PitchBook News - New year, new PE?

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The Weekend Pitch

January 5, 2025

The Daily Pitch is powered by PitchBook’s industry-defining research and best-in-class data

(Jenna O'Malley/PitchBook News)

When I started covering private equity over a decade ago, my job felt simpler. While the industry was already mature, it was still fairly easy to define.

I'm Andrew Woodman, and this is The Weekend Pitch. You can reach me at andrew.woodman@pitchbook.com or on X @adwoodman.

Today, traditional descriptions of what—and who—comprises the PE industry seem increasingly inadequate. As a result, describing the asset class to outsiders can often feel like nailing jelly to a wall.

Few of the industry's major players can now comfortably fit the label of "PE firm." This is not only the case with so-called buyout shops like KKR are The Carlyle Group, which have long since outgrown their original labels, but also with asset managers that have historically associated with those assets making significant inroads into the private markets.

The products they offer also look less like standard PE. Not only have fund managers expanded their offerings beyond standard PE—particularly with private debt—but also they're making greater use of open-end vehicles that subvert a core characteristic of PE: illiquidity.

In the year ahead, the boundaries of PE will be further stretched as asset managers innovate and consolidate to capture more capital.

Fundamentally, the PE investor base is changing. PE is not focused solely on legacy providers of capital—the pension funds, insurance companies and sovereign wealth funds—but has turned more to high-net-worth individuals and even retail investors for commitments.

Industry veterans will argue that none of this is new, but the pace of change—especially where it relates to the blurring of public and private markets—is accelerating.

In the past year, some watershed moments have spelled out this evolution.

Apollo Global Management CEO Marc Rowan put it most simply in a September CNBC interview: "A year from now, you will not be able to tell the difference between public and private."

Trivia

(NurPhoto/Getty Images)

2024 was a blockbuster year for AI foundation model startups. Funding more than doubled from 2023 as mega-deals from a small cadre of companies like OpenAI and Anthropic pushed the segment to new heights. How much was invested in foundational model startups in 2024 according to PitchBook data?

A) $23.7 billion
B) $51.9 billion
C) $40.2 billion
D) $34.5 billion

Find your answer at the bottom of The Weekend Pitch!

Stay tuned

Keep an eye out for these insights and research reports coming out this week:

Q4 2024 Venture Monitor First Look
December 2024 Global Markets Snapshot
Analyst Note: AI Healthcare & Life Sciences Market Snapshot
Emerging Space Brief: Warehouse Robotics
Q2 2024 PitchBook Benchmarks (with preliminary Q3 2024 data)

Quote/Unquote

(Jenna O'Malley/PitchBook News)

"The real challenge is cutting through the 'AI washing' to identify founders who aren’t just using AI as a buzzword."

—Richard Dulude, co-founder and general partner at pre-seed and seed investor Underscore VC, discussing the difficulties of finding new startups to invest in when nearly 1 in 4 is an AI company.

Trivia

Answer: C.

In 2024 AI foundation model funding grew more than 100%, generating $40.2 billion. Smaller VC firms, though, are feeling crowded out and looking for opportunities elsewhere.

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This edition of The Weekend Pitch was written by Andrew Woodman and Jacob Robbins. It was edited by Clarinda Simpson.

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PitchBook News - New year, new PE?

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