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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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Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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.

Source:

Female Foundry | State of Gender Diversity in European Venture report 2024 logo
Female Foundry logo
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Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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.

Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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.

Source:

Female Foundry | State of Gender Diversity in European Venture report 2024 logo
Female Foundry logo

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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Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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.

Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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:

Source:

Female Foundry | State of Gender Diversity in European Venture report 2024 logo
Female Foundry logo

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.

Female Foundry | State of Gender Diversity in European Venture report 2024 logo

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: 

Source:

Female Foundry | State of Gender Diversity in European Venture report 2024 logo
Female Foundry logo
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Female Foundry | State of Gender Diversity in European Venture report 2024 logo<