Author: Tom Sheridan, RTP Global
For years, the competition to invest in top-tier startups has been intensifying, driving up valuations and pushing VCs to rethink their strategies. Just look at Clickhouse. It raised $50 million in a Series A only to follow up with $250 million in a Series B just two months later at a staggering $2 billion valuation. Deals like this underscore the rush to secure high-quality startups with the potential for massive returns.
But in 2024, as the pool of truly exceptional investment opportunities continued to shrink, the battle for the best deals became even fiercer.
Many VCs found themselves outbid, priced out, or simply unable to deploy capital at the pace they once did. According to PitchBook, the number of active VCs in Europe fell by nearly 30% between 2022 and 2024. This is a sign of just how tough the market has become.
This shifting landscape has also fuelled the rise of “zombie funds” – firms that still manage their existing portfolios but are no longer actively making new investments. With fewer deals and greater competition, VCs are being forced to adapt. The best are shifting strategies to stay in the game.
The Changing Investment Bar: Where Capital is Flowing Now
Despite fewer high-quality deals, the pressure from LPs to generate returns hasn’t disappeared. VCs are being forced to look beyond their traditional comfort zones to find companies with true breakout potential.
This has led to an increasing willingness to invest in previously overlooked industries, such as material science, oil and gas. They are sectors that might not have been historically “venture-scalable” but are now becoming more attractive as AI, automation, and data-driven efficiencies reshape old business models.
We’re already seeing this shift play out in deal flow, and it’s likely to accelerate in the coming months. The VCs who succeed in this new environment will be those willing to bet on non-traditional sectors – and bring more than just capital to the table.
How VCs Can Stay Competitive
Winning the best deals today isn’t just about writing the biggest cheque. It’s also about what else you can offer a founder. So, what separates top-tier VCs from the rest? It boils down to two things:
1) Table Stakes – i.e. the basics every VC should offer:
- Business development: Facilitating meaningful introductions that drive revenue.
- Strategic guidance: Using pattern recognition from working with similar startups.
- Fundraising support: Helping founders navigate future rounds.
2) Platform Value – i.e. the differentiated support that top VCs provide:
- Talent networks: Helping founders with hiring, particularly for key technical and executive roles.
- Industry connections: Corporate VCs often excel here, offering access to strategic partners.
- Deep domain expertise: Partners who plugging gaps in a founder’s knowledge and actively help founders ideate, hire, and access customers.
One of the biggest shifts in VC positioning over the past few years has been the rise of media-driven venture firms. Having a personal brand, podcast, or strong social presence has become a competitive advantage.
20VC (Harry Stebbings in Europe) and All In (US) have built massive audiences, giving them greater brand awareness and greater reach for hiring posts and product announcements.
Emerging managers like Nicole Wishoff and Turner Novak are running similar playbooks, leveraging Twitter, newsletters, and content creation to get on founders’ radars before they even start fundraising.
But beyond these, the most referenced VCs – and the ones that founders actively seek out – are those who provide emotional support (founding a company is brutal, and VCs who genuinely back their founders stand out), stay true to their word (a founder’s network is small; reputations matter), and move fast (speed of execution can make or break a deal).
For top-tier founders, speed is everything. Their focus is on building their company, not endless investor meetings. VCs who delay decision-making to see if a round “gets hot”, waste a founder’s time with unnecessary back-and-forth and overcomplicate due diligence for no real reason are the ones who lose out.
Looking Ahead: Why Founder-First VCs Will Win
Despite the slowdown in deals and increased competition, there’s a sense of optimism in 2025. The UK rebounded in Q4 2024, attracting the highest level of VC investment in Europe. It’s a sign that momentum is returning.
However, for this growth to continue, VCs need to adapt.
The best founders are vetting their investors more than ever – and reputations matter. The market isn’t forgiving to VCs who overpromise and underdeliver. The firms that will thrive are the ones that offer real value beyond capital, whether through sector expertise, platform resources, speed of execution, or simply being the best partners to their founders.
In a world where money is a commodity, winning the best deals means being the investor that founders actually want to work with. The competition has never been tougher but for VCs who can evolve, there’s never been a better time to stand out.
