Top New York VC Ben Lerer says more mid-sized VC firms are headed for failure

Ben Lerer, CEO of one of New York’s most prestigious venture firms, Lerer Hippeau, shared some predictions with Fortune’s Leo Schwartz.

He believes venture firms will continue to see a bifurcation as money pours mostly into major funds like Thrive and a16z, as well as smaller, more customized funds.

“Where you’re going to die is somewhere floating in the middle, managing a few billion dollars, and not doing anything particularly well,” he told Schwartz.

While a few billion dollars is certainly not chump change, many companies have struggled to collect by the end of the spending spree in 2021. The Financial Times also reported earlier this month that the number of active venture firms in the United States has begun to decline as cash flows only to the first names. Perhaps the biggest example of a first-name VC firm announcing in 2024 that was closed was Foundry Group.