As fundraising got tougher for venture firms in 2022, many feared emerging managers, which don’t have the same networks or track records that more established VCs have, would be hit disproportionately hard. While that rang true in 2022, this year, emerging managers fared better than they got credit for.
U.S. emerging managers 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 in 2022, which was down 31% from 2021. While these numbers aren’t great, when you compare them with established managers, they start to look pretty good.
Established VCs raised $31 billion across 174 funds so far in 2023, according to PitchBook. This means established managers have only managed to raise four more funds this year than emerging managers. Despite fundraising being down across the board, emerging managers raised 26% of the total capital raised. This is up from 23% in 2022, which means as they raise more of the overall total, established managers are raising less.
Historically, emerging managers raise a similar percentage of the overall capital each year, said Vincent Harrison, a VC analyst at PitchBook. That means emerging managers are seeing as much success as usual in 2023; the numbers are just lower because the overall fundraising market is depressed.
Harrison said it isn’t surprising 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 larger managers don’t, he said.
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