PitchBook News - What's holding back first-time VC funds

Limited partners have been pouring money into venture capital at record rates, but their excitement about the asset class has not extended to first-time managers. In fact, the number of inaugural funds has dropped sharply since 2018, according to PitchBook data.

Ironically, the decrease in first-time funds is largely due to venture capital's recent success, LPs say.

• Established managers are raising larger funds at a faster pace, taking up a bigger portion of LPs' VC allocation.


• The venture market's recent strong performance has resulted in some LPs suddenly finding themselves overallocated to the asset class.


• Despite these challenges, there's no shortage of new managers trying to raise their first fund.

• KKR posted a profit of $1.67 billion in Q1, compared with a loss of $1.28 billion in the first quarter of 2020, when the pandemic upended the global economy. Apollo posted a profit of $678.9 million in Q1, compared with a loss of $996.2 billion in the same period last year.


• KKR credited $461 million in realizations to its asset sales of FanDuel and BridgeBio. Apollo posted realized proceeds of $3.7 billion, driven by stake sales of subprime lender OneMain and revenue from Cox Media, among other factors.


• Apollo's private equity portfolio appreciated 22%, besting the S&P 500's 5.8% gain, as well as gains in the private equity portfolios of rivals KKR (19%), Blackstone (15%) and The Carlyle Group (15%).


• Both firms reported a bump in assets under management, reflecting a broader push from LPs to pour money into alternative assets. Apollo's AUM jumped to $461.1 billion, up from $455.5 billion at the end of 2020. KKR's AUM increased to $367 billion, fueled by the firm's acquisition of insurance giant Global Atlantic.

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