How Private Markets Are Digesting the Last Fundraising Boom

Global private markets are in an unusual phase. Fundraising has slowed sharply from the peak years, yet undeployed capital (dry powder) is at record levels and still rising. Deal activity and exits are subdued in many strategies, but commitments raised in the previous cycle are still working their way through investment periods.

PitchBook’s report treats this as a normal part of the capital cycle: money came in fast between 2019 and 2022, deals and exits have not kept the same pace, and the system is now digesting that gap.

Fundraising is weaker, especially for smaller and mid-market funds

On a trailing 12-month basis, private equity fundraising is well below recent highs. Data shows that capital raised by PE funds is meaningfully lower than a year ago, and the number of funds has fallen even more sharply. Similar patterns appear in several other private capital strategies, with fewer funds closing and a higher share of capital concentrating in larger vehicles.

The distribution of that slowdown is uneven. Large, established managers continue to close sizable flagship funds and multi-strategy platforms. The pressure is most visible in the long tail: smaller, newer, and more generic mid-market funds are finding it harder to reach target size or to get traction at all. This lines up with what limited partners (LPs) have been signalling for some time: they prefer to consolidate relationships, re-up with managers they know, and put larger tickets to work with fewer GPs.

Dry powder keeps building and is sitting in older vintages

At the same time, PitchBook estimates that global private capital dry powder is at an all-time high, in the multi-trillion-dollar range. The aggregate number receives a lot of attention, but the age profile matters just as much.

The report highlights PE as an example, with undrawn capital representing a historically high share of total AUM, exceeding prior peaks shown in the data. A growing share of that undeployed capital now sits in funds that are several years into their lives rather than in newly raised vehicles, and the portion held in even older vintages is also edging up.

This tells you two things at once. Funds raised in the 2019–2022 boom have not been fully deployed. And investment periods are moving forward on the calendar whether deal markets are cooperating or not. Managers cannot assume that capital can simply sit idle indefinitely; the pressure to put money to work, or to adjust fund terms, is real.

Why fundraising slowed

It is tempting to explain all of this with one factor: higher interest rates. PitchBook’s analysis suggests a more layered picture.

Rate moves have clearly changed the relative appeal of private assets versus public credit and listed equities for some allocators. But three other forces are in play.

Exit activity has been weak. IPO windows have been patchy, strategic buyers more selective, and secondary or recap markets have not fully absorbed the backlog from the 2020–2021 vintages. Without distributions, LPs are more cautious about committing fresh capital.

Portfolio allocations need time to rebalance. Mark-to-market effects in the previous cycle left many LPs overweight private markets relative to policy targets. Even if they are structurally positive on the asset class, they have to adjust pacing and make room for new vintages.

There is more scrutiny of realised returns. After a long period of strong reported performance, some investors are looking more closely at the gap between paper IRRs and cash returned. That naturally leads to more selective underwriting of new blind-pool funds.

In other words, the capital inflow in 2019–2022 ran ahead of the deal and exit cycle. The current slowdown is partly the system catching up with that.

Strategy-level differences: secondaries, co-investments, and private debt stand out

The aggregate picture hides meaningful differences by strategy.

PitchBook’s data shows that core private equity, venture capital, and several real estate strategies have seen the sharpest declines in fund count and capital raised over the past year. In contrast, secondaries and co-investment funds have continued to grow on a trailing 12-month basis, and private debt and infrastructure have held up more resiliently than classic PE and VC.

The pattern is consistent with LP preferences reported in the study. Investors indicate that they still want private-market exposure, but are more inclined to back structures that give them additional tools: co-investments that provide more control over individual deals, secondaries that help reshape or reduce older exposures, and private credit or parts of infrastructure that offer yield with a different place in the capital structure. The shift is evolutionary rather than abrupt, but it does affect which managers find fundraising conditions more or less supportive.

What’s Ahead

Taken together, PitchBook’s Q3 2025 work presents a private-markets ecosystem that is adjusting rather than unwinding. Fundraising momentum has slowed, especially for newer and less differentiated managers, while undrawn capital remains elevated and skewed toward funds raised in the last cycle. Strategy-level shifts toward secondaries, co-investment tools, private credit, and infrastructure reflect how investors are navigating that environment rather than turning away from the asset class altogether.

How this digestion phase resolves will depend less on any single fundraising quarter and more on what happens to the capital already raised: the pace and quality of deployment, the timing and form of exits, and the way LPs evaluate the realised outcomes of recent vintages. Those factors, rather than headline AUM alone, will shape the next stage of private-markets growth.

Research Analyst

Simran Mehla

Frequently Asked Questions

Q: Why has fundraising slowed if dry powder is still rising?

A: Exits have been weak, LPs are over-allocated on paper, and many funds raised in 2019–2022 still have undrawn commitments, so allocators are slowing pacing and rebalancing before adding more.

Q: What’s the significance of aging dry powder?

A: A growing share of undeployed capital now sits in funds that are 2–5 years old, which increases pressure on managers as investment periods mature and makes rushed deployment a real risk.

Q: Which strategies are holding up better?

A: PitchBook shows relatively stronger momentum in secondaries, co-investment funds, private debt, and infrastructure, as LPs seek more control, portfolio tools, and higher-in-the-stack exposure.

Q: Who is under the most pressure in this environment?

A: Large, established platforms are still raising; the real squeeze is on mid-market and emerging managers with undifferentiated strategies.

Q: What are LPs actually doing in response?

A: They’re concentrating commitments with fewer managers, increasing use of secondaries to reshape portfolios, and being more selective about new blind-pool funds and vintages.

Sources

PitchBook, Q3 2025 Global Private Market Fundraising Report.