6 Venture Capital Firms Now Dominate Startup Financing. How Entrepreneurs Can Win in the Age of the Giga VC

6 Venture Capital Firms Now Dominate Startup Financing. How Entrepreneurs Can Win in the Age of the Giga VC

They’re the VC superfunds that can make, or break, your business. Meet the G-Flats: General Catalyst, Founders Fund, Lightspeed, Andreessen Horowitz, Thrive Capital, and Sequoia.

BY BRIAN CONTRERAS, STAFF WRITER @_B_CONTRERAS_

Illustration: Inc.; Photo: Getty Images

“I’ve never seen it before over 20 years in the industry.”

Umesh Padval has worked in venture capital for two decades, during which time the sector has taken on an increasingly central role in American capitalism. But Padval, a managing partner at the $500 million venture platform Seligman Ventures, still can’t quite believe what’s happened to his industry.

He’s not the only one. In a relatively short period of time, the U.S. venture ecosystem has experienced a fundraising boom that’s helped VCs amass war chests of staggering size—and in the process, rewritten the startup financing playbook in ways that founders will ignore at their own peril.

Many smaller venture firms still struggle to raise capital. But a de facto Big Six of VC have bucked that trend: General Catalyst, Founders Fund, Lightspeed Venture Partners, Andreessen Horowitz, Thrive Capital, and Sequoia Capital. For lack of a better acronym, call them the G-Flats.

Data from the research firm PitchBook, analyzed by the National Venture Capital Association, shows that among U.S. VC firms during the past two years, these six have raised more capital commitments than all the other managers. The fundraising totals include:

From there, it’s a steep drop-off to seventh place, with Kleiner Perkins having raised a comparatively meager $3.7 billion.

“Ten years ago, one would not have seen funds at that scale,” says Greg Sands, founder and managing partner at the early-stage investor Costanoa, which is currently investing from a $325 million fund.

The G-Flats have amassed another kind of capital, too: cultural. A round led by them, or even just a tweet from one of their name-brand GPs, can trigger a news cycle for an attention-hungry startup. Their name on a cap table is a sign of legitimacy, potentially worth more than the check itself. What’s more, they’re increasingly holding onto portfolio companies longer, or investing at a more mature stage—acting less like venture investors and more like private equity firms.

These are the kingmakers and powerbrokers of the new American economy. So how can founders navigate this strange new landscape? Inc. spoke with entrepreneurs, analysts, and investors of all sizes about how growth strategy has changed in the age of the giga VC, and what you can do about it.

In this article, you’ll learn:

How the giga VCs achieved titanic scale

The multibillion-dollar fundraises that the G-Flats have pulled together over the past few years threaten to upend a lot of the assumptions about how founders should engage with outside investors.

“Before the last two quarters of the dot-com boom, outside of NEA, I’m not sure there’s anybody who would have been thought of as a first-class Silicon Valley investor who was over $1 billion,” says Costanoa’s Sands. (One indication of how hyperscale has shifted expectations in the VC world? Sands describes his firm—which counts recognizable brands such as Vannevar, Quizlet, and Lively among its portfolio—as aiming to be “the world’s best enterprise boutique.”)

He and Padval both attribute this supersizing to two main factors: the tremendous capital it takes to build AI software and the fact that many companies are staying private for longer than they used to, eschewing IPOs for continued private investment.

Case in point: SpaceX, which just underwent a record-breaking IPO, remained private for 24 years. (Four of the six G-Flats had investments in the company.) The data analysis giant Databricks and the payments processor Stripe, both of which have secured valuations well over $150 billion, remain private, avoiding the scrutiny that comes with an IPO. Andreessen recently cited both companies as examples of “growth-stage venture” assets, or companies that can maintain startup-like growth—and thus justify startup-like venture investment—deep into their life cycles, well beyond when VCs would’ve historically started looking for an exit.

“It all comes down to how businesses are growing differently than they were pre-AI,” says Olivia Moore, a partner on Andreessen’s consumer investing team. “As we saw so many companies growing so quickly and being able to deploy large amounts of capital, we knew we both wanted to lead more rounds and lead larger rounds, because the race to become a generational company is more intense than ever.”

Moore believes that AI software will offer unprecedented investment returns, thus warranting these massive outlays of capital: “I’m thinking of many companies in our portfolio that have gone from zero to $100 million in ARR, and we’re only, what, 3.5 years into generative AI?” (I wrote about annual recurring revenue—and how it’s been abused in the age of AI—earlier this spring.)

The concentration of VC capital parallels a similar dynamic among startups themselves, with recent Crunchbase data suggesting that around 5 percent of venture-backed startups claimed about 70 percent of American VC funding, leaving the rest of the market to fight for the remaining third. Crunchbase deemed 2025 “the year of the most U.S. venture capital concentration on record.”

When massive investment creates massive pressure

This enormous scale of fundraising distorts the VC landscape in ways that have meaningful ramifications for founders looking to grow sustainably. That’s partly just a numbers game: The more money on the line, the bigger the upside needs to be to justify it.

