Fundraises now take 18-24 months from first convo to capital in bank.
PitchBook’s Q3 2024 data shows the median time to close has hit a decade high. It’s 15 months median, 19 months average.
For emerging managers who don’t have, say, a16z or Sequoia type brand-name leverage, we’re talking 24-month window.
That’s 18-24 months of management fee burn with zero revenue from new LPs.
If you’re a $200M fund burning $1.2M/month in management fees, that’s $21.6M-$28.8M in cash burn before new capital closes.
Let’s not BS ourselves and call this “a sales problem”. This is structural.
Carta data from Q3 shows emerging manager fundraising (Funds I-III) is down 40% year-over-year.
The count of funds successfully closing has dropped to 2017 levels. Funds aren’t stalled because their decks suck.
They’re stalled because LPs are just illiquid.
Bain’s Global Private Equity Report shows DPI (distributions to paid-in capital) at near historic lows.
LPs are waiting for liquidity from previous vintage bets before they can write new checks.
The gap between your burn and when capital actually hits the bank isn’t a timing issue.
This is called the working capital gap.
For the next few weeks, we’re running 45-minute office hours at 1pm PT / 4pm ET. Free.
We walk you through the math on your specific fund:
Your burn rate vs. your current reserves
When new capital actually hits your bank account
Your working capital gap
No pitch. Just the math.
Either you know your runway, or you don’t. See you at 1.
-ajm
