Limited partners, the pension funds and family offices that supply the capital that venture capital funds invest, are ordinarily silent participants. That has, in the Australian VC market over the past year, changed.

What has changed

The three largest institutional LPs in the Australian VC market have all, in different forums, expressed public views about fund performance, fee structures, and portfolio construction. A large super fund committed publicly to no new commitments in Australian VC for a period of 18 months while it reviews its allocation model.

Why now

Two reasons. First, the 2022 correction in global tech valuations has produced Australian fund returns for the 2020–22 vintages that are, in the LP community's view, weaker than either the funds' own marketing or industry aggregate figures suggest. Second, several individual funds have distributed disappointing final returns from earlier vintages.

The consequence, for founders, is that the next Australian VC fundraising cycle will be more difficult and more selective than any since 2018.