We Are Now Facing the First Industry-Wide Contraction in Modern Venture History
For decades, venture capital has expanded practically by default. More funds, more managers, more capital. Today, fundraising, firm formation, and LP participation are all moving in the same direction: down. After 20+ years, we are now facing the first meaningful industry-wide contraction since the dot-com collapse.
Underpinning our analysis is 20 years of Sapphire Partners’ data on graduation rates: how many Fund I managers survive, for how long, and whether new fund formation is keeping pace as the market expands or contracts.
Dive deep into one of venture’s least-settled questions: when, if ever, follow-on capital actually helps fund performance, especially for emerging managers. Drawing on research, simulations, and including Laura Thompson’s “Dirty Secret: Venture Reserves Are Not Always a Good Thing.”
U.S. Venture Capital Fundraising Falls 35% as Firms Stay Private Longer
U.S. venture fundraising fell 35% in 2025, reflecting a prolonged liquidity crunch as startups stay private longer and IPOs remain scarce. As Beezer noted, LPs are concentrating capital with the most trusted firms in a risk-off environment, accelerating consolidation at the top while making it materially harder for newer managers to get funded.
Nikhil Basu Trivedi shares his 'Next Big Thing' roundup after speaking with founders, funders, and frontier tech builders, from NVIDIA to OpenAI, a16z to USV, Canva to Applied Intuition. This year’s consensus: 2026 is the year AI goes from copilot to pilot.
Drawing on years of firsthand firm-building experience, Roger Ehrenberg lays out what it actually takes to build a seed-stage venture firm from scratch. The piece spans the grit of Fund I through the discipline required in Fund II, with a clear emphasis on how LP trust is built over time.
Ben Horowitz reflects on his journey from operator to cofounder of a16z, and what it really means to run a venture firm like a company. The conversation touches on why scale can be a feature and how his partnership with Marc Andreessen evolved, and why media has become a core part of building durable venture platforms.
Abe Othman brings an evidence-based lens to how seed-stage outcomes are actually shaped. Drawing on AngelList data, he shows why returns often reflect structure and access more than individual insight, challenging assumptions around conviction and expected value, and highlighting how power-law dynamics, adverse selection, and diversification shape results.
2025 was undoubtedly the year of AI. In the first Origins episode of 2026, Beezer and Nick revisit some of their favorite moments from last year to see what some of the top voices in VC saw as emerging AI trendlines and how the venture ecosystem and global markets might respond next.
VC Deep Dives
TEMPLATE
The LP Checklist Every GP Should Know
ILPA’s Due Diligence Questionnaire 2.0 lays out, in plain terms, how LPs diligence fund managers across investment, operations, and alignment. By digging into areas like succession planning, co-investments, fund terms, governance, valuation, and ESG, it shows how expansive LP expectations have become, and where managers often underestimate the preparation required.
Rohit Yadav’s 'Big Book of Venture Capital: 2025 Annual Edition' is a year-end deep dive into venture capital and startup dynamics, combining structured analysis, hard data, and forward-looking perspectives to help make sense of where the market stands today.
‘Work Hard, Play Hard’ Is Over: Inside Silicon Valley’s 996 Culture
A new cohort of founders, particularly in the YC orbit, are opting into 996-style intensity (working 9 a.m. to 9 p.m., six days a week), optimizing for speed, focus, and agency over perks or balance, and reframing ambition as sustained velocity rather than lifestyle.
$100 Million-Plus Funding Rounds Used to Be Incredibly Rare. Now, 40% of Seed and Series A Rounds Are Clearing That Bar.
Crunchbase data shows that in 2026, more than 40% of seed and Series A funding has gone to rounds of $100 million or more, reflecting how mega-rounds have become increasingly common in early-stage investing. Recent AI financings highlight the scale and interconnected nature of capital flows across the ecosystem, alongside growing concern about what this normalization could signal for market stability.
OpenAI Plans Fourth-Quarter IPO in Race to Beat Anthropic to Market
OpenAI is reportedly preparing for a potential IPO as soon as the fourth quarter of this year, holding informal talks with Wall Street banks and expanding its finance team as it faces intensifying competition from Anthropic. Anthropic is also exploring an IPO timeline by year-end, setting up a race between the two leading generative AI companies to reach public markets first.
Thanks for reading OpenLP! We’d love your input to help shape future editions. What’s working well? What’s missing? Your feedback will help us make this newsletter more relevant and insightful for the LP and venture community.
Nothing presented within this article is intended to constitute investment advice, and under no circumstances should any information provided herein be used or considered as an offer to sell or a solicitation of an offer to buy an interest in any investment fund managed by Sapphire Ventures, LLC (“Sapphire”). Information provided reflects Sapphires’ views as of a time, whereby such views are subject to change at any point and Sapphire shall not be obligated to provide notice of any change. No assumptions should be made that any investment listed above were or will be profitable. Various content and views contained within this article represent those of third party guests, which do not necessarily reflect the views of Sapphire. Such views are subject to change at any point and do not in any way represent official statements by Sapphire.Due to various risks and uncertainties, actual events, results or the actual experience may differ materially from those reflected or contemplated in any statement made. Nothing contained in this article may be relied upon as a guarantee or assurance as to the future success of any particular company. Past performance is not indicative of future results.
