The fat years are over. Sky-high startup valuations, limited partners who are desperate for investment opportunities and subscribe for practically every new fund – the almost heavenly conditions for venture capital are over for now. Fortunately.

The low interest rate environment in recent years has made venture capital one of the last havens for many institutional investors looking for attractive yields. During the pandemic in 2020 and 2021, this trend boomed. According to PitchBook, in 2019, 1,012 funds in Europe and the United States raised a total of $94.6 billion. In 2021, these figures skyrocketed to 1,575 funds and $183.9 billion.

The turnaround in interest rates last year resulted in a remarkable shift: As the combined fundraising volume of Europe and the US reached a new all-time high of $189.4 billion, the count of closed funds experienced a substantial decline. The total number of closed funds, 981, was marginally below the level before the pandemic, with a lower figure last observed in 2017. This suggests two things. First, venture capital continues to play an important role as an asset class in capital allocation among institutional investors. Secondly, these investors are now once again betting more heavily on teams with a track record.

We just recently learned how important this is when we successfully raised capital in March. Despite the bank turmoil and the disruptions in the venture capital and startup sector triggered by the collapse of Silicon Valley Bank, Heliad was able to raise around €7 million in fresh equity.

Given the gigantic sums of money raised worldwide last year, this may seem like a modest amount. However, under the new valuation regime, you no longer need billions to make good later-stage investments. According to data from AngelList, the average Series B valuation of U.S. startups in the fourth quarter of 2022 was $125 million. In the first quarter of the year, it was twice as high, at $250 million.

The fat years are certainly over. However, the new era also offers exciting opportunities for teams with a track record – there are still good companies out there and demand from institutional investors is still high.