The global economy has narrowed, with fundraising in the US predicted to reach only $56 billion this year, a 21% drop from 2024 and the lowest level since 2017. As the cost of capital rises, the volume of capital deployment required by these funds requires a recalibration of their focus. While the generalist mega-fund remains a crucial engine for market scale and LP diversification, the recent tightening of the economy is highlighting the indispensable value of the focused manager.

In no sector is this reality more pronounced – and more complex – than in healthcare technology. Health Tech is not an investment vertical; it is a complex, regulated ecosystem where technological innovation must be surgically applied to systemic challenges. This distinction is the core of our thesis at Nina Capital: The future of alpha belongs to the specialised, high-conviction manager.

Mega & micro-funds gain a foothold

To cope with the lack of liquidity in the market, Limited Partners (LPs) are flocking to very large, well-known funds usually over $1 billion. These generalist mega-funds are structurally compelled to deploy capital at immense scale and speed. Funds raised by established VCs like Andreessen Horowitz (a16z), Sequoia Capital, and the Founders Fund are seen by LPs as safe bets, as they are more likely to be resilient to downturns in the market and access top-tier deals.

The popularity of mega-funds is clear to see, with Pitchbook analysis finding that just 12 firms secured over half of all venture cash in the first half of 2025, and the top 30 firms collected almost three quarters of all capital raised. The Founders Fund alone raised $4.6 billion during this timeframe.

Smaller funds like micro-funds or specialist early stage funds are also gaining traction at this time, outperforming mid-size generalist funds. These are typically less than $100 million and have a tight focus on a specific sector or sub-sector – such as deeptech or digital health. Their small size and specialism makes them nimble, enabling better deal flow, talent identification, and assessment of technical merit.

The bifurcation of capital

The movement of massive institutional players into Silicon Valley further highlights the need for specialised navigation. Recent headlines, such as Goldman Sachs' acquisition of Industry Ventures, reflect a clear trend: Wall Street is expanding its presence in private markets. As Matrix managing partner Antonio Rodriguez noted in response to that deal, such acquisitions show "how institutional investors are moving deeper into private markets, even as the venture landscape grows more bifurcated in terms of performance and strategy."

This institutional flood of capital, while validating the importance of the private markets, makes the environment for founders more confusing. With vast, diversified pools of capital competing for every deal, founders need partners who can cut through the noise and provide strategic focus. The market is splitting into two complementary strategies: one side prioritises scale and asset management, driven by diversification and broad market access (the generalist mega-funds); the other side is built on deep partnership, driven by domain expertise and hands-on, sector-specific strategy (the specialist small funds). The wisest LPs are now constructing portfolios that strategically leverage both for comprehensive market coverage and outperformance.

Specialisation as a performance driver

The data increasingly supports the specialised model. Smaller, more focused funds, particularly those with a strong sector mandate, demonstrate better net returns. They achieve this because their investment strategy is built on intellectual scaffolding, not market froth.

When it comes to healthtech, investment requires precision and focus. VC teams which include seasoned Health Tech operators, can build true conviction on disruptive themes, backed by embedded expertise and constantly updating research on payers, regulatory bodies, clinical adoption cycles, and hospital politics. When investing, these VCs are not learning on the job; they are deploying a pre-existing blueprint for success within that specific sub-sector. This focus translates into three direct benefits for the founder:

1. De-risking capital: they move faster because their due diligence is smarter. They know the regulatory pitfalls and the clinical needs, which means the capital they deploy is intrinsically "safer" and more targeted. This reduces the founder's time-to-market and lowers the risk of strategic missteps
2. Strategic accountability: they do not just take a board seat – they become a high-signal partner. Because they understand the founder’s world deeply, they can  challenge them with specific, high-leverage questions about clinical trials, payer reimbursement, and enterprise sales cycles – the questions a generalist fund can't even formulate
3. Network density: their specialised focus creates a uniquely dense and relevant network. When a portfolio company needs to connect with a leading German health system CEO or a key executive in a US-based Health Plan, their rolodex is curated, not scattered. This accelerates market penetration far beyond what a multi-sector fund can provide

The future is defined by purpose

Although excitement around AI has improved overall sentiment among LPs, it hasn't yet translated into faster capital deployment and liquidity remains low. Unless distributions recover, fundraising is expected to remain difficult for most managers throughout 2026. This is rapidly transforming VC into a network of specialists and big names, driven by the bifurcation of capital.

Mega-funds will reach new limits from this year, with A16z reportedly in talks to raise a $20 billion venture fund for AI. This would be four times larger than A16z’s previous record of $5 billion, which closed in 2022. And, would exceed the total sum of US venture funds closed in Q1 of 2025 ($17.4 billion). Yet, the immense scale required for their returns means their risk is diversified, while their alpha generation may be constrained and focused more on broad market returns.

Deploying capital at that scale may require complementing their approach with the insights and proximity of specialist early-stage investors. The market correction we are witnessing is not just a cycle; it's a structural realignment where performance matters more than momentum. LPs are now gravitating toward managers who can articulate a clear, differentiated, and defensible investment thesis.

For founders in healthtech, the choice of capital is more critical than ever. The most promising companies look for partners who grasp the profound complexity of their mission, especially at their earliest stages. More than ever before, founders need partners who can provide capital at scale, and can help them navigate the complex path to clinical and commercial success. Amidst the bifurcation of the VC landscape, the path to outperformance requires an early stage investor with deep domain knowledge and a high-conviction mandate.

The future of VC will be defined by purpose. At Nina Capital, our purpose is healthtech, and we believe our specialised strategy is the most effective for the founders building the next generation of patient care. In this new landscape, depth complements breadth, and in complex verticals, depth is the key to outperformance.

For more startup news, check out the other articles on the website, and subscribe to the magazine for free. Listen to The Cereal Entrepreneur podcast for more interviews with entrepreneurs and big-hitters in the startup ecosystem.