Most meaningful emerging manager stories from 2021

LP-GP relations evolved amid the pandemic, though most emerging managers find raising a first-time fund difficult. Here are five stories that shone a light on the plight of emerging venture managers in 2021.

Overall, venture fundraising has been robust in recent years.

But for emerging managers, fundraising can feel like a mixed bag. Most new funds managers face lengthy fundraising timelines of 12 or more months for their inaugural funds, and that conservative estimate has been extended to 18 months or more under the pandemic.

However, new fund managers who have previously established relationships with LPs or who have successful track records to boast of, have different fundraising experiences. In their case, closing a fund may happen much sooner.

On the flip side, emerging managers have never seen greater access to capital. The supply side of LPs has broadened, with an increase of family offices and accredited individual investors, both of which are fueling much of the emerging manager market in venture.

Throughout 2021, Venture Capital Journal explored the evolving GP-LP relationship for emerging fund managers and their investors.

Here are the top five emerging manager stories from the year:

Lo Toney
Lo Toney, Plexo Capital

#5

Plexo Capital launches program to help new GPs

Plexo Capital, founded by managing partner Lo Toney, announced in the fall it set up a program with education and networking services to help newly launched GPs become better fund managers. Sponsors of the program include Plexo backer Alphabet, as well as City National Bank, Practical VC and law firm Gunderson Dettmer.

Toney, who makes direct investments in companies and backs venture funds as an LP, was inspired to provide the program based on his experience of launching Plexo and seeing the barriers that diverse GPs face when starting their own vehicles.

#4

Diverse voices: How LPs encouraged the rise of diversity funds

Toney of Plexo Capital is featured prominently in this story too, which tells of how LPs have pushed for diversity among their fund portfolios. With LPs seeing how diversity drives returns, along with a groundswell of social change and a generational shift in their workforce, we reported how LPs are asking GPs to make diversity a core tenant of their strategies. However, underrepresented start-up founders – entrepreneurs who are Black, Latinx or Native American – still have received less than 1 percent of investments from VCs.

cash

#3

Revere VC launches to help LPs invest in venture capital

With more emerging venture funds looking to connect with a growing pool of LPs worldwide, fund managers and LPs alike face challenges in trying to connect with one another, much less finalize a commitment. Revere VC is hoping to solve that problem for the LPs and the GPs. The asset management firm launched in the summer to essentially help LPs meet with emerging fund managers.

Business Up

#2

Family offices look to step up their allocation to VC

Average family office allocation to venture capital has more than doubled in the last year, according to data collected by First Republic Bank and Oper8r. Winter Mead from Oper8r tells us that family offices gain a particular advantage from investing in emerging managers that they don’t get with established VCs they invest into – co-investment opportunities.

#1

Why now could be emerging managers’ time to shine

Emerging managers play an important role in venture, representing 38.3 percent of fund commitments over the past 15 years, according to PitchBook. Still, the decline in opportunities for emerging VC managers was one of the most talked about trends of 2020 and much of 2021. But the tide is turning. Emerging managers’ lack of fundraising success from established LPs amid the pandemic looks set to change soon, we reported.