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TLDR: With interests rising and growth slowing down, it's getting harder for VCs to find capital. Therefore, some funds have stopped investing in new companies and are just managing their existing portfolio. These funds will most likely slowly wind down their activities and shed employees as the size of their portfolio dwindles.

Unclear to me how it's an issue for investors however.

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As I commented independently, I'm not sure how this isn't both expected and a good thing.

I think the issue is that the VC funds are sitting on billions of unallocated capital with interests rates at levels not seen in decades. LPs might want their money back for that sweet risk free return but VCs aren't going to return even though they're not investing it either.

If the VCs haven’t made a capital call, then that unallocated money is likely still sitting with the LPs collecting that sweet risk free return.

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