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What happened: Emerging fund managers are having difficulty raising capital for their VC funds this year. Emerging VC fund managers raised $10.3B toward their respective debut funds in 2022, less than half the $21.6B raised in 2021. Pitchbook reckons the funding will drop further this year, making it even more difficult for emerging fund managers to raise capital. What the numbers say: So far this year, all VCs have collectively raised $11.7B in capital from limited partners. Between 2021 and 2022, VC funds raised $329B in dry powder, of which $171B was raised last year alone. Pitchbook data shows that U.S.-based female-led VC firms have secured only $74M so far this year. At this rate, the funding may fall short of the $2.4B raised by women-led firms last year. Relevance: Helen Min and Meena Harris, founders of VC firm Phenomenal Ventures, were able to secure only $6M in capital commitments from limited partners for their debut fund by December 2022. The duo started fundraising in January 2022 with a target of $15M. Reason behind the drop in funding: Due to the volatile economic conditions, LPs prefer to invest in established VC firms over debut funds launched by first-time fund managers. However, S2G Ventures managing director Sanjeev Krishnan believes that emerging fund managers with niche and differentiated investment theses will still be able to attract capital from LPs. |
