Culture Shifting Summit is a series of deal making Summit focused on channeling capital to Black and diverse fund managers. Our Managing Director, Bonnie Chiu, was honoured to speak at the opening panel with Vivek Aswani from RIMM Sustainability, moderated by Milton Speid from VC Include, at the Culture Shifting Summit in London in April 2024.

We love the spirit of the #CultureShiftingCommunity – abundance and generosity. It is our first time joining the summit but they’ve been around for over a decade – enabled a staggering $1.4B into the hands of this community including Summit attendees.

This blog post shares the dominant trends that we are seeing in our work, as tips and guidance for emerging fund managers, in the impact space.

In terms of positive trends, we see that there’s more focus on emerging fund managers and changing mindsets among asset owners. Some Limited Partners (LPs) recognise that it’s their role to build the market and have begun to actively invest in first time or emerging fund managers. As part of meeting risk-adjusted returns, catalytic capital as a concept has gained prominence, thanks to the work of Catalytic Capital Consortium. Some LPs in Europe and US are more comfortable with blended finance structures, which are traditionally used in project finance, applied to funds as well. 

Among institutional investors, there is more allocation to private markets. According to a survey conducted by the Defined Contribution Investment Forum, 70% of defined contribution (pension) schemes already invest in private markets or intend to do so. 84% of schemes who are or will be allocating to illiquids are also very or somewhat motivated by a desire to improve sustainability and reach Net Zero. These present opportunities for emerging fund managers, who provide options for private market investments, especially those with a sustainability lens.

But there’s always a but! In terms of worrying trends, the label of emerging fund managers is not helpful as some stay emerging simply because they are women-led or people of colour-led. There needs to be more discussions and almost defining – when do you graduate from being an emerging fund manager? How can people not be pigeonholed so that they can go on to raise not only their first fund, but also the second fund.

While there’re helpful macro trends that can drive allocation to private market investments including emerging fund managers, there is not always the data or mechanisms to track these allocations. Ada Ventures latest research, based on looking at publicly available data from Companies House, has revealed that all-men-owned management companies raised around 8 times more funds, and around 10.3 times more capital between 2017 and 2023 compared to all-women-owned VC funds.

What next? We are excited to be incubating Pathway Fund, a Black and Global Majority-led impact investment wholesaler dedicated to catalysing more investment for Black and diverse communities in the UK. We will be sharing learnings, as an emerging LP, and through implementing the first-time fund manager incubator. We hope that the favourable macro trends will indeed materialise into more investment into emerging fund managers, who we believe are having outsized social and environmental impact, and financial returns.