Will 2023 Be Better Than 2022 for Raising by Emerging VC Fund Managers?

Over the last few weeks, I’ve chatted with several emerging VC fund managers who are preparing to raise their first or second funds. They’ve seen the headlines about established mega funds cutting their fundraising targets. And they’ve chatted with their peers who went to market in 2022. There’s lots of uncertainty about what to expect if they go out to raise in the second half of this year.  

The fundraising environment for emerging VC fund managers has been difficult for the last eighteen months for several reasons. But one of the variables has changed, I think: the NASDAQ stock index. In 2022, the index was down over 30%. It declined most of the year and no one knew when it would bottom. The sentiment toward tech (and public equities in general) was negative in 2022, with many potential LPs reluctant to make new investments in emerging funds. Through the end of July of this year, though, the NASAQ is up ~35%. I wouldn’t call sentiment in 2023 optimist, but so far it’s better than it was in 2022.

I’m not sure what the NASDAQ will do—or what fundraising environment emerging VC fund managers will face—the rest of this year. If the NASDAQ rises further or at least stays in positive territory, I wouldn’t be surprised if LPs are more receptive to pitches from emerging VC fund managers than they were in 2022. I’m curious to see how the fundraising environment for emerging managers shapes up for the rest of the year.