A fund can start investing while quietly carrying a fundraising problem into its next chapter. If it closes below the number promised in its pitch deck, the shortfall may not stop operations—but it can resurface when institutional investors decide whether to back the manager again. Korea’s 2026 venture market is exposing the risk many managers overlook: a fund target is not just an ambitious headline. It determines whether the vehicle can support itself and leaves behind a measurable record of what the manager said it could raise—and what it actually delivered.
Korea Shows How a Missed Venture Fund Target Can Remain on the Record
A recent Korean case illustrates how the difference between a fund’s target and its final size can matter beyond the initial fundraising period.
In July, DealSite reported that Daily Partners was again competing for a Korea Fund of Funds mandate while carrying questions related to an earlier biohealth vehicle. The fund had originally targeted KRW 100 billion, but ultimately formed at KRW 83 billion after additional closing efforts did not fill the remaining amount.
Daily Partners had still secured more than KRW 70 billion, the amount required at an earlier formation stage, which allowed it to maintain GP status and operate the fund. The distinction is important because a fund can satisfy the conditions needed to begin operating without ultimately reaching the full amount originally proposed.
And yet, the later consequence was less mechanical. DealSite reported industry concern that the previous shortfall could become a burden in qualitative assessment when Daily Partners sought another mandate, since prior formation records and compliance with contribution conditions can factor into manager evaluation.
Nothing in the report indicated Korea Venture Investment had formally penalized the firm over the gap, but this case highlights a broader problem for venture fund managers: a target fund size creates expectations about both economic viability and fundraising execution.
Fund Size Determines More Than How Much Capital a VC Can Invest
Ryan Moyes encounters this issue through his work with new and emerging venture managers at Decile Group, where he serves as Account Executive, Venture Solutions. His previous roles include more than five years at PitchBook and a founding account executive position at Wokelo AI, giving him extensive experience across private-market data, investment research and venture infrastructure.
During a discussion with KoreaTechDesk on the challenges for emerging fund managers, Moyes argued that managers should begin with the economics the fund actually needs rather than an aspirational fundraising number.
“Funds should target the minimum size that supports sufficient capital deployment while also covering the fixed, ongoing expenses of operating the fund.”
A fund has costs that continue after formation. Legal work, fund administration, accounting, tax preparation, audits and other operating requirements can consume capital, while the management company also needs sufficient resources to sustain the investment organization.
Moyes cautioned that the economics are not universal because regulatory and operational requirements differ across jurisdictions. He noted that audit requirements, in particular, can materially increase expenses in some structures.
“The answer varies because different countries have different legal, regulatory, and operational requirements that can increase or decrease the ongoing costs of running a venture fund,”
Moyes told KoreaTechDesk.
That variability makes a single global minimum fund size misleading. Moyes said that, historically, managers using Decile’s more traditional fund structure generally needed to raise around USD 5 million before the economics became workable, while some jurisdictions could require a higher level.
His observation may be specific to Decile’s experience rather than an industry-wide threshold. Independent data, however, support the broader point that small venture funds face heavier expense pressure relative to their size.
Smaller Venture Funds Carry a Larger Relative Expense Burden
Carta’s 2025 Fund Economics Report, based on roughly 2,000 private funds that use its fund-administration platform, found substantial economies of scale in venture fund operations.
The median VC fund with USD 1 million to USD 10 million in commitments spent about 3.4% of total fund size on operating expenses during its first five years. For funds larger than USD 100 million, the median was only 1% over the same period.
Carta also found that the median management fee during the investment period remained 2% across recent VC vintages. Smaller funds therefore operate with a smaller absolute fee base while fund-level expenses consume a greater proportion of committed capital.
This means the target must reflect the cost structure supporting it. When the fund becomes too small relative to its fixed obligations, Moyes said, the balance can shift in a way that works against the investment vehicle’s purpose.
“Anything less typically results in a disproportionate amount of LP capital going toward expenses rather than investments, which isn’t good for anyone.”
Larger Korean Venture Funds Offer Scale, but Bigger Targets Create Bigger Obligations
Korea’s venture market is already moving toward larger vehicles.
The Bell’s 2025 venture-capital league table, covering 67 Korean VC firms, counted 16 funds of at least KRW 100 billion, compared with nine in 2024. Those larger funds represented KRW 2.558 trillion out of KRW 5.1319 trillion in total fundraising covered by the survey, putting roughly half of the measured capital in vehicles above the KRW 100 billion level.
The publication also cited management-fee stability and operating efficiency among the reasons larger vehicles have become attractive to Korean investment houses. Managing a larger fund can generate more recurring fee revenue and reduce some duplicated administration that comes with operating several smaller vehicles.
But greater scale solves only one side of the economics.
A manager that chooses a larger target also creates a larger fundraising obligation. If the number materially exceeds the firm’s realistic ability to secure capital, the target itself can become a source of credibility risk.
