Two prominent investors have exited a venture capital firm co-founded by Y Combinator CEO Garry Tan and Reddit co-founder Alexis Ohanian amid a larger restructuring that includes layoffs, joining a nascent trend of Silicon Valley venture firms downsizing.
Jennifer Wolf and Jennifer Fleiss are among those exiting Initialized Capital, the early-stage venture firm founded in 2011 by Tan, Ohanian, and Harjeet Taggar, which has backed Instacart, Opendoor, Coinbase, and other companies.
Wolf joined Initialized in 2016. She served as president for just over a year beginning in 2021, one of the few women to hold a top position in venture capital, before transitioning to a role as managing partner.
Fleiss, co-founder of fashion company Rent the Runway, exits Initialized less than a year into her tenure there. She was hired after the company conducted an open search for a partner, listing an annual salary of $400,000 to $650,000, excluding bonuses and carried interest.
A blog post published Wednesday by managing partner Brett Gibson announced the restructuring and suggested that an undisclosed number of people were leaving the firm. On Wednesday, the company’s website listed 21 people on the team; an archived version of the website from Oct. 1 shows it used to employ 33. Those no longer listed on the website include Wolf, Fleiss, and staffers in sales, engineering, and administrative roles.
Gibson mentioned Wolf in the blog post, writing that she has been “truly impactful for the firm,” but did not speak to Fleiss’ exit.
Until last year, when Sequoia let go of seven staffers, a third of its talent team, and Y Combinator cut 17, layoffs at major venture firms were almost unheard of.
Initialized lost two of its prominent founders in recent years. Ohanian, also co-founder of Reddit, left in 2020 and founded a new venture firm, Seven Seven Six. Tan in 2022 was named head of the startup accelerator Y Combinator.
Wolf has known Tan since 1998, when he interned at the consulting firm Adjacency where she worked as a designer, according to a post made when she was promoted to president. Adjacency was founded by Andrew Sather, who now works at Initialized and was promoted to partner as part of the reorganization.
Gibson wrote in the blog post that the firm needed a new team to chart its course, adding that staffers who “embody the way forward” — Abdul Ly, Zoe Parrett, and Sather — are joining himself and Kim-Mai Cutler as partners.
A spokeswoman for Initialized declined to comment.
Venture firms are struggling in their fundraising efforts as exits have slowed dramatically. One Silicon Valley fund is even planning to return $275 million to investors because startup valuations are too high relative to the payoff potential.
The IPO market has been largely dormant for three years, interest rates have remained high, and valuable artificial intelligence startups are seeking major investment rounds without plans to return capital anytime soon.
“It’s getting crazy out there,” Gibson wrote in the blog post. “AI is ripping its way through software and all of technology is next.”