The venture capital (VC) ecosystem has long thrived on narratives. From the “golden age” of Silicon Valley startups to the cooling-off periods marked by macroeconomic downturns, the stories told within and about the VC community often shape sentiment as much as raw data. One such narrative that has gained traction in recent years is that emerging managers—smaller, first-time, or second-time venture fund managers—are shrinking in number and influence.
But this storyline, while compelling, may be far from reality. Two highly respected voices in the venture ecosystem, Adeo Ressi (founder of Founder Institute and VC Lab) and Sarah Lacy (acclaimed journalist, entrepreneur, and investor), have publicly called “BS” on the emerging manager decline narrative. Their counter-perspective challenges the assumptions driving mainstream commentary, offering a more nuanced and optimistic view of the sector.
This article explores the underlying dynamics of the emerging manager debate, the evidence against the so-called decline, and why Ressi and Lacy’s perspective matters—not just for fund managers, but for the future of innovation, entrepreneurship, and capital formation.
The Narrative of Decline: Where Did It Come From?
The belief that emerging managers are shrinking comes from several observable macroeconomic and industry-level trends:
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Fundraising Headwinds: After the record-breaking capital deployment of 2020–2021, venture capital slowed dramatically in 2022–2024 due to rising interest rates, geopolitical uncertainty, and institutional risk aversion.
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LP Conservatism: Limited partners (LPs), particularly institutional ones, prefer allocating capital to larger, established funds during periods of volatility. This creates an appearance of consolidation.
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Valuation Corrections: The correction in late-stage valuations trickled down, making it harder for smaller funds to justify high entry prices for early-stage deals.
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Media Amplification: Headlines about unicorn write-downs, failed IPOs, and declining venture returns feed into the assumption that smaller funds are failing disproportionately.
Together, these factors have built a perception that the emerging manager pipeline is collapsing—but perception doesn’t always align with reality.
Who Are Emerging Managers and Why Do They Matter?
Before diving deeper, it’s worth defining who “emerging managers” are in the VC context.
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First- or Second-Fund GPs: Often new entrants raising sub-$100M funds.
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Specialist Investors: Managers focusing on niche sectors (climate tech, AI, Web3, frontier tech) or underserved regions.
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Diverse & Inclusive Leaders: Many emerging managers represent underrepresented groups in VC, including women, minorities, and immigrant founders.
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Innovation Catalysts: They tend to write smaller, earlier checks, fueling startups that larger funds may overlook.
Emerging managers are crucial to the dynamism of the startup ecosystem. They discover overlooked founders, explore untapped markets, and diversify the flow of venture dollars away from entrenched networks. Without them, VC would risk becoming a closed loop dominated by a handful of mega-funds.
Adeo Ressi and Sarah Lacy’s Perspective
Both Adeo Ressi and Sarah Lacy bring deep credibility and data-driven analysis to their critique of the decline narrative.
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Adeo Ressi has mentored thousands of founders through the Founder Institute and guided hundreds of venture managers through VC Lab. He has direct visibility into the pipeline of new fund managers being launched globally.
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Sarah Lacy, as a veteran journalist (formerly of TechCrunch and PandoDaily) and now an investor, brings a skeptical eye to overhyped narratives and a clear understanding of both media dynamics and venture economics.
Together, they argue that:
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Emerging manager formation is stronger than perceived. While large institutional LPs may be pulling back, there’s an influx of new micro-VCs, operator-led funds, and angel syndicates formalizing into funds.
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Globalization of VC is accelerating. Emerging managers are increasingly launching funds outside Silicon Valley—in Latin America, Africa, Southeast Asia, India, and Europe—counterbalancing U.S.-centric data.
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Alternative LPs are stepping up. High-net-worth individuals, family offices, and corporate LPs are showing interest in backing smaller, more specialized funds.
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Narratives are cyclical. Every downturn is met with predictions of VC contraction, but history shows that downturns often produce the strongest vintages for new funds.
In other words, the supposed decline is more a reflection of limited narratives and selective data than a comprehensive picture of global venture capital.
The Data vs. The Narrative
To assess whether emerging managers are truly shrinking, one must look beyond headline numbers. Consider:
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Fund Launches: Data from VC Lab shows a consistent pipeline of new funds being launched across continents, with many exceeding their targets despite challenging conditions.