Moyes therefore recommends separating an achievable target from a more ambitious ceiling.
“We generally recommend choosing a fund size target you can confidently achieve, then setting a higher hard cap as the stretch goal.”
He added that first-time managers can overestimate their fundraising capacity. A significantly undersubscribed fund may still become operational depending on its structure and minimum requirements, but the gap between the stated goal and actual formation can remain visible.
A Fundraising Target Can Become Part of Future LP Diligence
The importance of that record is also reflected in institutional diligence practices.
The Institutional Limited Partners Association’s Due Diligence Questionnaire 2.0 asks managers to explain how a proposed fund’s target compares with predecessor funds and to describe the firm’s ability to invest effectively at the targeted size. The framework also requests extensive information concerning fund terms, track record, accounting, reporting and other areas used in LP assessment.
The DDQ may be a best-practice framework rather than a mandatory universal standard. Still, its questions demonstrate that sophisticated investors can scrutinize fund size as part of a broader assessment of a manager’s operating and investment capacity.
Moyes sees fundraising execution itself becoming part of that record.
“Consistently missing a stated fundraising target can become a red flag and may lead LPs to view the manager as a fundraising risk.”
Indeed, market conditions can change, anchor commitments can disappear, and managers can deliberately revise fund plans. But the more consequential issue is how accurately the manager calibrated the original target and how clearly the eventual outcome can be explained later.
Long Fundraising Cycles Make Poor Sizing Expensive
Fundraising targets also carry a time cost.
Moyes said GPs commonly allow 18 to 36 months to raise a fund. Current market data suggest that extended fundraising periods are becoming increasingly common.
Preqin reported in February 2026 that venture funds closed during 2025 spent a median of 19 to 24 months on the market, continuing a trend toward longer fundraising timelines.
A poorly calibrated target can therefore tie up considerable management attention before the firm accepts that its original plan needs adjustment.
Now, Moyes does not see resizing as an automatic sign that the entire fund concept should be abandoned. If the manager remains committed to building the firm, he views lowering the target or refining the strategy as possible alternatives to ending the fundraising process.
That distinction matters in Korea, where government-backed mandates, private LP commitments and the growth of larger venture funds are pushing managers to raise more capital. However, setting the highest possible target does not always produce the most effective fund.
The Better Fund Target Is the One a Manager Can Defend Later
Fundraising announcements naturally emphasize capital ambition because fund size is simple to communicate. The harder questions sit underneath the headline number.
Can the planned vehicle absorb its legal and operating costs without allowing expenses to become disproportionately heavy? Does the management company have an economic base that can sustain the work expected of it? Most importantly, does the target reflect capital the manager has a credible path to raising?
Daily Partners’ Korean case shows why those questions do not disappear after a vehicle becomes active. A manager can meet an initial formation requirement, begin investing and still carry the difference between the original target and final close into later scrutiny.
For emerging managers, the fund target is therefore part budget and part promise.
A well-designed number gives the firm enough scale to operate while remaining grounded in its fundraising capacity. An unrealistic number creates the opposite problem: the manager may spend years pursuing capital for a structure that was poorly calibrated at the beginning, then have to explain that gap the next time investors examine its record.
Key Takeaway
- Venture fund size is an operating decision as well as a fundraising target. Legal, administration, tax, audit and other costs can make smaller vehicles disproportionately expensive relative to committed capital.
- Carta found clear economies of scale in venture fund operations. VC funds sized USD 1 million to USD 10 million spent a median 3.4% of fund size on operating expenses during their first five years, compared with 1% for funds above USD 100 million.
- Korea’s venture industry is building larger funds. The Bell counted 16 Korean VC funds of at least KRW 100 billion in its 2025 league table, with those vehicles representing KRW 2.558 trillion in combined fundraising.
- Managers should choose an achievable target and treat the hard cap as the stretch goal. His experience suggests that repeatedly missing stated fundraising targets can later raise questions about fundraising credibility.
- Daily Partners provides a current Korean example of the risk. Its biohealth fund targeted KRW 100 billion and formed at KRW 83 billion after clearing an earlier KRW 70 billion requirement, while DealSite later reported concern that the shortfall could weigh on qualitative assessment in another Fund of Funds selection process.
- Institutional diligence can examine target-size credibility. ILPA’s DDQ asks managers to explain their ability to invest at the proposed fund size and how that target compares with predecessor vehicles.
- Fundraising itself can consume years. Preqin reported that venture funds closed in 2025 spent a median 19 to 24 months in market, reinforcing the cost of pursuing a poorly calibrated target for too long.
- For Korea venture capital managers, the strongest target is not necessarily the largest number available. A credible fund size has to balance operating economics with a fundraising plan the manager can later defend to LPs and institutional selectors.
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