strongest fundraising position in years. Meanwhile, startup founders say they want to raise from people, not monolithic brands, and a new crop of fund managers could fill the demand.

Investors who know the value of their brand and reputation are leaning into the opportunity.

“Most venture funds look and feel the same. As a result, founders are starting to go shopping not just for capital but for very specific things,” which could be an investor’s experience, expertise, or wealth of connections, said Kyle Harrison, a venture capitalist. He told Insider he recently left Index as a principal to pursue a new role in venture.

To be sure, experts say the Great Resignation isn’t hitting the world of venture capital as it has other industries, with a near-record number of job openings and too few job seekers.

But it’s likely that more investors flee their jobs and raise new funds while the getting is good.

Funding the renegades

Historically, the big investors who fuel the venture industry, known as limited partners, or LPs, preferred to put their money behind institutions rather than individuals. Those firms take the lion’s share of capital, and with only so much money to go around, first-time managers have raised fewer funds in recent years, according to PitchBook.

That’s now changing, the prolific tech investor said Elad Gil in an interview. In August, Gil was reportedly raising $620 million for a new fund — potentially the largest amount ever raised by a solo fund manager for a single fund. The success of Gil and solo capitalists like Raymond Tonsing and Steve Anderson has paved the way for new entrants.

Limited partners “had periods of hesitancy with any sort of scaled capital behind individuals, and perhaps that hesitancy has decreased some,” Gil said, adding that he sees a “bigger embrace of individuals running funds.”

In December, Haun, one of the most influential crypto venture capitalists, made the bombshell announcement that she was leaving Andreessen Horowitz, where she co-led the firm’s crypto funds, after four years. With a rising profile and deep ties to crypto founders and limited partners, she’s now opening a venture shop with a small crew and is reportedly seeking $1 billion for her first fund — a staggering amount even for established firms.

It’s also plausible that Haun could seek investments from limited partners of her former firm.

When a key person leaves an institutional firm, its LPs frequently follow investors from their prior shop to their new firm, said Michael Larsen, a managing director focused on venture capital at Cambridge Associates. If the investor signed a nonsolicit agreement, though, they might need to wait a year or so before approaching the LPs, he added.

There’s enough interest in crypto investing for Haun, who has a distinct personal brand, to have successful fundraising away from a powerhouse firm like Andreessen Horowitz, said Harrison, the former Index principal.

“There’s no reason that she needs to run her own fiefdom when she can run her own kingdom,” he said.

If the talent shuffle brings a new wave of emerging fund managers, founders stand to benefit, too. They’ll have expanded access to capital, and they could decide an investor’s skill set or experience is more helpful than a firm with a brand name, said Leah Solivan, a founder turned investor who’s now a general partner at Fuel Capital.

Emerging fund managers could also write smaller checks into funding rounds, which leaves room for other investors to participate, said Jordi Hays, the CEO of Party Round, a software firm that helps startups with fundraising.

“Having more people on your side has led to better outcomes for entrepreneurs, and at Party Round, we’re seeing founders realize that small-check investors can provide immediate, tangible benefits to their businesses,” he said.

The model alma mater

Investors who quit to build new funds might find themselves working closely with their former employers.

Established firms have a track record of investing in their alumni. For instance, when Matt Huang left Sequoia to start Paradigm, a crypto-focused firm, several partners at Sequoia invested personal money into the first fund, according to a person familiar with the matter who asked not to be identified discussing confidential agreements.

Doing so gives the LPs a lens into a category or geography where the investor now focuses — and a path to deal flow, said Arjun Sethi, a founding partner at Tribe Capital, which is backed by partners at his former firm, Social Capital.

“I think anytime anyone wants to leave, it’s never easy,” Sethi said, adding that his former coworkers still offered to invest and introduce him to their limited partners because they bought into his vision of investing globally.

Andreessen Horowitz is the model of a supportive alma mater. The firm and some of its partners invested in several funds created by alumni, including Zal Bilimoria, Jesse Walden, Li Jin, and now the crypto rockstar Haun.

Traditionally, partners spent two to three years at the firm and then went to start a company, join one, or raise their own fund, said Bilimoria, who left in 2015. Andressen Horowitz doesn’t often promote partners from within, so in a way, the culture allows employees to talk openly about their career aspirations, even if that meant starting rival firms.

Bilimoria said that after he told the firm’s partners, Marc Andreessen and Chris Dixon, that he was leaving to raise a fund — a dream he confessed two years earlier — they were “completely supportive” and wrote some of the first checks in.

“I think they invest in A16Z alums, among other seed managers, because they know us, want to support us, but also want to stay close and understand our investments in order to potentially invest in a later round, quite simply,” he said.