Big money-management firms expanded their dominance in Silicon Valley last quarter, crowding out venture capitalists in a once-niche business and putting 2021 on pace to nearly double last year’s record in startup financing.

Hedge funds, mutual funds, pensions, sovereign-wealth groups and other so-called nontraditional venture investors were more active in the second quarter than in any previous period, according to research firm PitchBook Data Inc. These firms participated in 42% of startup financing deals, and those deals accounted for more than three-quarters of the invested capital, according to Pitchbook. READ MORE