In Shift, LPs Branch Out with New GP Relationships
October 08, 2013
Last week, we took a look at the rise of small funds evident in PitchBook’s preliminary 3Q 2013 PE fundraising numbers. While this emphasis on small funds (less than $500 million raised) should be viewed in the context of broader fundraising trends—large PE funds are still a force to be reckoned with and will likely continue to account for significant portions of capital raised—the growing prominence of small funds in the fundraising landscape points to a strong improvement in LP confidence.
As highlighted in last week’s post, many of the sub-$500 million funds raised in 3Q 2013 were either debut funds, second funds or funds that represented a significant shift in GP strategy. Why do LPs appear to be on board with these new fundraising strategies, breaking with tradition and committing capital to more new firms and firms with new fund focuses?