Per Fortune, “Emerging Managers are on track to raise less this year than they have in a decade.” A challenging time for a capital raise to be sure.
However — it is important to put headlines like this into the proper perspective. Going back a decade ago would put us back to mid-2013. Given what we have experienced since that time, it is difficult to go back to the mindset of 2013.
At that time, we were still grappling with the fallout of the 08/09 housing crisis. There were not many experts (if any) in 2013 that would have predicted the ten year surge in investment opportunity and valuations that was just beginning to get underway. Yet it happened.
No one can tell for sure what the next few years will bring. However, the investment markets are a pendulum, constantly swinging from over activity to zero activity, and back again.
This challenging fundraising market will pass — just like those that came before it. As the market starts to build in more moderate inflation and interest rate expectations, expect activity and fundraising to pick back up again.
In the meantime, if you are a private equity, venture capital, or hedge fund — use this time wisely. With institutional limited parters increasing their scrutiny and diligence — strong fund infrastructure and governance have increased in importance in their eyes.
© Copyright August 2023. Marc Patterson. All Rights Reserved.