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Deal Flow: Startups continue to attract early-stage funding at strong levels, even if mega-rounds and late-stage deals have slowed.
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Check Sizes: Emerging managers often invest smaller amounts, which makes them more resilient in capital-constrained environments compared to mega-funds.
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Historical Context: Post-dotcom crash and post-2008 recession both saw surges in new fund managers who went on to define the next era of VC.
The conclusion? While fundraising timelines may have stretched, the supply of new managers is steady, and in many regions, it’s even growing.
Why the Decline Narrative is Harmful
Beyond being inaccurate, the narrative of decline can have damaging consequences:
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Discourages New Managers: Aspiring GPs may hesitate to launch funds if they believe the market is hostile.
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Skews LP Perceptions: Institutional investors may dismiss emerging managers prematurely, reinforcing a self-fulfilling prophecy.
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Narrows Diversity: Since many emerging managers represent diverse backgrounds, the narrative disproportionately impacts inclusivity in VC.
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Stifles Innovation: Startups needing early, risk-tolerant capital may struggle if smaller funds are overlooked.
By challenging the narrative, Ressi and Lacy are not just debating statistics—they are defending the vital diversity and innovation engine of venture capital.
Signs of Resilience in the Emerging Manager Ecosystem
Despite macroeconomic headwinds, several trends showcase resilience and opportunity:
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Rise of Operator-Led Funds: Experienced founders and tech executives are spinning up micro-funds, leveraging networks to source high-quality deals.
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Regional Growth: Markets like India, Africa, and Latin America are witnessing first-time funds that bring fresh capital to local ecosystems.
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Family Offices and Angels: More non-traditional LPs are diversifying into venture, especially with smaller managers.
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Specialization Pays Off: Funds focusing on climate tech, AI, healthtech, and Web3 continue to attract strong LP interest.
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Technology-Driven Fund Formation: Platforms like AngelList, Carta, and Assure simplify fund administration, lowering barriers to entry.
These dynamics suggest that emerging managers are not just surviving—they are adapting and thriving.
Looking Forward: What Needs to Change
For emerging managers to truly break free from misleading narratives, several shifts are needed:
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Better Data Transparency: Industry reports must capture global and micro-fund activity, not just mega-fund fundraising.
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LP Education: LPs need to understand the outsized returns and innovation access that emerging managers often deliver.
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Media Nuance: Journalists must dig deeper than surface-level numbers to portray the full complexity of VC ecosystems.
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Community Support: Platforms like VC Lab and operator networks should continue amplifying and supporting first-time fund managers.
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Policy Environment: Governments can encourage new fund formation through tax incentives, grants, or co-investment schemes.
These shifts would help emerging managers claim the visibility and legitimacy they already deserve.
Our Perspective: Why Ressi and Lacy Are Right
From our vantage point, Ressi and Lacy’s critique resonates for three core reasons:
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The Decline Narrative is U.S.-Centric. Much of the “shrinking” argument is based on U.S. institutional LP behavior, ignoring global growth.
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Emerging Managers Drive True Venture Innovation. Some of the most transformative companies in the past decade (Airbnb, Uber, Stripe) received early checks from emerging managers, not mega-funds.
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Resilience is Built into the Model. Smaller funds are structurally more nimble, better suited to downturns, and positioned to back riskier ideas that later reshape industries.
In essence, the emerging manager ecosystem may look different than it did in the boom years of 2020–2021, but different is not the same as diminished.
Why This Debate Matters Beyond VC
This conversation is not just for fund managers or LPs—it has ripple effects across:
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Entrepreneurship: Founders rely on emerging managers to get the first institutional check.
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Economic Growth: Emerging managers drive regional innovation hubs, job creation, and technology adoption.
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Diversity & Equity: Emerging managers amplify underrepresented voices in tech and finance.
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Globalization: The democratization of VC across regions has geopolitical and economic significance.
By dispelling myths, we safeguard the pipeline that powers global innovation.
A Narrative Shift is Needed
The emerging manager narrative is at a crossroads. On one hand, sensational headlines and institutional conservatism fuel a story of decline. On the other, the lived experience of managers, founders, and ecosystems worldwide tells a story of resilience, reinvention, and expansion.
By calling “BS,” Adeo Ressi and Sarah Lacy are urging us to look past the noise and see the truth: emerging managers are not disappearing—they are evolving.
And in this evolution lies the future of venture capital.
