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General Catalyst Closes $6 Billion Fund

It’s a possible sign that the VC industry’s newest chapter is a story of the haves and have-nots.

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What venture capital drought?

General Catalyst, the influential Silicon Valley VC firm with investing hits including Stripe and Snap, closed a nearly $6 billion fund, sources told the Financial Times over the weekend. It’s a sign that the VC industry’s newest chapter is a story of the haves and have-nots.

A Venture is Out There

VC funding is in the gutter due to high interest rates and a still-turbulent IPO market. US firms raised just over $9 billion in the first quarter of the year, according to Pitchbook data, well off the pace of the $81 billion raised throughout 2023, which was half as much as 2022 and the worst year for venture funding since 2016. But General Catalyst maintains a strong reputation — and its outside-the-box strategies have kept it appealing to institutional investors even as its peers start to sweat.

The firm has expanded its purview to startups the world over as well as into industries like healthcare and education typically passed over by other VC firms because of already entrenched players. In January, it even acquired healthcare system Summa Health.

The performance has proven enough to keep General Catalyst at the top of the VC food chain — though the industry is starting to finally move its mountain of “dry powder”:

  • General Catalyst’s $6 billion fund places it in league with fellow VC titan Andreessen Horowitz, which recently closed a $7.2 billion fund; meanwhile, former big shot Tiger closed its latest fund at $2.2 billion, roughly just a third of its goal. The General Catalyst and a16z funds mark the biggest in the industry since the end of 2022, according to Pitchbook. 
  • US VC firms entered the year with around $311 billion in unspent cash, according to Pitchbook, pent up from massive amounts raised in 2021 and 2022. In the first quarter of this year, US startups scored over $36 billion in VC investments, according to a recent KPMG report, marking a 16% uptick from the same quarter.

Into the Woods: Investments in AI continue to be a bright spot in the startup world. Last week brought just the latest marquee fundraising round; on Thursday, sources told the Financial Times that Sequoia Capital would join a fundraising round for xAI, Elon Musk’s startup designed to take on OpenAI. The round could be as big as $6 billion, sources said, and possibly value the company at around $18 billion. It’s the firm’s second major bet on Musk, after previously backing his Twitter takeover with an $800 million investment. Of course, Fidelity recently implied that the platform (now X) has seen its value tank by 73% since the Musk takeover. Fool Sequoia once…