A VC firm does something rare: Gives money back

Venture capital firms raise money — lots of it — and invest it in start-ups in hopes of generating big returns.

- ERIN GRIFFITH

One thing they rarely do is give the money back. Yet that is what CRV, one of the industry's oldest firms, is planning. The firm will tell its investors this week that it will return the $275 million that it has not yet invested from its $500 million Select fund, which is designed to back more mature startups.

The reason, four of the firm's partners said in a joint interview, is that market conditions have changed for the worse. The valuations for startups are too high relative to their potential for a payoff, the partners said.

CRV's decision is part of a reset that is happening around the venture capital industry after the go-go years of the pandemic. In 2020 and 2021, many startups and investment firms raised outsize funding, expecting the boom to keep going.