Against the bleak backdrop of a post-pandemic world, emerging managers are under immense pressure to overcome market challenges no one could have ever predicted – the most devastating economic downturn since the global financial crisis of 2008.
But there is a silver lining. While raising new funds may have become more difficult under the prevailing climate of uncertainty, the timing has never been better. When the dust starts to settle and markets are primed for recovery, emerging managers are expected to gain from the expected drop in asset valuations.
Emerging managers are typically nimbler and more resourceful during periods of disruption as they are not encumbered by legacy portfolios. Instead, they are aimed at detecting new market opportunities that show all the signs for attractive returns.
According to recent survey reports, 91% of emerging managers expect to continue being active dealmakers despite the recent market disruption, seeking to gain opportunities despite the crisis. This reveals a remarkably eager and optimistic mindset among new fund managers amidst an increasingly competitive environment.
The definition of emerging managers would generally include newly formed or relatively small firms who are at the early stages of their life cycle, managers raising funds for the first or second time, or firms that are managing relatively smaller funds (usually pegged at no more than US$100 Million in total assets).
Emerging managers usually start with their own money, but the real key to their continued growth and success lies in their ability to attract investors and raise capital.
In the investment industry, new fund managers are known to drive innovation and diversity. Emerging funds have shown greater flexibility in responding to current market conditions as compared to more tenured funds, with emerging managers able to execute new ideas and transactions at a quicker pace.
As with any other asset management firm, emerging managers need to set up their funds in compliance with legal and regulatory requirements, in order to improve governance, ensure stability, and minimize risks.
Veritas Global offers a full range of services to help optimize the capabilities of emerging managers, from due diligence and oversight, to business-oriented legal advice and technology-based solutions, backed by years of proven performance and in-depth knowledge in partnering with private equity, venture capital and alternative asset class investment firms all over the world
Grace under pressure
It is impossible to refer to the investment industry without being concerned about the disruptive impacts of the pandemic, which have made raising funds in the traditional manner much more difficult, and in some ways, almost impossible.
For instance, restrictions on travel and international health protocols have created logistical obstacles for basic business activities such as due diligence, on-site inspections, or face-to-face meetings, resulting in increasingly challenging deal-making scenarios for raising new investments.
Despite assurances from limited partners that the appeal of emerging managers remains strong, market observers have indicated that LPs are expected to become more cautious about increasing their commitments to first-time funds in the foreseeable future.
Nevertheless, these conditions have not dampened the enthusiasm of motivated general partners as they continue moving forward and devising innovative strategies that would allow them to persistently launch new funds despite ongoing twists and turns in the international market.
A strategic partner that grows with you
Emerging managers seeking a competitive advantage should realize that proven expertise and experience are the most important attributes in choosing a trusted advisor.
Veritas Global is unique in its specialized focus on representing leading private investment funds and their portfolio companies across the full range of business transactions. Our clients have included many of the world’s largest and most influential private investment funds, corporations, and financial institutions, as well as a wide variety of investors, commercial enterprises, and technology companies.
And with the continued rise of digital assets, cryptocurrencies, and e-commerce in propelling powerful and dynamic changes in how the market behaves, our team keeps up with technological trends and virtual platforms that could offer investors greater value in the digital economy.
We at Veritas Global understand the extraordinary challenges of a post-pandemic landscape and are able to anticipate potential hurdles along the way. We have the proven ability to expertly guide emerging managers in their decision-making processes, provide them with accurate information and reliable insights, and eventually grow with their companies over time.