| You're receiving Dealmaker for free. Upgrade to a paid subscription to access all of our award-winning tech and business journalism. Subscribe to The Information here for 25% off your first year (normally $399). Welcome back! Accel, a blue-blood of Sand Hill Road, is thinking smaller. The firm publicly filed Thursday that it has raised $1.35 billion for its latest growth fund to invest in mature startups. That's nearly a quarter less than the $1.75 billion it raised for its last growth fund in 2021. The smaller fund is a tacit admission by one of the industry's leaders of the challenges facing scores of venture capital firms—that there just aren't enough good investment opportunities anymore, particularly among late-stage startups. Accel, which manages nearly $30 billion overall, told limited partners the move to downsize the fund was intentional and that it had five times more demand from investors than its target, a person familiar with the matter said. Accel's growth investments this year include Vercel, which offers AI tools to developers, and Cyera, a cybersecurity startup. Its past wins include cybersecurity giant Crowdstrike and software firm Qualtrics. The move contrasts with others in the industry that have raised larger and larger funds, even as initial public offerings and acquisitions remain sparse. Thrive Capital, a backer of OpenAI, Stripe and Databricks, said its ninth fund would commit $4 billion to late-stage startups, about 60% more than its previous fund. Lightspeed Venture Partners is looking to raise about $7 billion for three new funds, with the target for its growth fund slightly topping what it raised for those mature startups in 2022. Other rivals have struggled to meet ambitious fundraising targets. Insight Partners raised about $10 billion for private tech investments, about half what it sought to raise a couple years earlier. The VC industry, meanwhile, is still far from working its way through the backlog of startups that got excess funding, at excessive valuations over the last few years. About 1,300 private tech firms can call themselves unicorns, with valuations over $1 billion, and 1,000 reached that designation since 2021, according to Goldman Sachs. But just 291 have been sold or went public over that span, according to Goldman Sachs. Venture capitalists have increasingly debated whether bigger is better. Larger funds ensure firms guarantee fatter fees—typically 2% of the assets they manage—while general partners' share of profits on startups' gains—usually 20%—have become more uncertain. "Today, with fund sizes where they are, many are instead looking to optimize for the 2%. This means raising as much as possible, and deploying as much as possible (as quickly as possible)," wrote Jamin Ball, a partner at Altimeter, on his "Clouded Judgment" blog in October. He added: "This is where the incentives start to diverge between [general partners] and Founders." | 
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