| Hi, it’s Katie Roof in California. New data shows venture firms are in trouble — and some are feeling it more than others. But first... Three things you need to know today: • Microchip Technology was hit with a cyberattack, forcing it to scale back operations
• OpenAI will let businesses customize its most powerful AI model
• Uber hired a former Tesla executive to help lead the ride-share company’s conversion to electric vehicles Is 2024 the best to ask investors for money — or the worst? It depends who you ask. In venture capital, this year has seen no shortage of massive funding hauls. VC firms Kleiner Perkins, Andreessen Horowitz, Thrive Capital and Iconiq, to name just a few, have all brought in billions of dollars in new capital. But many of the smaller, lesser known funds that formed before or during the pandemic boomtimes for tech are having trouble getting investors’ attention. A pattern is emerging in the world of VC that has been echoed across the tech industry: Money is becoming more concentrated. Put another way, the rich are getting richer. Investors in VC funds, or limited partners, “have become more selective and cautious,” research firm PitchBook said in a recent report. At the same time, average funding has fallen. One reason for the pullback is that startup valuations are languishing in most sectors outside of artificial intelligence, and returns have stalled. “The median investor in vintages 2015 to 2022 has not broken even yet,” PitchBook found. Your average venture investor from the last decade has yet to make much or any money. In fact, new data from Carta shows that many funds haven’t even begun to recoup investment dollars spent: As of last year, almost one-third of funds launched in 2017 hadn’t returned capital from a single investment. Beezer Clarkson, an investor at Sapphire Ventures and a VC limited partner, said that a track record of returns is now a must for VCs trying to raise funding. In 2021, there was a “a major exit market,” she said, noting that any firm that can’t show significant wins “when the world is flush with capital” is going to have a tough time raising right now. At the end of the day, limited partners “are looking for managers that have shown the way to produce returns,” she said. That’s good news for the largest players in the industry. Limited partners are “leaning into established vehicles,” Clarkson said. However, it will hurt upstarts. While some nascent venture firms have been able to raise money, most of the partners who are getting checks already had a strong track record from a previous firm, she said. Right now, “the big funds have a real advantage,” said Howard Morgan, chairman at B Capital Group. “Existing investors are flocking to quality and big-name firms,” he said. Morgan predicted that emerging fund managers would continue to have a tough time. And given investors’ limited patience with AI spending — things might get still tougher before they turn around. —Katie Roof A new twist in the saga of Paramount Global — Edgar Bronfman Jr. formally submitted a $4.3 billion bid to take control of the media company from Shari Redstone and quash an existing offer from Skydance Media, according to a person familiar with the proposal. The bid by the media executive and Seagram Co. spirits heir would sweeten the deal for Paramount’s minority investors. Taiwan Semiconductor Manufacturing Co. broke ground in Germany on a €10 billion chipmaking plant, its first factory in Europe. Condé Nast and OpenAI reached a multiyear partnership deal. A US governor says Elon Musk’s X is a “dangerous” purveyor of misinformation. | 
