The extraordinary liquidity that has entered venture markets in the last year has prompted several trends that require VCs adapt to a more competitive climate where startup founders have more leverage than ever before.Structurally speaking, there are only so few startups that want to raise capital. Even though some founders might be pursuing deals they would not have done before, the supply of capital for venture funds has outpaced the demand.This makes it more difficult for VCs to secure deals with startups.Early-stage VCs who are the best invest their time in finding founders they believe and need their expertise. They will be there for them over the long term.In an effort to increase exits and return on investments, new entrants in the VC market such as Tiger Global and a variety of non-VC funds like PE are aggressively pursuing huge deals.Many founders are seizing the opportunity to raise larger rounds of capital and return for more funding faster than ever. This is evident in the constant stream of funding news, 250 unicorns, and $288 billion in funding for startups in the first six months of the year.How can VCs be adaptable and competitive?Some people believe that moving faster is the best way to make deals. This can be achieved by leveraging technology like AI to help investors evaluate companies and doing more due diligence before meeting with startups. Others may find it more difficult to make larger investments or accept smaller stakes in startups.
