The changes at Initialized are undoubtedly substantial—along with an undisclosed number of employees, managing partner Jen Wolf and partner and Rent the Runway cofounder Jenny Fleiss will be leaving the firm. In the announcement, Initialized managing partner Brett Gibson wrote out publicly what I usually hear privately—that this just isn’t the marketplace they planned for, and that it’s time to adjust or falter.
“We moved fast and got things done,” Gibson wrote in the Oct. 2 blog post. “Over time, we found success and grew, but we lost a step, added too many layers, expanded the priorities we serviced. It’s time to get back to basics.”
It’s an arresting flash of transparency (in my experience in the private markets, people usually like to hide from their own layoffs whenever possible). It would be easy to focus solely on Initialized—the 2022 departure of Garry Tan marked a new chapter and brought with it the inevitable tensions of a cofounder’s exit. But that would be the proverbial “missing the forest for the trees” scenario. Looking around the VC forest, these kinds of layoffs and restructurings have been happening for some time.
This year alone, we’ve seen layoffs and restructurings at firms large and small, historic and new. In March, Y Combinator cut its late-stage fund and the team associated with it. In July, Sequoia laid off several members of its operations team, while across the pond, London’s Octopus Ventures announced it would lay off eight members of its investment team. There have been cases of VC firms folding, like OpenView in Boston. Techstars did layoffs of its own this year, while Coatue closed its London office just two years after it opened. Everyone, more or less and implicitly or directly, cites “current market conditions.”
And, to be sure, the market of the last few years hasn’t exactly been a breeze. Zero interest rates came to a grinding halt in 2022, exit opportunities dried up, and concerns about an LP crunch intensified.