Key Takeaways
- • Proskauer's 2026 Under the Microscope report analyzed 28 data points across 61 US-focused venture capital funds with recent vintages, with target fund sizes ranging from $40 million to $6.5 billion and a median of $1.1 billion.
- • A 12-month fundraising period is used by 72% of funds, five-year investment periods are the most common at 56%, and six-year periods appear in 35% of funds.
- • Recycling provisions are widely used, with caps of 120%–130% of commitments common, and nearly all sampled funds impose no time limit on follow-on investments after the investment period.
- • 80% of funds use a European-style distribution waterfall and 90% have no preferred return, while about 62% allow carried interest to rise to 25% or 30% based on performance.
- • 94% of funds permit GP removal for cause, typically requiring a two-thirds investor vote, and 87% contain no removal-without-cause provision.
Summary
Law firm Proskauer released its 2026 Under the Microscope: Fundraising Terms and Trends in US Venture Capital Funds report, which analyzes 28 data points across 61 venture capital funds with recent vintages. Each fund examined was either focused on the US or included the US as a key investment geography. Target fund sizes ranged from $40 million to $6.5 billion, with a median of $1.1 billion, according to the report.
The report indicates that venture fund managers are adapting to longer holding periods and the need to support portfolio companies through later funding rounds. Proskauer partner Brian Schwartz said managers are "planning for those possibilities upfront, particularly through extension, recycling and follow-on investment provisions." He framed the central question for venture managers as how much flexibility they will need to support portfolio companies through later rounds and extended holding periods.
On fundraising and investment periods, 72% of funds use a 12-month fundraising period, though Proskauer notes added flexibility in more recent vintages. Five years is the most common investment period at 56%, followed by six years at 35%. On capacity to reinvest, recycling provisions are widely used, with caps of 120%–130% of commitments particularly common. Nearly all sampled funds place no time limit on follow-on investments after the investment period.
Economic terms show consistency in structure. Eighty percent of funds use a European-style distribution waterfall, and 90% have no preferred return. Approximately 62% provide for performance-based carried interest increases to 25% or 30%. On governance, 94% of funds provide for GP removal for cause, most commonly requiring a two-thirds investor vote, while 87% of sampled funds do not include removal without cause.
The report indicates that venture fund managers are adapting to longer holding periods and the need to support portfolio companies through later funding rounds. Proskauer partner Brian Schwartz said managers are "planning for those possibilities upfront, particularly through extension, recycling and follow-on investment provisions." He framed the central question for venture managers as how much flexibility they will need to support portfolio companies through later rounds and extended holding periods.
On fundraising and investment periods, 72% of funds use a 12-month fundraising period, though Proskauer notes added flexibility in more recent vintages. Five years is the most common investment period at 56%, followed by six years at 35%. On capacity to reinvest, recycling provisions are widely used, with caps of 120%–130% of commitments particularly common. Nearly all sampled funds place no time limit on follow-on investments after the investment period.
Economic terms show consistency in structure. Eighty percent of funds use a European-style distribution waterfall, and 90% have no preferred return. Approximately 62% provide for performance-based carried interest increases to 25% or 30%. On governance, 94% of funds provide for GP removal for cause, most commonly requiring a two-thirds investor vote, while 87% of sampled funds do not include removal without cause.
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