Venture Capital Fundraising Slowdown
Fundraising for female emerging fund managers has become increasingly challenging in a high-interest-rate environment, as limited partners have more options to deploy their capital into less risky assets. The rise in interest rates has made fixed-income instruments and other traditional investment vehicles more attractive, offering competitive returns with lower risk compared to the speculative nature of venture investments.
This shift in investment preference has led to a tighter capital pool for venture capital firms and especially for emerging fund managers, as LPs reassess their asset allocation strategies in favour of stability and predictable returns. As a result, female emerging fund managers in Europe are facing higher LP expectations in relation to their track record, thesis, and the uniqueness of their deal flow.
Key insights
The vast majority of female emerging fund managers choose the Pre-Seed and Seed investment stages as their investment focus.
From our analysis, two-thirds of female emerging fund managers are looking to raise a specialist fund (66%), with sustainability (19%), deeptech (13%), data and AI (12%), and health (8%) being the top focus areas for their investment thesis.
Investors
2
2.1
The Funnel
Female emerging fund managers adapt to the current market
We have analysed survey responses from female emerging fund managers in Europe to gain a better understanding of the funnel of female emerging fund managers who are either currently fundraising or looking to fundraise for their fund in the next 12 months.
From our analysis, two-thirds of female emerging fund managers are looking to raise a specialist fund (66%), with sustainability (19%), deeptech (13%), data and AI (12%), and health (8%) being the top focus areas for their investment thesis.
The vast majority of female emerging fund managers choose the Pre-Seed and Seed investment stages as their investment focus.
The most frequent thesis
34%
Generalist
Specialist
66%
Sustainability
19%
Deeptech
13%
Data & AI
12%
Health
8%
Growth: Series A - Series C
14%
Early: Pre-Seed - Seed
86%
Late: Series C+
0%

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General Partner, altitude
Videesha Boeckle
Fundraising
United Kingdom
"I'm holding a very optimistic view on 2024.
In 2023, when the fundraising market dramatically slowed down, many emerging fund managers came together and started helping each other. I believe we are going to see that sentiment continue into 2024."
VC and angel investment backgrounds are the most common for European female emerging fund managers
We have also analysed the backgrounds of female emerging fund managers who responded to our survey to gain a better understanding of their profiles and ambitions.
Over two-thirds of our respondents are first-time fund managers, and the vast majority of them have investment backgrounds, with 58% as angel investors, 42% as VC investors or both.
Emerging fund manager profile analysis
26%
Not-first time
First-time
74%
Emerging fund manager background
I have been
an angel investor
58%
42%
I have been
a VC investor
I have worked in a startup / scaleup
25%
17%
I have been
a startup founder
I have tech / engineering
background
17%
Notes: Emerging fund managers defined as those who are within their first three to four funds. All emerging fund managers, regardless of their fundraising stage.


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Founding Partner, MBA Ventures
Monica Aznar
Fundraising
United Kingdom
"We delayed our fundraising until we had a substantial number of portfolio companies – more than ten – to demonstrate our strong deal flow.
This is crucial, especially in the current market where there is a lot of scepticism towards venture capital, and even more so towards first-time managers. We wanted to prove that we have a unique niche and access to exceptional founders before we began external fundraising."
Female emerging fund managers in Europe aim to raise subsequent funds with a five-year AUM target of over €70m
In our survey, we also aimed to gain insight into the ambitions of female emerging fund managers today. Despite the macro fundraising conditions, female emerging fund managers aspire to manage over €70 million in assets in the next five years on average.

What is your 5 year target AUM? (€)
Female emerging fund managers
Notes: Emerging fund managers defined as those who are within their first three to four funds. All emerging fund managers, regardless of their fundraising stage.

2.2
The LP Mindset
Limited partners reassess their venture capital strategies
In a high-interest rate environment, Limited Partners are reassessing their capital allocation and rethinking their portfolio strategies. Looking for the same level of returns, venture capital class is no longer one of the most attractive targets for investors looking for higher returns.
Key insights
55% of limited partners that completed our survey have seen a much larger number of female-led funds approaching them for investment.