“For any venture firm, the question is, ‘What’s the likelihood that this can return an entire fund?’” says Costanoa’s Sands. “If the fund is $10 billion and you’re going to own 20 percent of the company, then mathematically it can’t return the fund unless it’s a $50 billion company.”

This is a recurring criticism among investors with less capital to throw around than the G-Flats. “Once funds reach tens of billions of dollars, they start operating very differently from traditional venture capital,” says a Tel Aviv-based VC with more than $500 million in assets under management. “A $20 billion fund needs enormous outcomes just to generate the kind of returns VC firms are expected to deliver.”

That skews the kinds of companies VCs are attracted to, but also how investors engage with their portfolio companies. The Tel Aviv-based investor says that billion-dollar funds create pressure on founders to scale rapidly in order to validate all the money being pumped into them.

The critique that VCs push companies to grow faster than is healthy—prioritizing short-term returns over long-term sustainability—is certainly not exclusive to the G-Flats. But bigger investments demand bigger returns, so it’s not hard to see how the scale of the giga VCs could exacerbate those pressures.

Blake Hall, founder of the $2 billion identity verification giant ID.me, says he’s spoken with investors at one of the G-Flats consistently while building his company, and is glad he opted to take on a mix of early backers that includes military academy graduates, angel investors, and smaller-scale investment funds.

“Moving more deliberately and validating product-market fit instead of being pressured to grow at all costs worked for us,” Hall explains.

In part because VC-backed companies are now waiting longer to go public, investors are also investing later in the life cycles of companies—so late that some critics have said the investment risk is largely gone, with the speculative function of venture replaced by a more private equity-style role helping established companies grow ever-larger.

“A $10 billion fund isn’t really a venture fund anymore,” says Ghazwa Khalatbari, vice president at the early-stage investor Creandum, which has backed companies including Spotify and Klarna and is currently investing out of a roughly $600 million fund. “The math forces you to underwrite so much—you need to be so much more sure.”

Founders Fund, Sequoia, and General Catalyst did not respond to a request for comment on how their multibillion-dollar fundraises have changed the calculus for founders. Thrive shared a recent interview in which its founder and managing partner Josh Kushner said: “The companies that we were partnered with needed to raise meaningful capital, and in order to be the best possible partner to them, we needed to do whatever we needed to do to support them in that capacity.”

A16z’s Moore says venture capital is “a power law game,” referring to the idea that a small subset of highly lucrative VC investments drive an outsize percentage of investors’ returns, offsetting the less impressive gains that the bulk of assets bring in. “If I were a founder, I think I’d like to have all of the resources that I can.”

The power of the giga VCs’ professional networks

Cash isn’t the only tool the giga VCs have at their disposal. These superfunds also stand out from their peers in more abstract, harder-to-quantify ways: brand reputation, professional connections, and clout.

“Anyone can give you money,” says Steve Sonnenberg, co-founder and chief executive of the workplace software company Awardco. “It’s the talent and the connection and the resources.”

Indeed, when Sonnenberg took on funding from General Catalyst—which counts Anthropic, Anduril, Ro, and Stripe among its portfolio companies—he saw the partnership as a means of transforming Awardco from a “young, scrappy, do whatever it takes to win” startup to a more mature company that could set its sights on top-tier talent and expand into global markets.

It worked. After General Catalyst backed Awardco in 2021 for its $65 million Series A, the investment giant returned last year to support the Inc. 5000 honoree’s $165 million Series B. That second investment secured Awardco’s unicorn status with a more than $1 billion valuation. Sonnenberg credits his main point of contact at General Catalyst, managing director Paul Kwan, with connecting him to chief human resources officers at major companies as well as Olympic athletes who could serve as brand ambassadors.

Lots of venture funds can throw money around, so it’s the more abstract value-adds that really set an aspiring investor apart, agrees Steijn Pelle, co-founder and chief executive of the business management platform Lassie.

Earlier this month, news broke that a16z was leading Lassie’s $35 million Series A; Pelle knew folks there from his time working at Robinhood and Coinbase, both of which have taken money from the investing powerhouse. (Andreessen has also invested in Facebook, Airbnb, Lyft, Instacart, Pinterest, and a long list of other software giants.)

“If you scale a business like this, especially these AI agent companies [which] scale really fast, you look for expertise,” Pelle says. “They have a really good network of people that can help pull in engineering talents, help with sales recruiting, help with building up functions of a company.”

His investors feel similarly. Moore, the a16z partner, characterizes her value-add to Lassie and other portcos as a whole platform of support, from access to a16z’s “network of networks” to advice on interviewing a new C-suite hire or marketing a product launch. Even potential customers pay attention to these sorts of things, she adds.

“If you’re a candidate or if you’re a potential customer … how are you going to choose amongst the wash of options of startups to work with, or work for, or buy a product from?” Moore asks. “Our goal is to have the Andreessen brand not just known but also respected and connected in a way that unlocks things for our founders.”

