The most prevalent reason why I always raise my hand to speak, moderate, or host an event, is that while written content reaches millions or podcasting helps people see or hear your tone and passion, it’s only through live events that one can read the reaction of an audience, and in real time nuance the experience to ensure we’re reaching people. And it’s in my work developing startup ecosystems for cities, wherein we have to point out that the conventional wisdom merely puts you on par with other regions of the world, that this is all the more critical so that we can convey why much of what is being done is wrong, so as to push attention toward the gaps that keep an economy stifled.
For example, at most innovation-oriented conferences, invariably we find a demo day, a pitch night, an organization claiming to connect you with investors, and a startup crawl of some sort. After you’ve been to one or two, you find that all of them repeat the same process, provide the same feedback, and feel exactly the same as the last one, sure to be the same in the next one.
30 years in, 90% of startups fail and everywhere is seeking more venture capital
Let’s start with the hard truth: most investors interested in startups don’t actually know what they’re doing. That’s not an insult; it’s an observation. The dream is simple — throw some cash into the next Uber or Airbnb, sit back, and watch the money roll in. Hell, I’ve noticed that for most, that’s not even the dream, it’s showing up at the meetup or getting your name on a website so you can share with friends that you’re a startup investor. The reality? Unless you have deep experience, a broad network, and a portfolio of at least 20 startups, you’re just gambling. And like most gamblers, you’re going to walk away broke.
What do people do? They either go it alone as angel investors or they shove their money into big-name VC firm, syndicate, or equity crowdfunding brand, where they become faceless capital in a bureaucratic machine that may or may not even care about the sectors they’re interested in.
Making my rounds at SXSW, I had an opportunity to help fix what’s broken in most regions of the world, joining Trey Ikard of WIV Ventures, Anthony Del Porto from BetterWay and Karen Sheffield from Pachamama Ventures, to explain why most should be looking to emerging fund managers. Tim Donohue from CBRE and Trae Nickelson from EisnerAmper hosted an event for startup-interested investors, a talk that should be standard practice in every major city, twice a year, to introduce capital to what makes more sense in their part of the world.
The Angel Investor Trap: Why Going Solo Is a Losing Game
Angel investing is like amateur stock picking, but worse. Unlike the public markets, where you can at least rely on liquidity and information, startup investing is usually an opaque mess filled with survivorship bias and hype. The narrative always revolves around the big wins — the rare angel who backed Google or Facebook early — but conveniently ignores the countless failed bets that lost everything.
To have a shot at reasonable returns, you need to invest in at least 20 startups. Not one, not five — twenty. Which hopefully conveys what you already appreciate – that it also means you must have a lot of disposable wealth. And even then, there’s no guarantee you’ll hit a winner. This isn’t theory; it’s backed by multiple studies on venture returns. But how many angels have the capital, time, and expertise to diligence 20 deals, negotiate terms, provide guidance, and manage follow-on rounds? Almost none.
Clearly, that doesn’t mean it can’t work out for many nor that that there are not opportunities to consider. Many cities have an Angel Group which, if run by a startup experienced team and a clear investment thesis (both of which is a big if), might be meaningful to getting you involved. Likewise, if you have experience in startups, in a sector, and have a network and personal brand as an angel so you can forgo depending on referrals, you likely play a critical role as an angel.
Still, too many try to do it themselves or fall into an organization or model that is not capably curating and supporting founders, leading to a lot of waste, misinformation, and bad advice in the startup sector.
The Myth of the Big VC Safety Net
“Fine, I’ll just invest in a big, established VC firm then.”
Okay. But here’s what you need to realize: traditional VC funds don’t exist to maximize your returns — they exist to maximize their business. Keep in mind, a venture capital fund is a business; a business wherein startups are the product hopefully delivering value to customers (investors). Typically and understandably, established funds are oriented to existing sectors or regions of the world and thus my point previous, that in your part of the world, if you’re genuinely seeking to develop venture capital and serve your community or sector, the big VC won’t close that gap.
Large funds raise hundreds of millions, deploy capital in batch processes, and have rigid investment theses that often chase trends rather than innovation. If you think you’re getting early exposure to the best startups, you’re probably wrong because large funds naturally get deal flow, but it’s the incubators and accelerators doing the work meaningful before later stage and larger rounds, that have it.
Meet the Emerging Fund Manager
So, if angels are playing roulette and big VC firms are running their own show in their slice of the world, who’s actually uncovering the next great startups and doing so more meaningfully to BOTH what you’re interested in and where?
Emerging fund managers.
These are investment professionals — often former founders, experienced operators, or niche investors — who are building smaller, sector-specific funds focused on backing early-stage companies with a strategic advantage. Unlike big VC firms, they don’t have the luxury of coasting on brand reputation; they need to prove themselves by actually finding, supporting, and generating returns. And unlike amateur angel investors, they have the experience, network, and focus to identify high-potential startups that others miss. Point being, aside from my critiques, you sort of get the best of both worlds plus the impact that matters in the sector or region of the world you’re seeking to mature.
