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General Catalyst is on the verge of raising almost $6bn to invest in technology start-ups, a signal that Silicon Valley’s biggest venture capital firms can still attract investment even as the sector contends with a fundraising drought.
The 24-year old firm — an early investor in payments company Stripe, social media company Snap and French artificial intelligence start-up Mistral — could close its latest fund as soon as next month, according to multiple people with knowledge of the matter.
General Catalyst will use the new money to invest across various sectors including defence, space, climate, fintech and healthcare in the US, Europe and India, they added.
The new investment is a sign that institutional investors, endowments and foundations, known as limited partners, are willing to back the best-known firms even amid a broader fundraising crunch.
General Catalyst is close to sealing its new fund just weeks after Andreessen Horowitz raised $7.2bn for a series of vehicles targeting artificial intelligence, infrastructure and defence. The two funds will be the largest raised since the end of 2022, according to private markets data company PitchBook.
Overall, fundraising for US VCs has tanked: the total raised last year was $81bn, less than half the haul in 2022, and this year is on course to be the weakest for fundraising since 2015, according to PitchBook.
That has created a two-tier market in which newer entrants are struggling to survive. “There have been some firms which have abandoned raising new funds,” said the head of investment at a US foundation that invests in a number of big VC firms, citing groups that entered the market after 2018. “But I’d be hard-pressed to come up with a high-profile fund that’s abandoned fundraising,” he added.
The raise also signals that LPs are willing to back General Catalyst’s unorthodox approach. The firm has increasingly diverged from peers by expanding into other countries while others are in retreat, and targeting sectors with well-established incumbents, such as education and healthcare, which have traditionally been shunned by VCs.
General Catalyst declined to comment.
Hemant Taneja, who stepped up to lead the firm in 2021, describes himself as “an advocate for responsible innovation” and has pushed for closer collaboration with policymakers and regulators, particularly on AI.
That has put him at odds with other VCs, including Marc Andreessen, co-founder of rival firm Andreessen Horowitz, who call for accelerating development of powerful technologies such as AI to give the US an edge over rivals.
Under Taneja, General Catalyst has pledged to transform complex industries such as healthcare. Earlier this year, the firm bought one hospital and partnered with a number of others as part of a plan to trial new models of care — a highly unusual move. VCs tend to spread bets across promising start-ups in the hope that one will grow into a $1bn-plus business.
General Catalyst has also expanded internationally, while other US-based firms such as Sequoia Capital and GGV Capital have retrenched. Last year, General Catalyst merged with European investor La Famiglia, and the group is close to agreeing a partnership with Indian firm Venture Highway, according to people familiar with the discussions.
