Does this mean that VC firms also need to ‘fundraise’?

Yup, that’s exactly right. Startups need to fundraise to convince Venture Capital firms, business angels, etc to give them money in exchange for equity. The case for VC firms is similar. General partners must convince some of the organizations aforementioned to invest in the fund with the promise of big returns (between 5X and 10X) in a certain period of time (usually 10 years).

The VC firms must then go on to make clever investments so they can give the limited partners their money back… plus a profit.