Dear SaaStr: Why Do Venture Capitalists Seem To Be Switching Firms More Frequently Than Before?

Having been there, a few reasons the trend has accelerated — to a point:

  • More anchor “limited partners” willing to fund to partners that want to spin out. LPs are willing to double down on the top partners when they start their own firms.  Not all partners, but they will fund the top partners in each firm when they want to go out on their own.
  • More generational change issues. Funds just plain got bigger over the past 10 years, and in many cases, the original GPs and Old Guard aren’t 100% ready to hand over economics and control. It’s complicated.
  • Fund sizes shrinking = headcount reductions. Not everywhere, but in just enough places so you can see it and feel it.

Overall it’s nothing new but the massive growth of the industry, combined with the stresses of the past 24 months in the post-ZIP Hangover, along with LPs being willing to back the top spin-outs … equals more transition.

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