This question came up as it tied together several common themes, including the overall success rate of emerging funds (i.e, a fund that failed will not reach profitability), fund model between distributed/concentrated/hybrid, capital deployment, and liquidity events. At the same time, emerging funds have shown the ability to outperform, so I would love to learn more about when they are able to reach profitability and greatly reduce risk while retaining upside.
Emerging funds typically reach profitability when they achieve significant liquidity events, which can take 8 to 12 years for startups to exit. Early liquidity events, such as secondary transactions, may occur in 3 to 5 years but are less common. Profitability is influenced by the fund's model, capital deployment strategy, and overall success rate. While emerging funds can outperform, reaching profitability and reducing risk requires patience and strategic management.