How healthy are VC funds, why do they start, die, and other interesting metrics on the life of a fund.
Venture capital funds
The State of Venture 2.0 in 2024 1
2024 Emerging Manager Report Reveals Industry Transformation
The venture capital industry is undergoing a seismic shift, and it’s not just about the money anymore. Our analysis of over 850 new fund managers in 2024 – representing approximately half of all VC firms launched worldwide – reveals a striking transformation in who gets to write the checks.
Gone are the days when venture capital was exclusively the domain of seasoned finance professionals from traditional backgrounds. Today’s emerging managers are younger (46% under 40), more diverse (27% women and non-binary), and increasingly likely to come from outside the industry (48.8% transitioning from other sectors). But perhaps most surprisingly, the data suggests that these new entrants aren’t just changing the face of venture capital – they’re rewriting its playbook entirely.
At Decile Group, we’re committed to democratizing access to venture capital by sharing these insights with the broader industry. Through our VC Lab program and comprehensive data analysis, we aim to help emerging managers avoid common pitfalls and accelerate their success. The full report, available for download, provides even deeper insights into the transforming venture landscape.
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The narrative that follows is a deep dive into how a new generation of fund managers is reshaping the industry, backed by comprehensive data from Decile Group’s VC Lab program, which tracks everything from fund structures to failure rates. Whether you’re a seasoned investor curious about industry evolution, an aspiring fund manager, or simply someone fascinated by where smart money is heading, this analysis offers unprecedented insights into venture capital’s transformative moment.
And spoiler alert: the traditional barriers to entry aren’t quite as insurmountable as they once seemed.
Global VC Expansion Trends
The Money is Moving Beyond Silicon Valley
The venture capital map is being redrawn, with new managers emerging from 97 different countries in 2024. While traditional powerhouses maintain their dominance – the US (39.0%) and EU (22.3%) account for the majority of new managers – the MENA region and Africa’s combined representation of approximately 10% signals a significant shift toward global democratization of venture capital.
However, 2024 saw an interesting recentralization trend. North America and Europe’s combined share of new funds increased to 56.7% from 51.4% in 2023, largely driven by the infrastructure needs of AI and DeepTech development. Meanwhile, emerging markets’ representation declined from 23.6% to 13.7%, reflecting current risk-averse conditions and investor preference for established venture ecosystems.
First Fund Size
Small is the New Big in Venture Capital
The myth of needing massive capital to launch a venture fund is being debunked by data. A striking 67% of new funds target under $10 million, embracing what might be called the “minimal viable fund” approach. This strategy isn’t just about lowering barriers to entry – it’s about optimizing for success.
The concentration in the $2-10 million range aligns perfectly with a proven strategy for first-time managers:
- Launch smaller, more focused funds
- Deploy capital quickly and efficiently
- Generate early markups to build track record
- Use initial success to fuel larger subsequent raises
- Maintain the flexibility to adapt investment thesis based on market feedback
Historical data supports this approach: managers targeting these smaller sizes show comparable PACT (non-binding commitments) velocity to larger funds, suggesting that bigger isn’t necessarily better for first-time managers.
The LP Sweet Spot
Data shows 50 Investors Beat 500
The path to success in venture capital shows some counterintuitive patterns in our 2024 data. Perhaps most surprisingly, managers with 26-50 LPs in their networks achieved peak average commitment totals of $2.0 million per firm – outperforming those with larger networks. This “Goldilocks zone” of LP relationships demonstrates that focused, high-quality networks outperform broader, less engaged ones.
Other key success indicators include:
- PACT Velocity: Managers who doubled their commitments monthly reached $2.5-5 million faster
- Prior Experience: While helpful, it’s not decisive – 60% of successful managers had made five or fewer angel investments
- Geography: Funds targeting Asia ($1.9MM average PACT) performed comparably to those focused on North America ($1.6MM)
Women in VC
The Glass Ceiling Is Cracking
The venture capital landscape is witnessing a gradual but meaningful shift in gender diversity. Female and non-binary managers now represent 27% of new fund managers in 2024, up from 25% in 2023. When combined with age demographics showing 46% of managers under 40 (up from 35% in 2023), a clear pattern emerges: the industry is getting younger and more diverse simultaneously.
