Latest Report Shows Emerging Managers Are Disrupting Venture Capital

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Decile Group's latest report show that the venture capital industry witnessed significant transformations in 2024, led by a new wave of emerging managers in venture capital. The report highlights the evolving profiles of these managers, their fund structures, and the factors influencing their success or failure. With data from over 850 new and emerging VC firms annually, the insights reveal the critical trends shaping the future of venture capital.

Let's take a quick over view of the report.

Key Questions Driving the Change

The report covers these 4 main questions:

1. Who are the emerging managers in venture capital?
2. How are these managers approaching firm-building and fundraising?
3. What determines success or failure among emerging funds?
4. Which sectors are defining current investment trends?

Profiles of Emerging Managers

Here are the results and key takeaways.

Geography: A Global Expansion

In 2024, emerging managers represented 97 countries, highlighting the growing democratization of venture capital. While the U.S. (39%) and Europe (22.3%) led fund creation, regions like MENA and Africa accounted for 10% of new managers, demonstrating meaningful growth.

Demographics: Younger and More Diverse

• Female and non-binary managers grew from 25% in 2023 to 27% in 2024.
• Managers under 40 increased from 35% in 2023 to 46% in 2024.
• Cross-industry transitions surged, with 48.8% of managers entering venture capital from other fields.

Fund Structures and Composition

Rise of Solo GPs

Solo general partners (GPs) represented 53.4% of emerging funds in 2024, reflecting the viability of both solo and team-led fund models. Additionally, the percentage of women-led or mixed-gender teams rose from 27% to 32%.

Smaller Fund Targets Dominate

• 67% of funds targeted under $10 million in 2024, aligning with strategies to start small and oversubscribe by 2x.
• Early-stage investing remained key, with 94.7% focusing on seed or earlier stages.

Regional Focus

North America and Europe remained dominant, accounting for 56.7% of new fund launches. Emerging markets, however, saw a decline in focus, reflecting risk-averse fundraising conditions.

Challenges Facing Emerging Managers

1. Strategic Uncertainty (41.8%)

Strategic challenges, such as unclear investment theses or fund types, led to 41.8% of fund launches being delayed or canceled.

2. Fundraising Difficulties (25.5%)

Limited LP networks and inadequate preparation hindered fundraising efforts for many new managers.

3. Resource Constraints (21.4%)

Time and financial limitations posed significant barriers, with 40% of successful managers dedicating at least 20 hours per week to fund-building.

4. Team Dynamics (11.2%)

Team-related issues, such as finding co-GPs or partner disagreements, affected a smaller but notable percentage of managers.

Success Indicators for Emerging Managers

1. Prior Investment Experience

Managers with angel investment experience averaged higher PACT volumes, but 60% of new managers in 2024 launched with five or fewer angel investments.

2. Targeted LP Networks

LP networks of 26-50 members yielded the highest commitment averages, underscoring the importance of quality over quantity.

3. PACT Velocity

Doubling PACT volume monthly correlated with greater fundraising success, particularly for funds under $10 million.

Sector Trends in 2024

• AI and Machine Learning (25.3%) and DeepTech (13.4%) led projected investment focus areas for 2025.
• Impact sectors such as Health, Climate, and Diversity accounted for 26% of 2024's funds.
• Emerging managers increasingly adopted sector-specific strategies, with 73.5% choosing focused approaches.

2025 Outlook

Emerging managers are redefining venture capital with their global representation, diverse demographics, and innovative approaches to fund creation. Key success factors include targeting smaller fund sizes, building focused LP networks, and maintaining fundraising momentum.

Looking ahead, emerging managers in venture capital are well-positioned to capitalize on trends like advanced technology investments and sustainable innovation, shaping a more inclusive and dynamic industry in 2025.

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