Global Private Market Fundraising Report

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Global private market fundraising declines as LPs assess damage from denominator effect

In 2022, LPs cut back their commitments across all private fund strategies amid questionably high valuation marks and macroeconomic headwinds. But the denominator effect, caused by public market values falling faster than alternative assets, was arguably the primary reason for the LP pullback from private funds.

Another factor in declining commitments was the fear that slowing distributions could lead to an inability to meet capital calls. But our data shows that scenario didn’t play out in 2022. Cash that flowed from GPs to LPs nearly equaled the outflows.

Other takeaways include:
 

• While the big private market players faced a difficult fundraising environment, it was particularly challenging for smaller emerging managers, regardless of the strategy.

 

• While VC saw the lowest fundraising declines compared to other private market strategies, we expect LP support of VC to drop further in 2023 amid a decline in distributions from IPOs or other exit options.

 

• Real estate and fund-of-funds fundraising hit the lowest point in 10 years.