Emerging Managers: Convergence or Divergence Across the Atlantic?

Emerging managers are not one category

Emerging managers come from a wide range of backgrounds, pursue different strategies and operate across very different fundraising environments. Some define the category as funds one to three below a billion dollars; others include “developing managers” up to fund five, while some placement agents focus less on fund number and more on when a manager is ready to access a particular market such as Europe. For LPs, this means the label “emerging manager” is a starting point, not an investment thesis. Some programmes target specific themes or sectors and then seek managers to fill those slots; others prioritise relationship access, market insight and the ability to generate alpha through nimble, specialised teams.

The common thread is that emerging managers are more heterogeneous than the term suggests. Their strategies, stages, geographies and levels of institutional readiness vary significantly, so each opportunity needs to be assessed on its own merits rather than as part of a single, uniform asset class.

The US–Europe fundraising divide

The US market is widely seen as more mature and conducive for emerging-manager fundraising, with deeper pools of LP capital and a longer history of dedicated programmes. Europe, by contrast, is more fragmented: managers must navigate different jurisdictions, investor bases and expectations, and there are fewer investors willing to back fund-one and fund-two vehicles. US first-time funds also tend to target larger sizes, reflecting both the scale of available companies and the depth of institutional capital.

For US allocators, understanding Europe requires building networks across GPs, LPs and advisors, and recognising that fundraising here is often more relationship-driven and less transactional. Overall, the structural differences in market size, investor infrastructure and cross-border coordination mean that emerging managers face distinctly different fundraising dynamics on each side of the Atlantic.

Institutionalisation starts from day one

• Track record is necessary but not sufficient

LPs expect fund one managers to demonstrate that the first fund is the start of a broader, well-thought-out plan, not a one-off vehicle.

• Infrastructure and team strength matter from day one

Allocators assess whether the team has the operational backbone, governance and resources to run an institutionally credible firm from fund one onwards.

• Founders often underestimate the non-investment workload

Building compliance, reporting, IR and other functions can consume a third or more of a manager’s time, and those who neglect this “institutionalisation” work struggle to win and retain LP capital.

Specialisation, relationships and the edge

LPs are drawn to emerging managers that offer something they cannot readily access elsewhere: focused strategies, niche sector expertise and the potential for portfolio decorrelation. Many allocators construct their emerging-manager programmes around specific themes and then seek managers who can deliver those exposures with conviction and depth.

Specialisation alone is not sufficient. Successful managers combine a clear edge in their market segment with strong prior relationships with LPs, which often prove more decisive than track record alone in accelerating fundraising momentum. The most compelling propositions therefore bring together three elements: a distinctive investment focus, evidence of a credible path to alpha, and an existing network of institutional relationships that can provide early anchor capital and help de-risk the fundraise.

Scaling requires a plan for the future

• Managers must decide early whether they intend to remain small and specialised or build a larger, multi-fund platform; the required infrastructure and team design differ significantly between these paths.
  
  
• Ambition to grow beyond fund three or four demands that operational, governance and investment infrastructure be in place from the outset, not added retrospectively.
  
  
• Succession and continuity planning are often neglected: managers need a clear view of who will form the next generation of the team and how incentives will ensure longevity.
  
  
• Without a credible plan for “what next” after the early funds, even successful fund-one and fund-two vehicles may struggle to access the capital needed to transition from emerging to establish.

Speaker Quotes

“By the time you have fund three, fund four, you need to have a plan for what next… it cannot just be ‘you are fantastic’...what’s next? What is the number two and the number three? And where is that incentive to make it and to give continuity?” Francesco Aldorisio, SAGARD

“As an allocator… if we know that this isn’t going to work, let’s tell that manager ‘No’ as soon as we possibly can, rather than drag the conversation out.” Sancia Dalley, PRUDENTIAL FINANCIAL

“Even if you have a great track record, a lot of times that’s still six, 8, 12, 18 months for someone to get comfortable with you… if people already know you, have relationships with you, have worked with you previously, those are the faster movers typically, which can help drive momentum in a fundraise.” Jason Howard, NEW CATALYST STRATEGIC PARTNERS

“You do need some sort of track record, but you also need the whole package of institutionalisation behind it. And if you have a specialised edge in something, that’s when it all comes together.” Alec Lingorski, ALVINE CAPITAL