Navigating the VC Drought: Innovative Strategies for Emerging Managers

The venture capital landscape has changed dramatically in recent times, with global VC funding falling by 53% in Q1 2023 compared to the same period last year, according to Crunchbase data. Emerging managers face an uphill battle in raising funds amidst economic uncertainty and increased competition. This article introduces an alternative approach for emerging managers: raising a sweat equity fund and raising capital on a deal-by-deal basis while valuations are low. We will explore the role of TokenSphere’s FASTfolio in enabling this innovative solution.

The Struggles of Emerging Managers in Today’s Market Emerging managers are grappling with multiple challenges in the current market. High-interest rates do not reward risk, making it more difficult for them to secure funding. Meanwhile, existing VCs are flush with cash, further intensifying the competition for resources. In 2022, VCs raised a staggering $162.6 billion across 769 funds, following 2021’s record-breaking $154.1 billion in venture fundraising. With fewer investment opportunities available and lower valuations, emerging managers are under immense pressure to secure capital.

Sweat Equity Funds as an Alternative Sweat equity funds present a compelling alternative for emerging managers facing funding challenges. This approach allows…