An Emerging Fund is a newly established venture capital fund, typically managed by these emerging fund managers (though they might also develop from seasoned general partners from other firms) with deep expertise in a specific sector, region, or investment thesis. These funds primarily focus on early-stage startups (pre-seed, seed, and sometimes Series A), leveraging specialized knowledge and networks to identify high-potential investments. Unlike large, established VC firms, emerging funds are often more agile, hands-on, and deeply involved in the growth of their portfolio companies.
Interestingly, they aren’t as well funded (or considered) by venture capital sources; frankly, because of my criticisms.
Most ecosystems are filled with people who either invest directly (badly) or stay on the sidelines, expecting someone else to fund innovation and support the startup development organizations. The result? Emerging fund managers — the very people positioned to actually build strong startup economies — spend proportionately more time raising capital and teaching people their role.
(see why I like getting involved and speaking when we can expose and explore why the gaps exist?)
This is the core issue we need to fix. Investors should stop making impulsive angel bets, stop blindly trusting giant VC firms, and start funding the professionals who actually specialize in early-stage, high-growth investing.
Let’s be clear: emerging fund managers aren’t a magic bullet. There are pros and cons, just like with any investment; it’s in these talks that should be more frequently had, that we can help capital where to discern best how to have the impact and ROI that it seeks to have.
* They have sector-specific expertise. Instead of being generalists, they focus on industries they actually understand. This means better deal flow and smarter investments.
* They can access hidden opportunities. Great startups don’t always go to the biggest funds first—they go to the investors who get them.
* They are more aligned with investors. Unlike large VC firms, which are often playing for management fees or operated through Associates, emerging managers themselves actually need to generate strong returns to survive.
/ They have limited track records. This means investors need to do due diligence and ensure they’re backing capable managers who are actively and publicly involved, not just people with good pitch decks.
/ They have smaller funds, which can be a risk. A small fund means fewer deals, and if a few go sideways, the whole portfolio can take a hit. But this can be mitigated by choosing managers with the right networks and expertise – again, we know how startup fail, seek partners that understand these reasons and how to overcome the causes of failure.
The best way to understand the power of emerging fund managers is to look at these folks I recently spoke alongside, and emerging fund managers like them, actually making an impact:
- WIV.vc: A fund designed to support the next wave of world-changing entrepreneurs. They don’t just throw money around—they build real relationships with the founders they back.
- Pachamama VC: Specializing in impact-driven businesses that prioritize sustainability, Pachamama is proving that ethical investing and high returns aren’t mutually exclusive.
- Betterway Ventures: Focused on technology and innovation, they’re funding the companies that will define the next decade.
These are the kinds of funds that investors should be pouring capital into — not because it’s “feel-good investing,” but because these are the funds actually positioned to win.
So… how do you find such emerging managers to even have a look at them??
Capable Emerging Fund Managers Have Been Trained
Of course, not just anyone can — or should — start a fund; well, actually, that’s not true and that’s the problem, anyone can start a fund. Being a great investor requires more than just industry experience; it requires an understanding of startup due diligence, the distinctions of startups from businesses, fund mechanics, portfolio construction, and investor relations.
Seek out programs such as Founder Institute’s VC Lab or even simply connect with super connectors in your ecosystem, people such as myself who teach venture capital, who are likely well connected with where money should be deployed. Intentional programs aren’t local investor networking — they’re rigorous training designed to turn experienced professionals into fund managers who actually know what they’re doing.
If you’re thinking about investing in an emerging manager, ask them: Have you been through VC Lab or another reputable program? If the answer is no, tread carefully.
If you seriously want to develop your startup sector as an investor, here’s what you to
Raise your damn hand and support the depth and breadth of your ecosystem, not the startup hub or the meetup, but everyone and every program that is substantially impactful. Call this, showing up and investing first in the people doing the work. Then:
- Stop investing in startups directly unless you actually know what you’re doing.
- Start looking for emerging fund managers who specialize in sectors or regions you care about.
- Speak up and participate. Let the ecosystem know you want to invest.
- Connect with people like me. I work to fix these gaps. If you want to be part of the solution instead of just throwing money around, raise your hand.
Because the future of startup investing isn’t about blindly placing bets — it’s about funding the people who actually know how to win.
How do I know this is what you should do? It’s what *we* do, people like me raise our hand to help, we invest in what actually works, and we stand up and speak to make it better for everyone – putting yourself out there is the first and most important measure of credibility, I’m willing to stand behind what good people are doing, defend my perspective, and talk about it publicly. Emerging fund managers need you, they need me, and we all need to work more closely together.
