Why Emerging Managers Drown and How to Avoid Their Fate

After ten cohorts in their accelerator programmes for emerging impact fund managers, Accelerating Impact dives into the lessons learned and uncovers three traits successful managers share, and three pitfalls unsuccessful ones met

Most first-time impact funds don’t die because the world lacks problems to solve, or even because the fundraising environment is so tight. They die because the managers run out of oxygen before the first close.

After seven years and ten cohorts of Accelerating Impact’s acceleration programs for emerging fund managers—the International Climate Finance Accelerator (ICFA) and the International Social Finance Accelerator (ISFA)—we’ve watched nearly fifty teams navigate the deep, dark fundraising sea. Some now manage real capital and generate real returns and real impact. Others who were just as smart, just as mission-driven, and just as motivated sunk.

When we excavated these successes and failures and sifted through the data beneath, it pointed to a few clear truths. It’s not (only) about hard work and great story telling or even the returns you promise. Survivors held to three working knots, and failures shared three predictable leaks.

If you’re raising your first fund in 2026, here’s what our cohorts of first-time fund managers wish they knew on day one.

How to Swim

1) Small Boats Launch Faster

Smaller marine craft are lighter, have simpler systems, need fewer crew and permits, and are cheaper to kit out, so they get into the water sooner. The trade-off of course is range, payload, and blue-water comfort. This is the same for small first funds: quicker to launch, easier to prove, but not built for transoceanic voyages just yet.

The managers who get to yes almost never open with a $100 million pitch deck and a prayer. They launch a pilot vehicle, a small evergreen sleeve, or a proof-of-concept portfolio that buys them the two things the market demands and emerging managers do not have: evidence and time. Our managers who have closed under USD 10 million or implemented rolling closes were able to start investing and built their footprints across their sectors while most of their first-time peers were still revising their data room and running out of money. A first vehicle is not about scale but about establishing that your ship runs.

2) Their Ship Has an Anchor Before a Deck

You’ve begun fundraising long before you even think of raising a fund. Our most successful closers didn’t “build a network” during the raise, they brought one with them. Your team’s network is one of the most important assets you have.

Early champions within DFIs or strong ties to coalitions of family offices create a centre of gravity for successful fund managers that pull in other LPs. As frustrating as it is, LPs would much rather follow than lead and, more often, progress with interested LPs is completely stalled until an anchor is found. This is the unfortunate physics of fundraising: mass attracts mass. So how do you find this lead? Networks compound like capital: systematize coffee chats, conference panels, and peer referrals to build a web with the greatest possible capture.

3) The Crew Has Sailed Together Before

Fundraising is a three-year (often longer) exercise in constant rejection. You need resilient co-founders who can disagree without detonating and divide work without duplicating it. In our portfolio, teams with pre-existing working relationships that have already been tested under pressure were more likely to reach first close. In a first fund, the team is the product you’re selling. LPs underwrite your partnership long before they model your pipeline.

Before you fundraise, build a business model for the GP itself. Codify roles and decision rights, document the operating cadence, and set a commitment plan. If you don’t chart your passages in a navigational plan up front, you’re unlikely to have the chance to “sort it later” when the seas get rocky.

How to Sink

1) The Crew Has No Provisions

There is no faster way to fail than to run out of money. As stated above, success stories codified their partnerships at the beginning and a crucial element of a successful business model is a financing plan. Unless you ensure 24–36 months of financial runway including salaries, you won’t last long enough to reach land.

Emerging managers almost always underestimate both the time and financial costs of reaching a first close. Then, when funds run out, teams fall apart or pivot. Management companies running on sweat equity who run out of capital inevitably turn to sporadic consulting revenue or other mandates. Too often, these competing commitments take over and the fund stalls.

2) The Team Fragments Under Strain

Talented founding teams splinter over vision, risk, economics, and just plain exhaustion. We have seen partnerships break because of fundamental misalignment on the fund strategy, interpersonal conflict, and simple changes to life plans, but lack of provisions is a leading cause for these breaks. Insufficient finances, coupled with a lack of formal business plan for the fund manager, pushes an already strained relationship to breaking point.

And this problem escalates quickly. Once the partnership looks unstable, LPs step back—and word travel fast. Those governance basics that successful teams implement at the beginning (clear roles, decision rights, separation plans) sound as unromantic as a prenup, but they’re also the cheapest de-risking tool you have.

3) Strategic Drift Sets In

When the course isn’t set at the start, drift is inevitable. If partners do not 100% align on the fund’s mission and objectives, it becomes nearly impossible to re-find their course.

Even then, when months stretch to years, it’s tempting to pivot to where you think the money is. And sometimes, that is valid. But often strategic drift is the inevitable effect of a team under pressure.

In our discontinued pool, nearly a third flagged a significant strategy change as a contributor—often triggered by the cash crunch or team dynamics, not by market insights. Pivot when facts demand it, but don’t chase rainbows. Geography shifts, asset-class detours, rebrands to pander to a new LP—each move signals uncertainty more than flexibility.

And your strategy may be less problematic than you think. We found no reliable pattern by sector, geography, or IRR. Africa vs. Latin America vs. Asia; agriculture vs. renewable energy vs. nature-based solutions—none of these variables separated winners from non-finishers.

But Beware the Three-Year Trench

If a fund has not reached close within approximately three years of launching fundraising, its thematic and strategic relevance begins to decay and the probability of reaching close declines precipitously. When we plot the outcomes across cohorts, a stark line appears. Nearly every fund that was going to succeed reached first close within about three years of starting the raise.

If you’re thinking “this sounds structural,” you’re right. Most emerging managers don’t fail because strategy is weak or the team lacks the skills, they fail because the pre-close corridor is riddled with underwater hazards. LPs want track record, track record requires funding to build, the GP can’t finance the gap, and the team disintegrates.

Setting Sail

Programmes like our accelerators are working to address some of these challenges, but fund managers can still position themselves to navigate the open water as much as possible.

As we open applications for our 2026 cohorts, we’re looking for feasible strategies, early traction, teams with demonstrated cohesion, and structured business plans. We back ideas that can compound into systems change, but in first funds, durability is impact’s prerequisite. You must last long enough to get to work.

We wish you fair winds and following seas!

Applications for ICFA 11th cohort (2027) will open in October. Applications for ISFA’s 3r^d  cohort (2027) will open in January 2027.  

Scalar International, emerging fund manager selected as part of the 2024 ICFA Cohort, and Mergence Investment Managers announce the launch of a $150 million project to finance clean energy and digital infrastructure in sub-Saharan Africa.

Read the full press release

Scalar is dedicated to addressing Africa's $3 trillion NDC Climate and SDG investment gap by mobilizing private capital through DFIs, Multilateral Development Banks (MDBs), and Private Capital Mobilization (PCM). The $100 million Africa Decarbonization project is a testament to Scalar's vision, focusing on SMEs and supporting first-time women and indigenous developers.

Their involvement in South Africa Real Estate Corporation’s (REIT) renewable energy projects led to the creation of the Scalar Africa Decarbonization project, investing in clean energy and energy efficiency projects across sub-Saharan Africa. Scalar's mission is to unlock institutional funding to support indigenous-owned project developers and independent power producers (IPPs) in the clean energy sector.

As an Indigenous-owned firm, Scalar integrates socio-economic development considerations to ensure the sustainability of its investments. Their impact is integral to their DNA, and they are committed to filling the space with specialist fund management capabilities in the clean energy sector.

We’re always delighted to hear successful achievements from the emerging fund managers accelerated through our programmes. Congratulations to Scalar and Mergence teams!