Venture Capital

Venture capital firms in the U.S. accounted for 49 percent of global VC deal flow (by dollar amount) in 2023 (the highest level since 2014.). In contrast, U.S. venture capital firms accounted for 79.6 percent of global VC deal flow in 2007.

There were 3,417 VC firms in existence in the U.S. at the end of 2023, according to the NVCA, up from 1,519 in 2015. These firms managed 7,238 venture funds (up from 2,511 in 2015) and had approximately $1.21 trillion in U.S. venture capital assets under management (a significant increase from the $444 billion in AUM in 2019).

In 2023, venture capital firms made investments in the following industries, according to the NVCA:

• Software: 39 percent
• Commercial Products and Services: 16 percent
• Pharmaceuticals and Biotechnology: 13 percent
• Healthcare Services and Systems: 8 percent
• Consumer Goods and Services: 6 percent
• Other: 6 percent
• Health Care Devices and Supplies: 4 percent
• Information Technology Hardware: 4 percent
• Energy: 2 percent
• Transportation: 1 percent
• Media: 1 percent

One of the hottest VC investment areas is artificial intelligence. “AI-focused startups received substantial investments as the potential of AI-driven solutions in various industries remains immense,” according to “Unveiling the Top Areas of Venture Capital Investment in 2023,” an article published by Foley & Lardner LLP. “Investors recognize the transformative power of AI in areas such as health care, professional services, finance, cybersecurity, and autonomous systems, leading to heightened interest in funding ventures with promising AI integration.”

Associates, analysts, managing partners, general partners, and entrepreneurs in residence are the major players in the VC industry, but venture capital firms also need accountants, lawyers, chief financial officers, controllers, and public relations, marketing, computer security, information technology, and office workers. Many firms have fewer than 15 employees, and even the largest firms typically have only 50 or so employees. For example, Kleiner Perkins, a leader in venture capital under management, ranks among the top five firms in terms of capital raised over the last decade, but it has fewer than 15 general partners, partners, and principals.

Venture capital firms are located throughout the United States and the world. Many U.S.-based firms are headquartered in California and on the East Coast. Some top U.S. firms have offices in foreign countries. For example, Index Ventures is headquartered in San Francisco, California, but it also has offices in the United Kingdom, Switzerland, and Jersey. New Enterprise Associates has U.S. offices in Menlo Park, California; Timonium, Maryland; and New York, as well as an office in London, United Kingdom.

Women and ethnic minorities are vastly underrepresented at venture capital firms. Worldwide, women only made up 23.8 percent of the employees in VC firms in January 2023, according to Preqin. And the percentage of partners is much lower.

The NVCA has pledged to improve diversity in the VC industry. The National Venture Capital Association launched the VentureForward nonprofit to provide opportunities for women and men of all ethnicities and backgrounds. The nonprofit seeks to provide education and training related to diversity and inclusion (D&I), human resources (HR), and harassment to VC firms and startups; sharing D&I, HR, and harassment best practices and policies for VC firms and startups to adopt; and seeking to connect VCs with a more diverse talent pool and a more diverse pool of entrepreneurs seeking funding. It has also created an online hub (https://ventureforward.org) for sharing information on these topics.

The Women’s Association of Venture and Equity, Women in VC, Al Raise, and other professional associations and organizations are also seeking to improve diversity in the VC industry.

Many noteworthy professional organizations serve those working in the venture capital industry and related alternative investment industries.

• All Raise (https://www.allraise.org) was founded by a group of women financial professionals with a goal of increasing the number of women in the venture-backed tech ecosystem. It has offered mentoring sessions for female founders in New York City, San Francisco, Boston, and other cities, as well as other opportunities for women. A job board and a blog are available on its Web site.
• The American Investment Council (https://www.investmentcouncil.org) is an organization of private equity firms and funds-of-funds.
• The Canadian Venture Capital & Private Equity Association (https://www.cvca.ca) represents the professional interests of the VC and private equity industry in Canada. It offers networking opportunities, data reports, and an annual conference.
• The CFA Institute (https://www.cfainstitute.org) offers the chartered financial analyst credential and continuing-education opportunities. It has more than 190,000 CFA charterholders in more than 160 markets.
• The Chartered Alternate Investment Analyst Association (https://caia.org) offers the Fundamentals of Alternative Investments Certificate Program, certification, and membership to those who complete its certification program.
• The Community Development Venture Capital Alliance (https://cdvca.org) represents the interests of firms that provide equity capital to businesses in underinvested markets.
• The Global Private Capital Association (https://www.globalprivatecapital.org) is a membership association of fund and institutional investors, including private equity, growth equity, venture capital, private credit, real assets, pension plans and sovereign wealth funds, among others.
• The Investments and Wealth Institute (https://investmentsandwealth.org) provides certification, continuing education, and other resources to its members, which include investment consultants and analysts, accountants, and others who provide financial services and advice to corporations, individuals, nonprofits, and retirement/pension plans.
• LAVCA–The Association for Private Capital Investment in Latin America (https://lavca.org) is a nonprofit membership organization that is "dedicated to supporting the growth of private capital in Latin America. . . through research, networking, education programs, promoting best investment practices, and advocating for sound public policy.” It offers networking and continuing education opportunities.
• The National Venture Capital Association (https://nvca.org) is the leading professional organization for venture capital firms. It serves as an advocate for the VC industry in Washington, D.C., and provides detailed information on the VC industry. Its membership includes more than 380 venture capital firms and corporate venture groups.
• Women in VC (https://www.women-vc.com) describes itself as the "world’s largest global community for women in venture capital to connect, collaborate, and create new opportunities."
• The Women’s Association of Venture and Equity (https://women-wave.org) is a membership organization that offers networking events and other resources.