There are 2,984 active venture capital firms as of 2026.1
That’s more VC firms then there are TJ Maxx and Marshall’s locations globally. That’s more VC firms than there are Jimmy John’s. But then again, it’s less than the number of Jersey Mike’s….
So we sat down with Ben Thornley from Tideline and asked a simple question, are there too many VC’s?
Can the cottage industry which began by funding ex semiconductor employees building Atari and defense tech, sustain itself, and return capital when there are so many more fishing lines in the pond?
2026 was the first year on record when vc funds declined, falling from 3,054, to 2,984. But this year is also the year that Anthropic, Open AI, and SpaceX are preparing to launch their IPO’s, which is expected to produce roughly $200B of liquidity for the LPs who invested in the venture funds that backed them.2 Which will allow those same LPs the opportunity to reinvest that capital and make their next round of fund commitments.
So we asked Ben Thornley from Tideline who guides some of the world’s largest LPs, are there too many VC’s and if so how does it affect Impact Investing?
His answer: the problem isn’t too much VC. It’s not enough of everything else. The capital stack in impact investing is barbelling, institutions are piling into later-stage, more proven strategies while early-stage impact markets are overcrowded and lacking liquidity.
Ben Thornley is the co-founder and managing partner of Tideline, one of the field’s leading research and advisory firms on impact investing. Tideline is who the largest limited partners in the world like Temasek, institutions managing hundreds of billions in assets, call when they’re trying to make sense of a market they don’t fully understand yet.
So Ben was able to offer his honest and unbiased view. He wasn’t pitching a fund or defending a track record. He’s spent years watching how institutional capital actually moves and where it gets stuck. And in this episode you’ll hear how;
The liquidity problem is more structural than the field admits.
Secondary markets for impact are barely a market at all. You can count the number of impact secondary funds on one hand. That means every exit is harder, slower, and more expensive than it needs to be. When the transaction costs of being an impact investor are that much higher than being a conventional investor, LPs make a rational choice to concentrate elsewhere.
Impact investors may be harder on themselves than the work requires.
The field has built purity tests around impact measurement that would disqualify investments doing genuinely good work. Ben’s framing of the dartboard and concentric circles is useful: the bullseye is real, but the adjacent rings aren’t impact washing, they’re just a different kind of impact. Loosening that a little might be what actually moves capital.
America is ceding its leadership in this space and the rest of the world isn’t waiting.
Europe and Asia, facing climate and inequality pressures more acutely and more honestly, are becoming the center of gravity for institutional impact investing. The Japanese pension fund, the largest in the world, just announced its beginning its impact journey.
So if you find yourself wishing to zoom out and see the broader chessboard of the impact investing field, this episode will be a great fit as it unpacks the macro-economic drivers that shape how impact capital is allocated. These structural forces are the reason some managers reach a fund three, and some companies rapidly scale. And to solve the problems we discuss in the episode we need to take an honest look at the plumbing of the private capital markets and the incentives embedded within.
https://nvca.org/wp-content/uploads/2026/04/NVCA-2026-Yearbook-4.9.26.pdf
https://finance.yahoo.com/markets/stocks/articles/openai-spacex-anthropic-eye-blockbuster-173054886.html
