Should you start your own VC fund in 2025?

Hi! I’m glad you’re here. You’ve made it to issue #73 of VC Demystified🪄.

My name’s Nicole - I’m a Principal at an early stage venture fund, and I know firsthand that VC can often be a black box. Breaking into the industry may feel daunting and resources can seem scarce and inaccessible. I wanted to put together a newsletter to give others the playbook I wish I had when I first started.

Today’s deep dive: A breakdown of whether now is the right time to start your own VC fund

^{My personal mission is to open as many doors as possible for other people and this newsletter is just one avenue to do that. As always, I will continue to post VC insights daily for free across my socials. This newsletter may contain paid partnerships or affiliate links.}

Read time: 6 minutes

A breakdown of whether now is the right time to start your own VC fund

Lots of folks talk about starting their own VC fund but the bar is higher than ever. With capital tighter, LPs more cautious, and returns lagging expectations, the question isn’t if you can raise a fund, it’s whether you should now.

Why the Idea of Starting a VC Fund Looks Attractive

• You want autonomy: choose your thesis, structure your returns.

• LPs are looking for differentiated managers with strong conviction, especially in niche sectors (AI, climate, deep tech) where there’s perceived opportunity.

• Fewer new funds being launched means less competition but also higher scrutiny.

What the Data Shows

Fundraising data for the fund managers (first-time & established) 👇️ 

Fundraising data for first-time fund managers 👇️ 

According to this PitchBook–NVCA data:

• Fundraising is at decade lows: U.S. VCs raised just $26.6B across 238 funds in H1 2025, pacing for a 33.7% YoY decline

• It takes longer to close: The median time to close a VC fund stretched to 15.3 months, up from 12.6 months in 2024, the longest in over a decade

• Emerging managers are stabilizing: They captured 23.1% of capital raised in Q2 2025 (up from 20.6% in 2024)

• First-time funds are struggling: They raised only $1.8B raised across 44 funds in H1 2025, on pace for the lowest levels in 10 years

The message: experienced managers still attract most capital, while first-time GPs face a much steeper climb at this present moment.

Headwinds to Watch Out For

• LPs are more skeptical. Track record matters more than ever. In many fundraising discussions, first-time managers and emerging funds are being heavily scrutinized.

• Macro conditions aren’t helping: high interest rates, inflation, uncertain exit environment. All of this presses valuations down and increases the risk of being trapped with hard-to-exit portfolio companies.

• Dry powder is plentiful in some quarters, but for new funds, access to LP capital is tighter, and there’s pressure to show differentiation.

Key Questions to Ask Before You Commit

Here are concrete things to think through:

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