7 first-time funds see an advantage in entering a downturn without a large portfolio

Who will perform better in this downturn?

The legacy investors with years of experience amassed through multiple market cycles, but who also have a sizable portfolio to worry about, or the emerging managers who are looking at the market with fresh eyes and a clean slate, will be the ones to watch. About to find out.

Almost 300 emerging managers who raised their fund in a bull market are now using it in very different market conditions after a record 270 first-time funds closed last year.

We asked seven first-time funds how they are navigating the downturn.

Giuseppe Stuto, co- founder and managing partner of 186 Ventures, a Boston-based early-stage generalist fund, said that entering the downturn with a very small existing portfolio could serve as a big advantage.

"We don't carry any of the baggage that comes with having previous funds or having a lot of capital tied up in what seems to be highly overpriced vintages." "Just like a founder, who looks at the world differently than subject matter experts, we bring a fresh outlook of how certain problems and industries are evolving."

Even though she started investing her fund during the bull market last year, focusing on a company's potential downstream risk was important.

We don't need to focus as much on triaging the portfolio because we don't have many prior investments that are high risk. I can focus on the future.

These investors can focus more on making sure the new companies they add to the portfolio are more resistant to market trends because they have a smaller garden.

runway is one of the things these managers are better equipped for. After investing in the fleeting days of the bull market, extension financing wasn't a big part of the conversation, but now that it's clear that will be a challenge for startups, 186Ventures plans to focus more on making sure its investments allow for a much

He said that bridge financing was readily available last year, so it was easy to give up on attracting new investors. Depending on the industry and who the other financing partners are in the round, we have increased our'market readiness' threshold.

Ariana Thacker, the founder and solo GP at Conscience VC, said she is putting an emphasis on deals that result in the company having at least 24 to 36 months of runway.

To find out what they are doing to prepare for the downturn, how their approach to investing has changed, and how to pitch them, read the full survey here.