The giga VCs’ marketing firepower

Reputation isn’t just a matter of having an impressive name on your cap table. Some of the giga VCs have built powerful marketing apparatuses, allowing them to back their investments not just financially but also with sophisticated media operations.

The power of a Big Six brand is top of mind for Josh Machiz, Lightspeed’s chief marketing officer: He just launched an in-house podcast for the firm, co-hosted by Lightspeed partner Claire Zau, which he sees as part and parcel with Lightspeed’s value-add to startups.

“We almost approach it a little bit like a consulting arm,” Machiz says. “For portfolio companies and for non-portfolio companies, being able to get your news out, especially with Claire’s 300,000 followers and Lightspeed’s 60,000 YouTube subscribers and growing, we’re gonna be able to play a meaningful role in helping them get the exposure that we think they deserve.”

Other giga VCs have thrown similar resources into building in-house media arms that can offer portfolio companies visibility, branding, and PR help. Last week, a16z celebrated the one-year anniversary of its “New Media” arm, which helps the firm’s partners produce original video and editorial content that can then be distributed through the firm’s own social media channels.

General Catalyst, meanwhile, dropped a sketch on social media in May—riffing on the classic “Apple Versus PC” marketing campaign to poke fun at its G-Flats competitors—that had the sheen and rhythm of a big-budget ad you might see on TV during a football game.

Venture capital has always had the resources to pay for sophisticated marketing campaigns, but that the G-Flats now operate like public-facing consumer brands, in the same way a snack food or car manufacturer might, is a testament to how valuable their names have become.

The golden handcuffs of a giga VC partnership

In the same way that an investment from one of the G-Flats can serve as a valuable seal of approval for a portfolio company, when one of these VCs declines to invest in a follow-on round, it can raise eyebrows.

“The market pays attention,” says Maor Fridman, a general partner at F2, which has $500 million in assets under management and backs early-stage Israeli tech ventures.

It’s a dynamic that founders take into account too.

“It’s really important that we keep them along,” Awardco’s Sonnenberg says of his General Catalyst partnership. “We were actually willing to take a lesser number to make sure General Catalyst sticks around, because we believe that narrative is extremely important.”

The rise of in-house VC media operations, meanwhile, may kick that risk into overdrive: What does it say about a company, for instance, if its own investor won’t invite them onto its podcast or profile them in its newsletter?

Not everyone takes signaling risk so seriously: Pelle, of Lassie, says the risk that the firm would decline to participate in future rounds—and what market signals that might send about his company—was not a consideration when choosing which investors to partner with. “The company needs to work anyway,” he says.

Still, concerns about this dynamic show how the giga VCs’ unprecedented firepower can tip the scales against a founder if they’re not careful.

When a smaller fund is the right choice for a startup

Seligman’s Padval says his fund competes against far larger players by having domain expertise and technical knowledge to share with startups working in its core sectors, which include tech infrastructure, cybersecurity, and data centers.

That holds true among many founders, too—even those who’ve worked with the giga VCs. Pelle, the Lassie founder, says that smaller funds can offer prospective portcos “specific domain expertise or specific networks” that may prove decisive.

“Every round, you orient in the market and see who’s a good fit for that next phase of the company,” he says. “I’m not necessarily sure if the size of the fund matters for the decision [of] whom you want to work with next. It’s table stakes.”

It’s not just a matter of overcoming a difference in scale. Hall, of ID.me, suggests that smaller firms may actually have a structural advantage over the superfunds.

“Asymmetric power dynamics can be a real issue with larger firms,” he explains. “If an investment doesn’t perform well immediately, the junior partner who led the investment might face intense criticism every Monday at investment committee meetings by a senior partner. That dynamic can bleed through and disrupt the relationship between the investor and the founder … Investors with a flatter structure can form strong relationships with founders and weather the storm with them.”

Ultimately, there’s a balance to be struck between the money an investor can offer and the other, potentially more narrowly tailored value-add they present. Michael Tannenbaum, CEO of the newly public blockchain lending platform Figure, encourages founders to try to get a big, name-brand fund on their cap table early on “for credibility and signaling,” and then later focus on relationships with smaller funds that can offer more narrowly tailored expertise or relationships.

But that’s not true of every company—including his own.

“These larger funds tend to be more ‘one-stop shop,’” Tannenbaum says, and Figure, which was in the enviable position of already having SoFi founder Mike Cagney behind it, didn’t need to worry as much about working with brand-name investors: “We focused on smaller funds where we thought the investors had expertise either in blockchain or financial services.”

With the VC ecosystem increasingly defined by a small subset of investors who wield historic levels of capital—plus wide-ranging industry networks and increasingly formalized branding operations—there are lots of reasons a funding-hungry founder might first turn to one of the G-Flats for financing.

But the wide-ranging ecosystem of smaller investors, whether they’re more narrow in their priorities or simply more restrained in their dealmaking, offers plenty of upside too, and may present a less skewed power dynamic for founders. Money is great, after all, but it always comes with strings attached—and the bigger the money, the more those strings might start to look like chains.

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