As the fundraising took off it will be more difficult for venture firms in 2022, many fear emerging managers, who do not have the same network or track record that more established VCs have, will be hit in a bad way. While this is true in 2022, this year, emerging managers are better than they get credit for.
Emerging US managers have raised $11 billion this year across 170 funds through the third quarter of 2023, according to data from PitchBook. Emerging funds are not on track to reach the $41 billion they raised by 2022, down 31% from 2021. While these numbers aren’t great, when you compare them to established ones managers, they start looking good.
Established VCs have raised $31 billion in 174 funds so far by 2023, according to PitchBook. This means that established managers were only able to raise four more funds this year than emerging managers. Despite the decline in fundraising, emerging managers raised 26% of total capital raised. It increased from 23% in 2022, which means that while they raise more of the total, the established managers are getting smaller.
Historically, emerging managers have raised the same percentage of total capital each year, said Vincent Harrison, a VC analyst at PitchBook. That means emerging managers see as much success as usual in 2023; the numbers are lower because the overall fundraising market is depressed.
Harrison said it’s no surprise that emerging managers are still seeing success in a tighter fundraising market. Despite market conditions, these firms still offer LPs access to the asset class and focus areas within VC that many managers cannot, he said.