The rise of emerging fund managers has reshaped the venture capital landscape, introducing greater diversity, agility, and strategic specialization. A key element in this transformation is fund size. Smaller target sizes, once seen as limitations, are now strategic advantages—especially for first-time managers navigating shortened fundraising cycles and intense LP competition.
Recent data reveals a compelling case for smaller funds. These vehicles tend to outperform larger ones across multiple dimensions, from quicker first closes to more efficient capital conversion and stronger LP follow-through. They are also more likely to be solo-led, focused on a single sector, and better suited to specialized, early-stage strategies—characteristics that often align well with emerging manager strengths.
This article explores how fund size tends to shape fundraising outcomes, leadership structures, sector and stage strategies, and gender dynamics. It draws from three robust data sources: 600+ funds that have graduated from Decile Group’s VC Lab accelerator, 1,500+ funds actively using Decile Hub, and 4,000+ fundraising commitments tracked on the platform. The findings offer actionable insights for fund managers seeking to right-size their strategies in today’s market.
Fund Size Distribution Trends
The distribution of fund target sizes among emerging VC funds is evolving, with notable growth in the smallest segments and a decline in larger ones. The shift toward leaner vehicles reflects a move away from early institutional-scale ambitions toward more focused and achievable fund formations. Specifically, while smaller funds are gaining ground, the mid-range remains a stable and dominant category, indicating a diverse range of fund strategies at play.
Small Funds Are Growing, Large Funds Are Declining
Between 2022 and 2024, the share of funds targeting under $5MM increased by 1.3x. Meanwhile, the number of funds targeting $25MM–$50MM declined by threefold, and above $50MM funds by half. This points to a decisive shift in the emerging manager space toward leaner, more focused fund structures. The rise of smaller funds is likely driven by multiple factors. They are easier to raise, require fewer large LPs, and better suit the operating models of solo GPs. As efficiency becomes a higher priority across early-stage VC, many new managers are right-sizing their ambitions to reflect their networks, strategies, and realistic timelines.
Mid-Range Target Sizes Remain the Norm
Despite the growth in funds under $5MM, those targeting $5MM–$25MM still account for nearly three-quarters of all emerging funds. This range has remained stable over time, suggesting its ongoing relevance for many first- and second-time managers looking to scale thoughtfully.
The $5MM–$25MM bracket offers a practical middle ground: large enough to support a diversified portfolio and attract institutional interest, yet small enough to avoid the complexity and extended timelines associated with larger fundraises. For many, this band reflects the most achievable balance of ambition and pragmatism.
Leadership and Team Structures
Fund leadership structures shift meaningfully with fund size. Smaller funds tend to be solo-led, while larger funds adopt more institutional team formats that are better equipped to handle operational complexity. Gender representation also fluctuates, with a standout pattern emerging among mid-sized funds that suggests a potential best practice in inclusive leadership.
Smaller Funds Are Often Solo-Led
Among funds targeting less than $5MM, two-thirds are solo-led. In contrast, only 38% of funds above $50MM are led by solo GPs. As fund sizes grow, team-led models become increasingly common and often necessary to manage fundraising, operations, and investor relationships.
This correlation makes operational sense. Smaller funds have tighter scopes, simpler operational needs, and require less coordination. Solo GPs can move fast and decisively in these leaner models. Larger funds demand more capacity, institutional interfaces, and operational support, making teamwork a natural progression as fund complexity increases.
Gender Representation Peaks at Mid-Size
Roughly 25–26% of funds across all size bands include at least one woman in leadership. Interestingly, funds in the $25MM–50MM range show the highest proportion of mixed or all-female teams at 35%, far exceeding other categories in relative representation.
Smaller funds may still reflect systemic disparities in access and networks, while larger funds often revert to more traditional or legacy team structures. In this case, the $25MM–$50MM tier appears to be setting an example that others can follow, while still leaving room for improvement. To move toward a more balanced 50–50 gender split, funds of all sizes should prioritize inclusive hiring early and expand their networks to support more equitable leadership.
Sector and Stage Focus
Target size also correlates with both sector concentration and stage preference. Smaller funds are more likely to specialize in a single sector and focus on earlier stages of venture investment. As funds scale, diversification and later-stage strategies become more common, reflecting broader mandates and more capital to deploy.
Smaller Funds Tend to Specialize
Over 80% of funds targeting less than $25MM focus on a single sector. In contrast, 11% of funds above $50MM invest in more than two sectors—almost three times as many as smaller funds, suggesting that diversification becomes more feasible and necessary at scale.
This concentration aligns with how emerging GPs typically differentiate themselves. Sector focus allows new managers to leverage domain expertise, founder networks, and brand visibility. Larger funds, on the other hand, must often cast a wider net to meet their deployment timelines and LP expectations, which leads to more diversified sector strategies.
Earlier Stage Focus Among Leaner Funds
Pre-seed strategies are most prevalent in funds under $5MM and decline consistently as fund sizes increase. Conversely, Series A investments rise in popularity as target sizes grow, reaching a high of 17% among funds targeting above $50MM. Notably, Seed stage is the primary focus across all target size bands, accounting for 60% to 79% of funds in total.
This reflects both strategic alignment and capital requirements. Earlier-stage investments align well with the strengths of new managers—access, speed, and specialization. As fund size increases, the need to deploy more capital and meet LP scaling expectations leads to a tilt toward later-stage investments that can accommodate larger check sizes.
