Emerging Managers Report 2022

Updated on: July 17, 2023

Funding stalls in the short term but capital raising poised for a rebound for emerging managers

Just when it looked like emerging managers would get past the effects of 2020, this year brought new market dynamics amid new uncertainties. Our 2022 Buyouts Emerging Manager Survey shows that private capital fundraising has clearly changed across the board.

It was especially challenging for emerging managers, who had a hard time even getting in front of investors. In 2021, thirty-one percent of respondents told us that it took four months or less to get from first introduction to signed commitment. Whereas in 2022, only one in 10 respondents secured commitments in this time frame – more than one half of respondents stating it typically takes five to nine months.

Established firms, on the other hand, are raising increasingly larger funds. These re-ups are absorbing the majority investor interest. LPs report that the percentage of their private equity/venture capital portfolio allocated to emerging managers has been cut by nearly one-third.

New pressures come to light

At the same time, it’s become apparent that today’s more risk-averse environment is putting more pressure on emerging managers to partner with the right service providers. LPs are making a number of unparalleled demands and greater reporting is one of them. In particular, they want real-time access to accurate, timely information.

This administrative burden is a distraction for emerging managers already saddled with market constraints. A partner allows them to focus on the mission-critical tasks of raising, investing, and growing capital without taking on the back- and middle-office responsibilities. Automation, accuracy and transparency have never been more critical.

Implementing technology in private markets should be table stakes now, to handle not only the increasing volume of data but also the growing complexity of the fund structures. Greater competition is also a forcing factor driving next-generation technology to fill a critical role in the fund administration process for emerging managers.

Not only are LPs in the driver’s seat when it comes to capital raising and negotiating terms, but they are also driving trends in fund operations. See what both emerging managers and LPs are prioritizing and how they view today’s private equity landscaping by reading the full report.

Published on: October 3, 2022

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