VC Fund Performance Q3 2025: A Simple Summary

This report breaks down how venture capital funds are performing — without jargon. Think of it like checking your investment portfolio returns, but for VC.

Here’s what actually matters.

The big picture

Venture capital performance is diverging sharply. A small group of top-tier funds are doing very well, while the majority are either average or still underwater.

Timing, fund selection, and exposure — especially to AI — are now the biggest drivers of outcomes.

Key performance numbers (explained simply)

TVPI — “What’s my money worth now?”

TVPI measures total value (realized + unrealized).

• A 3x TVPI means: invest $1, get $3 back

• Only the top 10% of 2017–2018 funds are hitting 3x

• Median 2017 funds: ~1.76x (decent, not exceptional)

• 2021–2024 funds: mostly flat or still underwater

Translation: strong returns exist, but they’re concentrated.

IRR — “What’s my annual return?”

• 2021 funds are struggling — worst performers among recent vintages

• They invested at market peaks (bad timing = lower returns)

• 2022–2023 funds are showing healthier early signals

Timing matters more than ever.

DPI — “How much cash have I actually received?”

This is real money back in your pocket.

• Most funds from 2019 onward: $0 distributed so far

• 2017 funds: about $0.28 returned per $1 invested

Translation: capital is still locked up across most recent vintages.

What’s happening with fund managers

Money deployment

• 2017–2020 funds: 89%+ deployed (fully invested)

• Newer funds: holding significant dry powder

Managers are moving slower and more selectively.

Fund sizes

• 40% of new funds are under $10M

• Large $100M+ funds remain steady at ~10%

Smaller, focused funds are becoming the norm.

Investor participation

• 2020 funds: median 67 LPs

• 2025 funds: median 38 LPs

Fundraising is significantly harder for managers.

Market trends you should know

The AI boom is real

• 44% of all VC capital now goes to AI

• Up from 23% five years ago

If your portfolio lacks AI exposure, you’re structurally underweight.

Fundraising is recovering

• Q3 2025: $30B raised by startups

• Highest level since 2022

The market is stabilizing — but cautiously.

Down rounds are declining

• Under 16% of deals are down rounds

• Indicates valuation pressure is easing

Healthy signal.

Bridge rounds remain elevated

• 28% of rounds are bridge rounds

• Startups are extending runways rather than scaling aggressively

Conditions are improving, but still tight.

Time between fundraises is longer

• Seed → Series A: 25 months

• Series A → Series B: 30 months

Startups must prove more before earning the next check.

What this means for you as an investor

✅ Good news

• Market recovery underway

• AI-led portfolios outperforming

• Top-tier funds still delivering strong returns

⚠️ Warnings

• 2021 vintage funds are lagging

• Distributions are slow

• Only top 10–25% of funds generate outsized returns

• Recent vintages need time to mature

💡 Key takeaway

If you invested in 2017–2018, you’re likely doing well.
If you invested in 2021–2022, patience is required.

Going forward:

• Favor AI-heavy portfolios

• Select top-quartile managers

• Avoid average funds — the gap is massive

Bottom-line investment advice

• Pick top-tier managers — performance dispersion is extreme

• AI exposure is non-negotiable

• Expect 7–10 years before meaningful cash returns

• Newer vintages = higher uncertainty

• Smaller funds can outperform — don’t chase size alone