If a company’s exit expectations decline it must raise less money to generate the same returns for its VCs. Less money means smaller rounds and less space for syndicate partners. Venture Source data in the graph below (courtesy of WSJ) which shows a dramatic increase in the percentage of first investment rounds with only one VC is therefore an indication (I would say strong indication) that in aggregate the venture industry is projecting that the exit market will remain weak for some time to come.
According to the WSJ similar trends are in evidence for later rounds as well.
There are, of course, a number of other factors which add to this trend, not least the fact that as the number of VCs reduces it has become harder to find syndicate partners, but my hunch is that the exit climate is the primary driver.
Overall I think this means that smaller rounds and less syndication are likely to remain features of the market for the next couple of years. This in turn puts a higher premium on capital efficiency than at times when exits are higher and the ‘land grab’ strategy pays more dividends.