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Founders Fund’s Investment Pace Slowed Ahead Of Fund Cut

Illustration of arrow pointing down-valuations

The venture world took note late last week as news broke that San Francisco-based Founders Fund will cut the size of its $1.9 billion venture fund raised last year by about half.

However, the highly recognized firm — whose investments over the years include Airbnb, Palantir and Stripe — has been significantly slowing the pace of its dealmaking as the venture market cooled and valuations dropped, according to an analysis of Crunchbase data.

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At the height of the market in 2021, Peter Thiel’s Founders Fund took part in 121 rounds that totaled more than $10 billion (it’s Important to note the amount any investor — including Founders Fund — invests as a specific stake in a round is not usually divulged).

That includes leading or co-leading huge rounds such as Mexico-based online car buying platform Kavak’s $485 million Series D, Cayman Islands-based crypto exchange Bullish Global’s $300 million venture round, and New York-based fintech Ramp’s $300 million Series C.

Changing market

Those numbers dropped precipitously in 2022 as venture capital numbers tumbled under a variety of economic pressures still being applied to the industry.

Last year, Founders Fund took part in only 80 rounds — a 33% drop from the heyday of 2021. Those rounds totaled only $6.6 billion — again a drop of more than one-third. However, that number is slightly elevated, since it includes the huge $1.5 billion Series E for Costa Mesa, California-based defense and security firm Anduril, which was led by Valor Equity Partners.

The numbers also continuously dropped as the year went on, with the firm only making 32 deals in the last two quarters of 2022, according to Crunchbase data.

Some of the largest rounds it led or co-led, including another $200 million for Ramp and a $100 million Series C for Redwood City, California-based cybersecurity firm Material Security, occurred in the first half of the year — when the venture market was just catching up to the changing economic winds.

Continued slowing

The firm’s investment pace has not picked up through the first two-plus months of this year. It’staken part in only three announced rounds thus far that totaled less than $200 million.

Founders Fund has led only one announced round this calendar year — a $15 million seed funding for Brooklyn-based Zellerfeld Shoe, a 3D-printed shoemaker.

It was almost exactly a year ago when Bloomberg first reported Founders Fund had closed more than $5 billion in two new funds dedicated to both early- and late-stage investing — including a $1.9 billion venture fund and a $3.4 billion growth fund.

With the news last week that roughly half of that $1.9 billion fund will be rolled into a future fund, it goes to show just how much can change in venture in 12 months.

Founders Fund did not return a request for comment.

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Illustration: Dom Guzman

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