“Increased uncertainty around the geopolitical and economic environment may pose a challenge to fundraising this year, but opportunities remain,” Preqin said.
Market makeup
The report noted that the private market “could now be balancing out,” with smaller funds comprising a larger portion of aggregate capital raised.
Funds outside the largest 25% accounted for 54% of aggregate capital raised so far this year.
That’s a reversal from 2023, when the largest 10% of funds accounted for 63% of aggregate capital raised. In 2024, aggregate capital raised by the largest 10% of funds fell to 38%.
At the same time, the number of private market funds “has fallen consistently since 2021, indicating that the fundraising landscape is becoming more concentrated among larger funds,” Preqin reported.
Private equity (PE) has the highest proportion of funds in the market so far this year, among asset classes that include private debt, real estate, venture capital, infrastructure and natural resources.
In 2024, PE accounted for 40% of all funds, up from 38% the year prior. Venture capital followed, accounting for 36% of market share in 2024, up from 31% in 2023.
“This growth could continue, with almost 90% of [limited partners] believing that private equity will perform the same, if not better, over the next 12 months, as shown in our most recent investor survey,” Preqin said.
Fundraising momentum slows
The report also highlighted a slowdown in fundraising momentum, as funds stay in market longer on average to achieve their targets.
Funds spent an average of 27.3 months in market before close in 2024, up from 23.4 months the previous year. Funds reached 91% of their final close targets in 2024 and 2023 on average, down from 100% in 2022.
Dry powder fell from $39.5 billion in 2023 to $35.7 billion in September 2024, “while unrealized value remained stable, suggesting that [general partners] may be trying to maintain deal flow as fundraising activity slows,” the report said.
