Which Emerging VCs Have the Most Dry Powder Left

Which emerging VCs have dry powder left to invest?

On an absolute dollar basis, it's those that raised their funds in Q1-Q2 of 2022.

Data below is from 2,300+ VC funds domiciled in the US. All of them have under $100M in committed capital and use Carta as their fund admin.

The figures line up pretty neatly with the standard 10-year lifecycle of a venture fund (although of course we know that's typically getting extended these days). Managers spend the first 3-4 years deploying, the next 3-5 supporting / following on, and then (hopefully) exits.

But the macro environment for VCs plays a major role. More money was raised in 2021 and early 2022 than at any other point.

The 2021 vintage funds invested really quickly, eating into their dry powder at the height of the frothy startup boom. The 2022 vintages were comparatively conservative on deployment pace, probably because interest rates had shifted and the vibes were cooling off fast.

So dollar for dollar, that early 2022 cohort still has money to spend!

𝗢𝘁𝗵𝗲𝗿 𝗜𝗻𝘁𝗲𝗿𝗲𝘀𝘁𝗶𝗻𝗴 𝗣𝗼𝗶𝗻𝘁𝘀

• This analysis includes many small funds (say $1M-$5M in total capital) which are unlikely to hold any reserves and will often use every dollar of dry powder. Bigger funds tend to hold more reserves at the 4-5 year mark.

• The super-fast deployment in the boom years is a hidden reason why LPs are currently reluctant to commit more capital to emerging VC - they have been hit by the double whammy of slow liquidity + fast fund raising cycles.

• Fingers crossed for a better second half of 2025 for emerging manager fundraising?

Founders don't need to spend too much time thinking about these dynamics, except maybe to check whether the VCs they are talking to have made an investment in the past 6 months to a year. No need to waste time talking to investors who aren't active!

#venture #VC #funddeployment #emergingmanagers