Fundraising Performance
Fundraising success rates show a notable correlation with fund size. Smaller funds not only reach their first close faster but also close a higher portion of their targets and see better follow-through from LPs. These trends point to the fundraising efficiency of leaner vehicles and the power of right-sized capital formation.
Smaller Funds Convert More Soft Commitments
Within comparable timeframes, funds targeting under $5MM and those in the $10MM–$15MM range are notably more successful in converting soft commitments into signed LPAs. Funds under $5MM convert at a 63% rate—roughly 2x higher than funds targeting above $15MM, and 1.2–1.3x higher than those in the $5MM–$10MM range.
This suggests that smaller and mid-sized funds are more effective at maintaining LP engagement and guiding commitments through to completion. Leaner structures, stronger LP relationships, and clearer communication likely contribute to this higher follow-through.
Average LPA Size Scales with Fund Size
For funds under $5MM, the average LPA size is around $90K—about 3.5x smaller than the $320K average among funds targeting above $15MM. Despite this gap, smaller funds often need fewer LPAs to reach their goals and benefit from lower entry points.
This reinforces the accessibility advantage of smaller funds. Lower minimums enable a broader LP base to participate, particularly from high-net-worth individuals and family offices. This supports the democratization of venture capital and creates a more diverse investor ecosystem.
Smaller Funds Secure a Greater Share of Their Target
Within comparable timeframes, funds with target sizes under $5MM sign 1.8x larger portions of their target sizes in LPAs than funds targeting $5MM–$10MM, and 2.2x larger than those targeting over $10MM. This shows that smaller funds are more successful in securing firm commitments relative to their overall fundraising goals.
Their ability to lock in a greater share of their intended capital suggests stronger alignment between fund structure and LP expectations. Smaller targets, simpler strategies, and lower entry points may be helping emerging managers bring more of their pipeline across the finish line.
Smaller Funds Are More Likely to Close
Within similar timeframes, funds targeting under $2MM are 2-2.5x more likely to reach a first close than those targeting $2MM–$15MM, and 1.3-1.5x more likely than funds above $15MM. This stark difference highlights the advantage of setting leaner targets when launching a fund.
Higher close rates at lower target sizes suggest that smaller funds benefit from clearer positioning and lower minimum investment thresholds for LPs. Emerging managers with modest targets are better able to build momentum and demonstrate fundraising traction early in the process—an essential signal for credibility and continued progress.
Small Funds Close a Larger Share of Their Target
Within comparable timespans, funds targeting under $5MM on average close a 1.5x larger portion of their target sizes compared to those targeting $5MM–50MM, and 1.2x more than those targeting above $50MM. This suggests strong alignment and more realistic target setting among leaner funds.
These results suggest that smaller funds often benefit from tighter alignment and more realistic fundraising goals. Managers in this range are more likely to reach or exceed progress benchmarks, which reduces fundraising fatigue and builds stronger LP confidence over time.
Key Takeaways for Emerging VC Fund Managers
This analysis highlights the strategic advantages of smaller fund targets in today’s emerging VC landscape. Funds under $5MM are growing steadily in number and outperform larger peers across several fundraising benchmarks. They tend to be solo-led, focused on one sector, and concentrated on pre-seed and seed stages—and they achieve faster closes, higher fundraising efficiency, and better LP conversion.
In contrast, funds targeting more than $25MM are more likely to be team-led and diversified, with a tilt toward Series A investments. These funds often need larger checks, more complex diligence processes, and longer timelines to reach their goals. While they offer expanded capacity and broader investment reach, their performance tends to lag leaner models when measured by fundraising efficiency and speed. Mid-sized funds remain the dominant category in emerging VC, but data shows they also trail smaller funds on key performance indicators.
For emerging GPs, the data suggests several actionable strategies:
Start Small to Gain Momentum: Smaller targets increase close rates and target coverage, providing early validation for first-time managers.
Go Solo if Suitable: Solo-led funds are viable and effective below $5MM. Focus on clarity, communication, and execution.
Use Focus as a Differentiator: Sector specialization supports brand building, LP targeting, and diligence efficiency.
Align with Early Stages: Smaller funds are best suited for pre-seed and seed investments. Avoid overreaching into later stages unless fund size and expertise support it.
Simplify the Close: Smaller LPAs, faster conversions, and higher follow-through make leaner funds easier to raise and manage.
Prioritize LP Accessibility: Lower barriers attract a wider range of LPs and support fundraising diversity—a key strength in emerging VC today.
Plan Realistically: Match fund size to your network, capacity, and value proposition. Over-targeting can delay progress and undermine credibility.
Build Toward Inclusive Leadership: Mid-sized funds are setting examples in gender diversity. All fund sizes can strive toward more inclusive leadership to reflect the evolving values of the VC industry.
Smaller funds are not just more achievable—they may also be smarter. These findings provide a clear, data-driven framework for emerging managers to structure their first fund with both ambition and pragmatism.
VC Lab, the leading venture capital accelerator, empowers new and emerging managers worldwide to close ethical, high-performing funds in under six months. The program provides cutting-edge tools, expert mentorship, and a global network to raise more money in less time. Apply if you want to build a meaningful venture capital firm.
