Venture capital funds have reportedly experienced a significant recovery during the first quarter of 2026, with key performance metrics improving across most recent vintages. According to Carta’s latest analysis, median net Total Value to Paid-In (TVPI) capital rose for nearly all tracked fund years, signaling renewed optimism among general partners (GPs) and limited partners (LPs) after a period of challenges.
According to insights from Carta, this latest upward trend marks a significant turnaround. Over the past six quarters, median TVPI has increased consistently for funds from 2017 to 2024.
The shift reverses earlier declines observed around three years ago, when TVPI for vintages from 2017 to 2020 began falling after a period of steady gains.
The 2018 cohort, in particular, faced sharp drops.
Today, however, the venture ecosystem appears to have entered a more positive phase, with valuations supporting asset appreciation once again.
The drivers behind these changes are straightforward. Startup valuations have climbed substantially from levels seen six quarters prior, boosting both median and top-percentile figures across funding stages.
As portfolio company values rise, so do the unrealized holdings within VC funds. Yet this recovery tells only part of the story.
Realized returns—measured by Distributed to Paid-In (DPI) capital—remain limited for most recent funds.
Many LPs have yet to see meaningful cash distributions, highlighting the gap between paper gains and actual liquidity.
For instance, median DPI for 2019 and 2020 vintages hovers just above zero, with fewer than half of funds in those years having returned any capital.
Even the more mature 2017 and 2018 groups show modest distributions, and only a small fraction have achieved 1x DPI—the threshold where LPs begin seeing profits beyond their initial commitments.
This underscores a core challenge for fund managers: converting rising unrealized value into tangible exits and returns that sustain the venture cycle.
Returns continue to vary widely. Top-decile funds (90th percentile) across most vintages from 2017 to 2024 deliver net internal rates of return (IRR) exceeding 20%, with the notable exception of 2021.
However, even 75th percentile IRRs rarely surpass 15.5%.
This concentration of strong performance in a minority of vehicles reflects the high-stakes nature of venture investing, where only elite outcomes meet LP expectations.
Fundraising activity gained traction in Q1 2026. Carta platform investors closed 86 new venture funds, raising a total of $3.9 billion—the highest number of Q1 closings since 2022.
Early indicators suggest 2026 could surpass recent years in both fund count and capital commitments.
The market shows increasing concentration. In 2025, roughly 57% of capital went to funds of $100 million or more, up sharply from 31% eight years earlier.
While most funds remain under $25 million, larger vehicles capture a growing share of the total pool.
This dynamic highlights the sector’s bimodal structure: numerous smaller funds coexist with a few capital-heavy players.
Data for the report draws from 2,775 venture funds closed between 2017 and Q1 2026, representing approximately $119.3 billion in commitments.
About 89% of these funds are smaller than $100 million, yet larger funds hold 54% of total capital.
Carta also pointed out that newly closed 2026 funds have deployed around 28% of commitments so far, while 2025 vintages sit at 35%—typical for early-stage deployment patterns.
Q1 2026 data reflects a somewhat encouraging picture for VC performance amid recovering valuations. The Carta update has concluded that more sustained success will depend on managers’ ability to realize gains and deliver returns that justify continued LP support.