Committed but uninvested capital, also known as dry powder, is crucial in keeping the private markets active. Dry powder allows fund managers the flexibility to deploy capital opportunistically into new investments or to support portfolio companies during growth initiatives or times of distress.

Although there is no strict timeline for deployment, aging dry powder—older than about three years—indicates that capital is not flowing into new businesses, and may cause asset owners to hesitate to fund new vehicles.

After a decade of consistent growth, private capital fundraising hit its peak in 2021. Since then, both the amount of capital raised and the number of fund launches have decreased.

In 2024, the slow pace of fundraising resulted in a reduction of dry powder for the first time since 2010. While previous declines in private capital dry powder were relatively small in absolute terms, the drop from 2023 to 2024 was $322.8 billion, representing 2% of 2024 private capital AUM. The proportion of older dry powder is growing, which is affecting LP investment decisions that could come in to refresh capital.

 

A backlog of exits is putting additional pressure on capital raising, especially in private equity and venture capital. PE fundraising through the first half of 2025 is tracking for a very weak full-year total—even considering an uplift that may come from late-reporting funds. In VC, we are seeing the bulk of dry powder sitting in funds between two and five years old, as GPs are slowing deployment to respond to portfolio companies' cash needs amid an uncertain macro backdrop.

However, not everything is dark in the private market horizon, as there are some select bright spots. In real estate, the fundraising and performance downturn has been particularly acute since 2023. But we see an improved outlook ahead as fundraising in 2025 is on track to match or exceed 2024. Private debt is on pace for another strong fundraising year, and the 2025 total is likely to be in line with the prior three years, which are three of its four best years in a decade. Real assets and secondaries were boosted by the closing of a few mega-funds. In the case of secondaries, fundraising in 2025 is expected to beat the 2024 record. Secondary funds are now well established as core strategies in private capital portfolios and are no longer just a niche liquidity tool.

Read more on this topic in our Q2 2025 Global Private Market Fundraising Report.

Many investors know the long-standing axiom that purchase price matters when it comes to returns. In today's PE market, pricing is also proving to be a strong predictor of exit outcomes. As liquidity conditions remain constrained, our recent analysis shows that buyout deals struck at the highest valuation multiples at entry are taking significantly longer to exit than their more conservatively priced peers.

Looking across buyout transactions from the 2020 to 2022 period, which saw peak valuations, only 12% of companies acquired in the top quartile of entry multiples have exited, compared to more than 30% of those acquired in the lowest quartile. And looking back to the 2017 to 2019 cohort of platform creations, only a little more than half of the most expensive quartile of deals have exited, versus more than two-thirds of the cheapest portfolio companies.

The results suggest that companies with higher entry prices need more time to grow into their valuations, often requiring stronger growth, operational improvements, or multiple expansion that is difficult to achieve in a more selective and rate-sensitive market.

 

At the same time, the median age of active buyout-backed portfolio companies has continued to climb, now reaching 3.8 years, up from under three years in 2021. As exits slow, portfolio aging is contributing to longer fund lives, complicating LP commitment pacing and pressuring the fundraising environment for new vintages.

In an era where capital formation is increasingly tied to realizations, these dynamics reinforce the importance of valuation discipline, not just for achieving strong returns, but also for maintaining liquidity and the capital recycling flywheel. As the private market cycle evolves, the cost of overpaying is not just about returns; it is about time.

Read more on this in our Quantitative Perspectives: US Market Insights report. Access prior editions of the PitchBook Weekly Commentary in our dedicated workspace.