Walden International, the US venture capital firm, has unveiled plans to reduce the size of its $1bn fund by 25 per cent due to the current paucity of viable investment opportunities which is making billion dollar plus venture capital funds unsustainable.
According to US newspaper San Jose Mercury News, Walden decided to cut $250m from the firm’s Pacven Walden Ventures V, which achieved final closing of $1bn in April last year. News of the cutback follows last week’s decision by Worldview Technology Partners to do likewise with its $1bn fund.
Walden decided to reduce the size of the fund due to an excessive amount of capital chasing too few deals. According to the US newspaper, the firm had considered cutting the fund by as much as $450m, but decided against such a drastic cut because it might have left the firm without sufficient capital in the event of an upturn in opportunities.
In a move suggesting that Walden is already preparing for busier days, the firm has appointed two new general partners, Mary Coleman, to join the firm's Palo Alto office, and Jack Gao, who will be based in China.
As the downturn in US venture capital continues, market participants continue to embrace the view that significantly less capital can be meaningfully deployed in early stage investments than had been the case before the market correction. Vinod Khosla, of leading Silicon Valley investor Kleiner Perkins Caufield & Byers, recently went on record saying that in the current climate start-ups will need only $30m to become profitable, compared to $150m during the internet bubble two or three years ago.