At SuperReturn Venture, the same question surfaces again and again in conversations between LPs, GPs, and emerging managers: Why does institutional capital continue to concentrate around familiar names when many of the most compelling venture opportunities are emerging outside the spotlight? As venture markets reset and access dynamics shift, Ariella Vildan Young, Principal, Alicorn, explores why emerging fund managers remain structurally underallocated, and why the next generation of standout venture franchises is being built in plain sight.

Every time I take the stage at SuperReturn, whether in Berlin or Dubai, I encounter a version of the same conversation. A seasoned LP pulls me aside and says some variation of: “We back the established names in the US and UK. Why would we take the manager risk of going with someone newer?” That question, coming from institutions managing tens of billions of dollars, tells you almost everything you need to know about why emerging fund managers (EFMs) remain structurally underallocated, even in the world’s most developed venture capital ecosystems.

That question tells you almost everything you need to know about why emerging fund managers remain structurally underallocated.
Ariella Vildan Young, Principal, Alicorn

Those conversations are precisely why SuperReturn Venture remains the most valuable gathering in the private markets calendar. It is one of the few forums where LPs, GPs, and emerging managers are genuinely in the same room, not just for keynotes, but for the unscripted exchanges that actually shift thinking and open doors. For any GP serious about building institutional LP relationships, the density of relevant capital in a single venue over three days is simply unmatched. I have seen allocations unlocked and fund strategies meaningfully reshaped from conversations that started in the hallway between sessions. That is rare, and it is worth showing up for.

This is not a story of ignorance. It is a story of habit, inertia, and, frankly, a benchmarking framework built for a different era of private markets.

The metric problem: Why IRR is misleading portfolio construction

Part of the allocation gap stems from how LPs evaluate performance. Internal rate of return (IRR) has long been the headline metric in private markets, and for large buyout funds with predictable deployment and exit timelines, it serves a reasonable purpose. In early‑stage ventures, and particularly in EFM ventures, there is often more noise than signal. IRR is acutely sensitive to deployment pace and early markups. A fund that marks up a single position in year two can show an impressive IRR that bears little relationship to what LPs will ultimately receive. For emerging managers, who may still be building portfolio construction discipline, this distortion is especially pronounced. Distributions to paid‑in capital (DPI) tell a more honest story. It measures what has actually been returned to investors, in cash, relative to what was called.

A compelling TVPI with zero DPI is a hypothesis, not a track record.
Ariella Vildan Young, Principal, Alicorn

For LPs building portfolios with real return requirements, DPI is the metric that matters. Yet it remains underweighted in many evaluation frameworks, largely because it takes longer to observe and requires patience to assess meaningfully.

At Allocator One, when we evaluate EFMs across geographies, we focus heavily on whether early performance is repeatable and whether managers have the discipline to convert paper gains into distributions.

What good emerging fund manager selection looks like in practice

Identifying high‑quality emerging managers is genuinely difficult, and pretending otherwise does the industry a disservice. The market is fragmented, information is asymmetric, and access to top‑performing funds is often deliberately constrained. What we look for is a combination of sourcing edge, founder relationship depth, and operational honesty. The strongest emerging managers almost always have a clearly defined reason to win - a community they are embedded in, a sector where they have genuine expertise, or a founder profile they understand better than anyone else. Generalism, at the emerging manager stage, is rarely a differentiator.

Generalism, at the emerging manager stage, is rarely a differentiator.
Ariella Vildan Young, Principal, Alicorn

In the US, this dynamic is particularly pronounced. Early‑stage deal flow is less a function of geography and more a function of trust and signal. Emerging managers with credibility inside specific founder communities consistently see better opportunities earlier than larger funds entering later rounds. In the UK, the pattern differs slightly. London’s ecosystem is mature but smaller, and some of the most compelling EFMs are those bridging the US and European markets. Managers with dual networks can bring US‑style ambition to European pricing or open US access to UK‑founded companies. That cross‑market fluency is scarce - and valuable.

We also pay close attention to how managers talk about mistakes. At this stage of the market, managers with multiple funds should be able to articulate what did not work and why. Defensiveness or revisionism is a red flag.

The window is open - but not indefinitely

The next wave of institutional capital into emerging managers will likely define access dynamics for a generation. In both the US and the UK, the managers raising second and third funds today are those most likely to run the marquee venture vehicles of the next decade. The LPs who back them early will hold allocations that later entrants simply cannot replicate.

The question is not whether to engage with emerging managers. It is whether LPs will engage early enough to matter.
Ariella Vildan Young, Principal, Alicorn

For LPs still concentrating capital in established platforms by default, the question is not whether to engage with emerging managers. It is whether they will engage early enough to matter- to their portfolios and to the founders who deserve investors paying close attention.

Key takeaways

• Structural underallocation persists. Emerging fund managers are often overlooked, not due to lack of talent, but because LP evaluation frameworks and habits favour familiarity over emerging opportunity.
• Performance metrics matter. IRR can distort early‑stage venture analysis; DPI provides a clearer picture of realised performance and discipline.
• Edge beats brand in EFMs. The strongest emerging managers succeed through specificity - deep founder trust, sector expertise, and repeatable sourcing advantages.
• Timing defines access. LP relationships formed during the second and third funds often determine access to marquee vehicles later on.