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Managing Partner, Isomer Capital
Joe Schorge
United Kingdom
"The macro and geo shifts of the past year have not greatly impacted our strategy or evaluation criteria.
Before the market correction, we already had various absolute guidelines on valuations/pricing, investment sizing, geo, etc., and therefore have not needed to change much. Like many investors, we do tend to focus more on liquidity and exit scenarios lately, since exit markets are generally less buoyant. We perhaps also put a bit more emphasis on investing with people who have experienced multiple business cycles and therefore may be better equipped to manage through the current market turbulence."
Over a third of European venture capital limited partners track the number of female emerging fund managers going through their deal flow
In our survey, we asked European limited partners, who invest in venture capital, whether they track the number of female-led funds in their deal flow to gauge whether gender has any significance to them.
Interestingly, 34% of the Limited Partners who answered our survey claimed that their funds track the number of female-led funds in their deal flow.

Does your fund track a number of funds (co)led by women in its deal flow?
LP investors say that their fund tracks a number of funds (co)led by women in its deal flow
34%
Notes:

LP investors see more female-led fund investment opportunities
We asked European LP investors about their observations regarding the number of female-led funds going through their investment pipelines.
Interestingly, a significant majority, 55%, of LPs have seen a much larger number of female-led funds approaching them for investment.

Thinking about your pipeline, what change in the deal flow of fund (co)led by women have you observed in the past 12 months?
LP investors only
Notes:


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Managing Partner
Blue Future Partners
Gregor von dem Knesebeck
Germany
"When it comes to 2023, for us, there has not really been a change with regards to the investment criteria: we focus heavily on the quality, complementarity and diversity of the teams we back.
Also the investment hypothesis, track record and differentiation in access are important. But given the tough fundraising environments, we have been focussing more on assessing the capabilities of the managers we engage with and try to support on the fundraises to add as much value as possible to all our managers."
LP investors are increasingly interested in backing more female-led GPs
In our survey, we also aimed to gauge the appetite of LPs when it comes to backing more female-led funds in Europe.
Interestingly, 39% answered that their fund has an increased interest in increasing their investment in female-led funds.

In the past 12 months, what change, if any, have you seen in your fund’s appetite to invest in VC funds co-led by women GPs?
LP investors only
Notes:

21% of Limited Partners have a policy in place to increase
the number of female-led funds in their portfolio
When it comes to specific policies aimed at increasing the number of female-led funds in their portfolio, 21% of the surveyed LPs have implemented policies targeting improvements in gender-diversity.

Does your fund have a policy in place to improve diversity in its portfolio?
of LP investors say that their fund has a policy in place to improve diversity in its portfolio.
21%
Notes:


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Chief Executive Officer, Tesi
Pia Santavirta
Finland
"In 2023, what we have experienced as a fund investor, is that both in PE and VC the pace of capital deployment in funds has been dynamic and subject to various economic and market influences.
There has been a slight slowdown in capital deployment as investors have become more cautious. This comes directly from the current economic factors such as economic growth and interest rates. Nevertheless, this has not affected our process of making new investment decisions. We have noticed, though, that the average fundraising period for funds has lengthened."
Gender composition of a Venture Capital team plays a role in LP investment decisions
In our survey, we aimed to better understand whether gender plays any role in LP investment decisions today. We asked them to reflect on three areas: Venture Capital partnership, Venture Capital team, and the gender composition of portfolio companies of funds that LPs invest in.
Understandably, there are limitations for our conclusions given our sample size and potential confirmation bias.
Subject to this, gender composition of a VC partnership plays the most significant role out of the three, with 58% of limited partners surveyed indicating that gender composition plays some role in their investment decisions.
Just over half of the respondents saw the gender composition of investment teams having any significance and a meaningful 40% of respondents said that gender balance across investments made by funds in their portfolio is important for them.
of LP investors say that gender composition of a Venture Capital Partnership team is part of their firm’s investment evaluation criteria
58%
of LP investors say that gender balance across an investment team in a VC fund important for you
48%
of LP investors say that gender balance across investments made by funds in their portfolio is important for them
40%
Notes:
