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Illustration: Sarah Grillo/Axios

We're living through the third financial crisis of the modern venture capital era, following the dotcom crash and the housing bust.

The big picture: There wasn't a widespread push for "fund size cuts" in 2008, save for a few efforts tied to funds that had closed just before Lehman went under. While it's too soon to know for sure which path LPs will take this time around, odds are that it will look similar — with already-raised fund sizes remaining static.

Three reasons:

  1. Today's LP universe is more diversified than it was in 2001, when university endowments and private foundations ran the show (and many of the managers knew each other). It would be much harder in 2020 to coordinate consensus, particularly with massive money managers like sovereign wealth funds for whom venture is a tiny allocation.
  2. There aren't fundamental doubts about the legitimacy of tech startups. The 2001 experience wasn't just that firms had raised too much money in light of falling valuations, but also fears that the internet economy may be a mirage.
  3. Timing plays in general partners' favor. The dotcom crash was a slow burn that took nearly a year before limited partners agitated for fund size cuts. One big reason that we didn't see the same moves in 2008–2009 was that the recovery began in relatively short order. It likely will be harder to restart the U.S. economy than it was to shut it down, but most LPs I've spoken with believe that we'll at least be heading in a positive direction by Q3 (although several are worried about President Trump's itch to end lockdowns before the virus is contained).

But, but, but ... This isn't to say all will be copacetic between general and limited partners. Don't be surprised to see some pretty epic battles over clawbacks, particularly given how time-concentrated many VC funds have become.

The bottom line: U.S. venture capital funds raised $104 billion during 2018 and 2019. Don't expect retroactive shrinkage.

Go deeper: Venture capital has no guesses as to what 2020 has in store

Go deeper

Scoop: U.S. begins denying Afghan immigrants

Afghan refugees on a bus bound for temporary housing after arriving in Greece. Photo: Byron Smith/Getty Images

The Biden administration has begun issuing denials to Afghans seeking to emigrate to the United States through the humanitarian parole process, after a system that typically processes 2,000 applications annually has been flooded with more than 30,000.

Why it matters: Afghans face steeper odds and longer processes for escaping to the U.S., despite the earlier sweeping efforts by the Biden administration to assist its allies. Immigration lawyers and advocacy groups say the government has set untenable barriers to a safe haven in the U.S.

2 hours ago - Politics & Policy

Dems invoke Robert Byrd to sell Manchin on Senate rules changes

Photo illustration: Shoshana Gordon/Axios. Photos: Diana Walker, Chip Somodevilla/Getty Images

A small group of Senate Democrats is privately invoking the legacy of late West Virginia Sen. Robert Byrd in an effort to sway Sen. Joe Manchin (D-W.Va.) to support their plans to change the chamber's rules, Axios has learned.

Why it matters: Manchin — who holds Byrd's Senate seat — has often referenced his predecessor's strong moral conviction and insistence on preserving the Senate as an institution, as justification for some of his tough positions.

House votes to ban imports from Xinjiang over forced labor concerns

House Speaker Nancy Pelosi. Photo: Anna Moneymaker/Getty Images

The House voted 428-1 on Wednesday to pass a bill that would ban all imports from the Chinese region of Xinjiang unless the U.S. government determines that the products were not made with forced labor.

Why it matters: Both the Trump and Biden administrations, as well as several foreign parliaments, have recognized China's repression of Uyghurs and other Muslim minorities in Xinjiang as genocide.