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Q1 2024
PitchBook Analyst Note: Estimating US VC First-Time Manager Dropouts
February 16, 2024
37% of first-time VCs will not be able to raise a second fund
2021 was the heyday for new entrants in venture capital: First-time fundraising reached a peak of $14.7 billion, including to more inexperienced managers without bulletproof track records or networks. Now that LPs have retreated, those same fund managers are in trouble, according to our latest VC analyst note.
More than 247 first-time managers who closed funds between 2019 to 2021 will not be able to raise a sophomore fund, according to PitchBook estimates. Those particularly at risk of being incapable of raising a second VC fund will likely be managers of funds with less than $10 million in commitments and those in emerging US markets.
Table of contents
2021 was the heyday for new entrants in venture capital: First-time fundraising reached a peak of $14.7 billion, including to more inexperienced managers without bulletproof track records or networks. Now that LPs have retreated, those same fund managers are in trouble, according to our latest VC analyst note.
More than 247 first-time managers who closed funds between 2019 to 2021 will not be able to raise a sophomore fund, according to PitchBook estimates. Those particularly at risk of being incapable of raising a second VC fund will likely be managers of funds with less than $10 million in commitments and those in emerging US markets.
Table of contents
| Key takeaways | 1 |
| Introduction | 2 |
| First-time fundraising activity | 2 |
| Estimating dropouts | 4 |
| Differentiating success rates by size bucket | 5 |
| Impact of first-time fund manager dropouts | 7 |
| Conclusion | 10 |