This shift is particularly significant in team compositions, where women-led and mixed-gender teams increased from 27% in 2023 to 32% in 2024. The data suggests that modern fund management’s reduced operational complexity and increasing institutional acceptance of diverse team structures are creating more entry points for traditionally underrepresented groups. However, the pace of change remains measured – we’re seeing evolution, not revolution, in venture capital’s demographic transformation.
Why New Funds Fail
The Four Horsemen of Fund Death
Our analysis reveals that fund failure rarely comes from a single catastrophic event. Instead, it’s usually a combination of challenges across four key areas, creating what we call the “Fatal Four” of fund formation:
Strategic Uncertainty (41.8%):
- 14% Reprioritized other opportunities
- 10.2% Weren’t ready to launch
- 7.7% Hadn’t finalized investment thesis
- 5.6% Reassessing fund strategy
- 2% Considering joining existing funds
The remaining challenges break down into Fundraising Issues (25.5%), Resource Constraints (21.4%), and Team Issues (11.2%). What’s particularly noteworthy is that these failures often manifest early in the fund formation process, suggesting that proper preparation and planning can significantly reduce failure risk.
Future Investment Focus 2025
AI Leads, But Don’t Ignore the Dark Horses
Looking ahead to 2025, investment focus areas show a clear hierarchy but with some surprising nuances. AI & Machine Learning dominates with 25.3% of projected focus, followed by DeepTech & Robotics at 13.4%. However, the emergence of Energy & Small Nuclear Reactors at 9.8% signals a growing appetite for hard tech solutions to global challenges.
The complete breakdown reveals interesting patterns:
- Advanced Tech Focus: AI/ML, DeepTech, and Energy represent 48.5% of projected investments
- Traditional Sectors: Health & Biosciences (9.3%), FinTech (6.7%)
- Wild Cards: Crypto & DeFi maintains interest at 7.7% despite market volatility
- Climate Focus: ClimateTech holds steady at 5.7%, suggesting sustained long-term interest
Changes in 2024
The venture capital industry experienced a remarkable transformation in 2024, with data showing clear shifts across demographics, fund structures, and investment strategies. This evolution isn’t just about incremental changes – it represents a fundamental restructuring of who becomes a venture capitalist and how they operate. The most striking changes reveal an industry becoming more accessible to younger, more diverse managers while simultaneously growing more sophisticated in its approach to early-stage investing. Fund structures and investment strategies also saw notable changes:
Investment Stage Evolution:
- Seed-stage focus increased from 45% to 54.4%, showing a strategic shift toward slightly later entry points
- Pre-seed focus decreased from 30.1% to 22.3%, indicating more selective early deployment
- Venture studio models doubled to 10.7%, reflecting growing interest in hands-on company building
Team Composition Changes:
- Women-led and mixed-gender teams rose from 27% to 32%
- Solo GPs maintained strong representation at 53.4%
- Team-led funds held steady at 46.6%
Geographic Shifts:
- Traditional markets (US/EU) increased focus from 51.4% to 56.7%
- Emerging market focus declined from 23.6% to 13.7%
- Infrastructure needs for AI and DeepTech drove market concentration
These year-over-year changes paint a picture of an industry in dynamic transition, balancing increased accessibility with sophisticated investment approaches. The data suggests that while venture capital is becoming more inclusive in terms of who can participate, it’s simultaneously becoming more structured and strategic in how new managers approach fund formation and investment.
Conclusion
The venture capital industry stands at a fascinating inflection point, where traditional barriers are being reimagined rather than removed. The data paints a picture of an industry becoming more accessible while maintaining high standards through different metrics. As we move into 2025, success in venture capital increasingly appears to be about strategic focus and efficient relationship management rather than traditional prerequisites. The next generation of venture capitalists is writing their own playbook, and so far, the results are promising.
For deep insights into these trends and more comprehensive data, download the full “State of Venture 2.0 Worldwide” report. Emerging managers looking to launch their funds can apply to VC Lab, which has helped launch approximately half of all new venture capital firms worldwide