Emerging Managers Report 2023

Updated on: October 17, 2023

This report highlights important factors that new general partners need to consider when launching their funds, and key areas of focus for limited partners considering investing with emerging managers.

It compiles survey results from both emerging managers and LPs, gauging their views on fundraising, fund terms, co-investment opportunities, and the due diligence process, as well as the defining characteristics that attract investors to emerging managers.

Among the areas explored by the survey:

• Fundraising timelines - from initial to both first and final closes
• Sourcing LP capital – where did the commitments come from?
• Hiring trends among emerging managers
• Importance of team composition versus track record from the LP perspective
• Anchor investor considerations

Key takeaways from this year’s survey include:

• Investors are most likely to invest in emerging managers to pursue superior returns compared to established managers, with over half of respondents agreeing that a key attraction of emerging managers is the chance to invest in more specialized strategies
• 89% of LPs will back a debut PE/VC fund. This number rises to 95% with a manager’s second fund
• Interest rate hikes, a recession in core markets, and high inflation were indicated as the most likely factors to impact performance over the next year
• When asked about the key challenges to raising a debut fund, emerging managers cited competition with more experienced managers as the number one issue
• LPs agree that track record, and composition of team are by the far the biggest factor in selecting emerging managers, with investment strategy in third place

“The pressures emerging managers are facing are reflected in this year’s survey results from both LPs and GPs, who clearly see the universe of private capital fundraising transforming right before their very eyes ” said Jeff Gendel, Principal at Gen II Fund Services. “Our partnerships with the industry’s leading emerging managers and LPs that invest with them reconfirm the importance of a cohesive team, strong track record and a clearly delineated investment thesis – and the imperative to engage with experienced service providers to help navigate the path to success. We thank the Buyouts editorial staff for their efforts to make this annual survey a must-read for the community.”

Graeme Kerr, Head of Special Projects at Private Equity International, said, “Despite the challenging times, nearly 90% of investors are willing to back a debut fund. As with previous editions, this year’s data will serve as a benchmark on the status of the emerging manager market. We are fortunate to be able to produce this report in partnership with Gen II Fund Services LLC.”

About the Report
The Emerging Manager Report, published by Buyouts in partnership with Gen II Fund Services, LLC, is the private equity industry’s primary source for PE/VC emerging managers and institutional investors with an appetite to back them. A total of 127 emerging managers and 58 institutional investors with a self-identified appetite for emerging managers were surveyed. The results are released annually.

Published on: October 17, 2023