One of the biggest venture capital trends of the last few years was early-stage firms raising “opportunity” funds to make follow-on investments into their most successful bets. But amid a tougher fundraising market that impacts both VCs and startups, muted exit environment and slowdown in late-stage funding, will that trend continue?

Earlier this week, TechCrunch first reported that Lux Capital was raising money. What stood out was the firm ditching its opportunity fund and combining its early- and late-stage strategies into one vehicle that will mainly focus on early-stage deal-making. This came just weeks after Y Combinator announced it was pulling back from its late-stage strategy too.

At first, I thought these were just the first few indicators that 2023 would likely be the year the opportunity fund trend dies, but of course, it’s not that simple.

I think whether to raise an opportunity fund will become a much more debated question for firms looking to raise money this year. I think we will see significantly less of them, but there will still be firms raising them with good reason. Khosla Ventures and Canaan appear to be among these: Back in January, Khosla started fundraising for a slate of new funds, including an opportunity fund, and on Thursday, Canaan said it had raised $850 million across two funds, its flagship early-stage fund and a late-stage strategy, my colleague Connie Lozios reported.

To raise an opportunity fund this year or to not raise an opportunity fund? by Rebecca Szkutak originally published on TechCrunch