Across private markets, LPs became more selective, liquidity remained uneven, and re-ups increasingly flowed to managers with proven systems. The result was a clear split: larger funds and established platforms continued to close, while smaller vehicles faced a tougher bar and longer timelines.
This matters for 2026 because it changes the real question from “Is fundraising back?” to “Who can still raise in this market?”
Total fundraising fell, but concentration rose
On the surface, the story looks like a slowdown.
Global private equity fundraising fell 12.7% to about $480.3B in 2025, with fewer funds launched than the prior year. Venture fundraising also remained under pressure, with industry data indicating global VC fundraising sat below $100B in 2025.
But the more meaningful story is concentration.
In the US, the top 10 private equity fund groups captured 46% of fundraising in 2025, the highest share in more than a decade, while fundraising outside the top tier declined.
The market did not stop allocating. It consolidated allocations.
Why big funds were easier to back in 2025
LP behavior in 2025 was shaped by a few practical realities:
1) Fewer re-ups, higher conviction
With distributions still uneven and denominators still a constraint for some allocators, LPs made fewer new commitments and concentrated more capital into managers they already trusted.
2) Operational maturity became part of underwriting
As scrutiny increased, operational readiness mattered more. Reporting, governance, investor servicing, and compliance are easier to diligence when a manager has scaled infrastructure and repeatable processes.
3) Scale reduced perceived risk
Large managers can staff value creation, handle complex cross-border work, and support portfolio companies through slower exit conditions. For many LPs in 2025, that resilience was worth paying for.
This “flight to scale” showed up beyond PE too. In venture, a16z raising over $15B is a visible example of how capital can pool into top platforms even when the broader fundraising environment is challenging.
What happened to smaller funds
Smaller funds were not unbackable in 2025, but they faced a different set of requirements.
They needed sharper differentiation, clearer proof of sourcing advantage, and greater transparency on how capital would be deployed. They also faced a credibility hurdle: LPs increasingly asked emerging managers to operate like institutions earlier in their lifecycle.
The squeeze was not only about performance. It was about confidence.
When LPs make fewer bets, they want each bet to feel operationally safe.
A useful benchmark: fund sizes are staying elevated
Another signal of consolidation is that typical fund closes remain large.
UBS noted that the trend persisted into 2025, with the average fund closing now above USD 930 million, alongside expectations of continued industry consolidation (UBS CIO Private Markets outlook).
In other words, the “middle” is getting stretched. The average is being pulled upward by the ability of larger funds to keep closing.
What this means for 2026 fund managers
2026 is not simply about timing the market. It is about meeting the market.
If you are a large fund manager:
Your advantage is trust and scale. The 2026 challenge is maintaining performance and delivering realizations, while continuing to professionalize operations as LP demands rise.
If you are a smaller or emerging manager:
Your advantage is focus and agility. The 2026 challenge is proving you can deliver institutional-grade execution without institutional overhead. That means tightening the operating model around four things:
- Clear governance and investor protections
- Repeatable onboarding and reporting
- Faster execution with fewer moving parts
- Professional infrastructure from day one
Because for smaller managers, the fundraising question is no longer “Can you raise?” It is “Can LPs trust the machine behind the raise?”
Ready to Compete in a Market That Rewards Scale?
In 2025, fundraising concentrated into larger funds because LPs prioritized track record, institutional standards, and operational confidence (Financial Times, S&P Global Market Intelligence). In 2026, smaller and emerging managers can still win, but only if they operate with the same level of structure and execution.
Nova – Fund-in-a-Box by Auptimate, is built for fund managers and investment operators who want to launch and run funds with institutional-grade structure, governance, and operational readiness from day one, without building the stack from scratch.
Whether you are moving from syndicates to a first fund or formalising a repeatable investment strategy, Nova helps you run capital with confidence and professionalism.
Book a call with our team to see how Nova can support your fund launch in 2026.
