VC Fund Returns: Carta's Q3 2025 Report Insights

A new report from Carta sheds light on the current state of venture capital fund performance, offering a sobering reality check for both founders and limited partners (LPs). Carta's Q3 2025 VC Fund Performance Report, which analyzed 2,835 funds representing $118 billion in commitments, reveals that most VC funds raised since 2017 are unlikely to meet their LPs' return expectations. However, the data also provides crucial takeaways for founders navigating the current fundraising landscape.

Here's a breakdown of the key insights:

1. The 3x TVPI Gold Standard Remains Elusive for Most Funds

In the venture capital world, a 3x Total Value to Paid-In Capital (TVPI) is considered the benchmark for excellent performance, indicating a fund is on track to return three times the capital invested by LPs. The latest data, however, paints a stark picture:

• For the 2017 vintage, only the 90th percentile achieved a TVPI of 3.52x.
• The 2018 vintage saw its 90th percentile hit 3.07x.
• In contrast, the 2017 median TVPI stood at a mere 1.76x.
• The 2018 median was even lower, at just 1.38x.

This means that even among older, more mature funds, only the top 10% are reaching the 3x mark. The median fund from 2017, now eight years old, is returning less than twice its capital.

What this means for founders: While top-tier VCs continue to deliver strong returns, there's significant dispersion in performance. Choosing the right investment partner is more critical than ever, given the vast gap between top-decile and median funds.

2. The 2021 Vintage Faces Significant Challenges

Funds that closed in 2021 are in a particularly difficult position. These investors likely deployed capital at premium valuations during the market's peak. The data for the 2021 vintage shows:

• A 75th percentile Internal Rate of Return (IRR) of just 5.9%, the lowest among all vintages from 2017-2023.
• A 90th percentile IRR of 14.8%, also the worst among recent vintages.
• A median TVPI barely exceeding 1.0x after nearly four years.

For context, the 2017 vintage had a median IRR of 26% at the same point in its lifecycle, while the 2021 vintage sits at a dismal 0.2%. These funds invested at peak valuations only to witness a market reset, leaving many of their early investments underwater on a marked-to-market basis.

What this means for founders: If your lead investor is from a 2021 fund, they may be more cautious about follow-on investments due to existing paper losses. Understanding their portfolio dynamics is key.

3. Smaller Funds Continue to Outperform Larger Counterparts

The report reaffirms a long-standing trend: smaller venture funds consistently generate higher returns across nearly all performance metrics. This phenomenon is attributed to several factors:

• Smaller funds can make earlier-stage investments with smaller checks.
• They can secure meaningful ownership stakes at lower valuations.
• A single successful investment can have a disproportionately large impact on their overall fund performance.

While the median fund in Carta's dataset is under $100 million, approximately 67% of the total committed capital resides in funds larger than $100 million. The bigger funds command more capital, but the smaller funds are delivering superior returns.

What this means for founders: Don't automatically gravitate towards the biggest names in venture. An emerging manager with a $30 million fund might be more driven, offer more hands-on support, and ultimately prove to be a more valuable partner than a mega-fund deploying capital from its multi-billion-dollar pool.

4. A Glimmer of Hope: 2022 and 2023 Vintages Show Promise

There's positive news for funds that began deploying capital after the 2021 peak. The 2022 and 2023 vintages are tracking better than their 2021 predecessor at similar stages in their lifecycles:

• The 2022 vintage (11 quarters in) boasts an 18.4% IRR at the 90th percentile.
• The 2023 vintage (7 quarters in) shows an even stronger 23.4% IRR at the 90th percentile.

These figures are significantly higher than the 2021 vintage at comparable points. Funds that invested into the "reset" valuations of 2022-2023 are building portfolios with more reasonable entry prices, laying a stronger foundation for robust returns.

What this means for founders: If you secured funding in 2023 or 2024 at these recalibrated valuations, you're likely in a better position than you might think. Your investors acquired stakes at prices that allow for sustainable growth into your valuation.

5. The DPI Problem: Awaiting the 2026/2027 IPO Wave

While TVPI measures a fund's theoretical value, Distributions to Paid-In Capital (DPI) reflects the actual cash returned to LPs. The DPI figures are stark:

• The 2017 vintage, the best performer, has a median DPI of just 0.28x.
• More than half of all funds from the 2018-2024 vintages have a DPI of exactly zero.

This highlights a severe exit problem in the market, characterized by a downturn in IPOs, sluggish M&A activity, and the demise of SPACs. Even funds with strong paper returns have struggled to convert those gains into distributable cash.

However, there's anticipation that a strong class of IPOs in 2026/2027, including high-profile companies like Databricks, SpaceX, Canva, Stripe, and Anthropic, could significantly alleviate this liquidity crunch.

6. Time Between Funding Rounds Stabilizes

After years of increasing intervals between funding rounds, the latest data suggests this trend is finally leveling off:

• The median time from Seed to Series A has decreased to 25 months.
• The median time from Series A to Series B remains steady at approximately 30 months.

While these periods are still considerably longer than the 18-month cadence prevalent during the bull market, the extension appears to have halted.

What this means for founders: Plan for a 2 to 2.5-year runway between funding rounds. This is the new normal. While faster fundraising is always a bonus, it shouldn't be the basis of your financial modeling.

Additional Key Metrics for Founders

Beyond the major trends, several other metrics offer valuable insights:

• Down rounds have fallen to 16%, the lowest rate since 2022. This indicates that the valuation reset is largely complete, a significant improvement from the 19%+ seen in most of 2023-2024.
• 28% of Series A rounds are still bridge rounds. While lower than the 2023-2024 peak, this figure remains elevated compared to pre-2022 norms. Founders raising a "Series A-2" are not alone.
• Only 49% of 2019 seed companies successfully raised a Series A within four years. Conversion rates have worsened since then, meaning cohorts from 2021 or 2022 are likely tracking even lower.
• Venture capitalists still possess significant dry powder, but it's concentrated in newer funds. Vintages from 2017-2020 are over 89% deployed, whereas the 2023 vintage still has 39% of its capital unspent. This means capital is available, but it resides with newer funds actively building their portfolios.

The Evolving Landscape of Venture Capital

The venture capital industry is undergoing a significant and often painful rationalization. The reality is that most funds raised in the past five to six years will