A recent episode of TechCrunch’s podcast features a fiery, data-driven pushback against one of the most talked-about narratives in venture capital: the claim that “emerging managers” (early-career VC fund leaders, often from underrepresented backgrounds or focused on niche sectors) are being squeezed out of the industry. Leading the charge are two seasoned voices in the VC world—Adeo Ressi, founder of the Founder Institute and a longtime advocate for startup accessibility, and Sarah Lacy, founder of PandoDaily and a partner at early-stage firm Chairman’s Fund—who argue that the “shrinking emerging manager” narrative is not just inaccurate, but harmful to the next generation of investors.
The debate comes amid a flurry of 2024–2025 reports suggesting that emerging managers are struggling to raise capital: a widely cited survey from a VC trade group claimed that only 18% of new funds raised in 2024 came from emerging managers (down from 25% in 2022), while media coverage has highlighted stories of first-time funds folding or slashing their targets. But Ressi and Lacy say these headlines miss the full picture—relying on flawed data, ignoring regional growth, and overlooking how emerging managers are adapting to a changing market.
The Data vs. the Hype: Why the “Shrinking” Narrative Falls Short
Lacy, who has spent the past year researching emerging manager trends for a forthcoming report, kicks off the podcast by challenging the data behind the doomsday claims. “The surveys that say emerging managers are shrinking usually only track funds over $50 million—and most emerging managers launch funds under $20 million,” she explains. “If you exclude the small, niche funds that emerging managers actually run, of course the numbers look bad. It’s like saying ‘restaurants are dying’ because you only count chain steakhouses and ignore local cafes.”
She points to alternative data from PitchBook and the National Venture Capital Association (NVCA) that tells a different story: in 2024, the number of emerging manager funds under $25 million grew by 12% year-over-year, and funds led by women or BIPOC (Black, Indigenous, and People of Color) managers hit a record high of 31% of all new small funds. “These managers aren’t raising billion-dollar funds, but they’re raising the capital they need to back pre-seed and seed-stage startups—exactly where emerging managers add the most value,” Lacy says.
Ressi adds that the narrative also fails to account for regional growth. “Everyone focuses on Silicon Valley, where yes, it’s harder for first-time managers to compete with established firms,” he says. “But in Austin, Atlanta, Toronto, or Southeast Asia? Emerging managers are thriving. They’re closer to local startups, they understand niche sectors like deeptech or climate tech better than big coastal firms, and LPs (limited partners) are finally waking up to the fact that diversity of geography and perspective drives better returns.”
Why the Narrative Is Harmful: It Deters Talent and Limits Innovation
Beyond being inaccurate, Ressi and Lacy argue that the “shrinking emerging manager” story actively harms the VC ecosystem by discouraging talented people from entering the space. “When you tell someone who’s a former founder or a domain expert that ‘emerging managers can’t raise money,’ you’re pushing them out before they even try,” Lacy says. “We need more people who understand healthcare, or AI, or manufacturing to become VCs—not fewer. This narrative is doing the industry a disservice by scaring off the very people who can fix its biggest problem: groupthink.”
Ressi, who has mentored hundreds of emerging managers through the Founder Institute, shares a similar frustration. “I’ve had three first-time managers in the past six months tell me they abandoned their fund plans because they read a headline that ‘emerging managers are dead,’” he says. “One of them was a former biotech executive who wanted to back early-stage life sciences startups—exactly the kind of manager the industry needs. That’s a loss for startups, for LPs, and for innovation.”
They also push back against the idea that emerging managers are “riskier” than established firms. Lacy cites a 2025 study from Cambridge Associates showing that emerging manager funds focused on pre-seed and seed stages have outperformed established VC funds by 8% annually over the past decade. “Emerging managers are more agile—they can move faster on small deals, they’re more connected to founders, and they’re less likely to chase hype,” she says. “LPs who write them off are leaving money on the table.”
How Emerging Managers Are Adapting (and Thriving) in 2025
Instead of shrinking, Ressi and Lacy say emerging managers are evolving—finding creative ways to raise capital, build networks, and deliver value to startups and LPs alike. They highlight three key strategies that successful emerging managers are using:
- Niche Focus: Instead of trying to be “generalist” funds, new managers are doubling down on sectors they know deeply. “We’re seeing funds focused on ‘AI for industrial manufacturing,’ ‘climate tech in rural America,’ or ‘SaaS for emerging markets’—spaces where big firms don’t have the expertise,” Lacy says. “These niches let emerging managers stand out and attract LPs who want exposure to high-growth, undercovered areas.”
- Community-Led Fundraising: Instead of relying on traditional LPs like pension funds (which often favor established firms), emerging managers are turning to “community LPs”—founders, executives, and angel investors who trust their expertise. “A friend of mine launched a $15 million fund for female founders by raising $100k checks from 150 female CEOs,” Ressi says. “These LPs aren’t just writing checks—they’re making introductions, advising startups, and helping the fund succeed. It’s a more sustainable model.”
- Lean Operations: Emerging managers are avoiding the high overhead of big VC firms (fancy offices, large teams) and operating leanly—often running funds with 2–3 people and working remotely. “This lets them keep fees low and pass more returns to LPs,” Lacy explains. “It also makes them more relatable to early-stage startups, which are often bootstrapped themselves.”
What Needs to Change: LPs and Media Have a Role
To support emerging managers, Ressi and Lacy say both LPs and the media need to shift their approach. For LPs, that means allocating a small portion of their VC portfolios to emerging managers (even 5–10%) and being patient with smaller funds. “LPs who only invest in funds over $100 million are missing the next generation of top managers,” Lacy says. “The best firms today—like Sequoia or Andreessen Horowitz—started as small emerging manager funds.”
For the media, it means moving beyond clickbait headlines and covering the full spectrum of emerging manager stories—including the successes. “Instead of writing ‘Emerging Managers Are Dying,’ write about the Black female manager who raised a $20 million fund for climate tech, or the former engineer who’s backing AI startups in Ohio,” Ressi says. “Stories matter. They inspire people to take action.”
Closing: The Future of VC Depends on Emerging Managers
The podcast ends on an optimistic note, with both Ressi and Lacy emphasizing that emerging managers are not just surviving—they’re essential to the future of venture capital. “VC is at its best when it’s diverse, curious, and connected to the real world of startups,” Lacy says. “Emerging managers bring that. They’re the ones who will back the next big idea that established firms miss—because they’re not stuck in the past.”
Ressi agrees: “The narrative that emerging managers are shrinking is B.S.—plain and simple. The data doesn’t back it up, and the people on the ground—founders, LPs, and the managers themselves—know it’s not true. The future of VC is emerging managers, and anyone who says otherwise is just not paying attention.”
For listeners—whether aspiring VCs, founders, or LPs—the message is clear: ignore the hype. The emerging manager ecosystem is alive, adapting, and ready to shape the next era of innovation.