PE, VC Fundraising to Increase Despite Limited Exit Ops

Nearly 66% of private equity and venture capital firms intend to raise funds in 2024, with the sector anticipating future interest rate cuts from central banks, according to a survey by Acuity Knowledge Partners, a research, analytics and business intelligence provider to the financial services sector.

The figure is a big increase on the 22% of respondents who planned to raise funds in the last survey.

Furthermore, private credit strategies are becoming more popular, with general partners looking for funds that may create significant returns (above 10%) in as little as five years, with direct lending being the most popular sub-strategy.

The biggest obstacles to successful fundraising are tough competition and convincing limited partners to contribute. Two-thirds of respondents believe that exits will be difficult, slightly fewer than last year, but preferences for exit methods remain unchanged, with a few more respondents selecting secondary sales.

Outsourcing is valued by almost 80% of respondents overall, and 70% of private-market firms are exploring outsourcing for increased operational efficiency, as portfolio monitoring and deal-related activities continue to take up more than half of their time.

“Amid this increasing optimism about fundraising, an important shift is emerging with respect to competition for funds,” said Chanakya Dissanayake, managing director, co-head of global delivery operations at Acuity. “While expectations relating to competition remain elevated and constant, the number expecting a decline in competition has doubled from 2022.”

The firm’s third edition of its Global Private Markets Outlook 2024 survey canvassed 128 private markets firms.

Buyout and venture funds accounted for 45% of survey respondents, with over 60% of them holding leadership positions at their companies. Approximately 92% have at least five years of industry experience, with more than half having a decade or more.