By Alberto Onetti, Chairman – Mind the Bridge

If you’ve been following the startup world closely, you’ve probably noticed that something’s… off. Basically, behind the glowing headlines of AI unicorns and mega-rounds, venture capital is quietly undergoing one of the deepest resets in its history.

Let’s start with a hard truth: according to recent Carta data, only 37% of VC funds launched in 2019 have returned any capital to their investors after five years. That’s during what many overall called VC’s “Golden Age.” Worse still, the newer funds are faring even worse — just 7% of 2022 funds have returned capital. And unfortunately, the story doesn’t get better from there.

Welcome to the great venture capital reality check.

What the Numbers Really Say

Let’s break this down by generation of VC funds:

  • 2017-2018: The “Golden Age“
    • 81% of funds returned capital
    • Median IRR: 11.5%
    • Top quartile: 28%+
       Even 2018 held strong with a 54% return rate and 8% median IRR.
  • 2019-2020: Cracks begin to show.
    • 2019: Only 37% returned capital, IRR drops to 5.4%
    • 2020: Down to 30% of funds returning capital, median IRR falls to 2.6% (lower than government bonds)
  • 2021–2024: The “Downturn“.
    • 2021: Just 15% of funds returned capital; median IRR was negative at -0.4%
    • 2022: 7% return rate, IRR: -1.9%
    • 2023: IRR drops to -5.8%

Indeed, we’re not just talking about underperformance. Rather, we’re talking negative returns — across the board

What Went Wrong?

  1. The Valuation Bubble Burst — except for AI
    Multiples of 100x revenue have disappeared in B2B and re-emerged only for fast-scaling AI startups. SaaS valuations collapsed while generative AI inflated a whole new category of sky-high valuations.
  2. The Exit Window Slammed Shut (but could reopen soon)
    Global IPOs dropped from 1,035 in 2021 to just ~180 in 2024.
  3. VC Fund Timelines Got Longer
    Capital returns that once happened in year 3–7 now stretch well beyond 10 years. Some LPs are holding onto positions for over 15 years, just hoping for a market rebound. Meanwhile, there’s no liquidity — only capital calls
  4. AI vs Everyone Else
    If you invested early in AI, you’re golden. If we take a look at the returns produced by the Top 90th percentile, IRRs are terrific:
    • 2021: 13.0%
    • 2022: 17.6%
    • 2023: 21.8%

How is that possible? Because early investors in Anthropic or OpenAI turned $10M checks into $500M+ paper gains.

By contrast, everyone else is in trouble, stuck with overvalued SaaS portfolios from 2021–2022 — with no exit in sight.

Is there some Light at the end of the Tunnel?

Still, signs of recovery are emerging in 2025:

  • Successful IPOs: CoreWeave (+250%), Rubrik (+206%), ServiceTitan (+50%)
  • Average first-day pop: +31%
  • Current average return vs IPO price: +77%

M&A is also back:

  • Meta invested $14.3B in Scale AI
  • Google acquired Wiz for $32B (after a rejected $23B offer!)
  • Quiet but significant mid-market exits are happening in B2B SaaS

 

What This Means for the Ecosystem

Founders (non-AI)

  • Fundraising is brutal
  • Bridge rounds come with harsh terms
  • Cost efficiency and burn reduction are non-negotiable
  • Exit expectations must be recalibrated

VCs

  • Fundraising cycles are now 3+ years
  • Fund sizes are shrinking
  • No distributions = no carry = pressure on compensation
  • Many have turned into so-called “zombie funds” focused on survival

LPs

  • Distributions are rare or nonexistent
  • Capital calls keep coming
  • Liquidity is stuck in underperforming funds
  • Many LPs are over-allocated to VC and not ready to commit to new funds

 

What’s Next?

  • Valuation Reset (in progress)
    We’re about 60% through the post-2021 correction. IPOs like Chime and Hinge Health are happening — but at significantly reduced valuations.
  • Exit Market Recovery (underway)
    • Several successful IPOs
    • More coming in H2 2025
    • SaaS revenue multiples have stabilized (6–8x)
  • Portfolio Rationalization (must happen now) 
    • Write-offs are inevitable
    • Down rounds needed to clean up cap tables
    • Focus capital on high-potential survivors
    • Fundraising in 2025? Only with a solid AI story

Final Thought

As Jason Lemkin puts it: “This is not just a rough patch. It’s a structural reset.”

The era of easy money, grow-at-all-costs, and “fake it till you make it” is over. The new cycle will reward fundamentals, real traction, and tech that matters — especially in AI.

Time to reset expectations. Rebuild strategies. And rethink what smart venture capital should look like.