PitchBook News - When dry powder stays dry

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The Research Pitch

March 22, 2025

Presented by Affinity

Private debt's rise: In 2024, private debt established itself as the second-largest strategy in private capital—behind only PE. Our new report explores the growth and the outsized role of direct lending. Read it here.

Airline MRO: PE interest in the aircraft maintenance, repair, and overhaul sector shows no signs of slowing, as stable revenue streams and a fragmented market make it ripe for consolidation plays. Read our research.

Tech updates: Access previews of our client-only research on VC trends in healthtech, foodtech, pharma biotools, and enterprise SaaS.

A message from Affinity

Due diligence in early-stage investing with former NEA Partner

What does the future hold for early-stage investing? Vanessa Larco, a former Partner at NEA, will share her expert perspective with Affinity on April 3.

At a time when traditional due diligence approaches are being tested, Larco is rethinking how investors assess the deals in their pipeline—combining a deep understanding of first principles and universal truths with a strategy that pushes new technologies to their limits.

Balancing the investor’s instinct with technology that promises to streamline due diligence is a challenge that many firms face. Larco offers a way to approach this question. Learn how her due diligence process has evolved, its impact on the new fund, and recommendations to help other firms strengthen their due diligence practices.

Register now

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Dry powder staying dry

Much has been written about the sluggish pace of distributions from private funds, with capital returned to LPs hovering near GFC-era lows as a proportion of NAV.

However, the other side of the equation—the pace of capital deployment—is important to understanding the current landscape and LPs' cash management.

PE funds have deployed about one-third of outstanding dry powder per year on average since 2010. Over the year ending in September 2024, that figure dropped to 26%.

This aligns with broader moderation in PE dealmaking, which has slowed from the breakneck pace of 2021 but remains far more stable than the collapse in exit activity affecting historically low distribution yields.

In VC, the slowdown in capital deployment has been even more pronounced. Since 2010, VC funds have called an average of about 37% of outstanding dry powder annually.

Over the 12 months ending in September 2024, that rate more than halved to just 18%, underscoring the dramatic pullback in venture investing.

While AI-driven enthusiasm has fueled optimism across the VC market, it has yet to translate into accelerated capital deployment.

If anything, this may signal to LPs that VCs are being more selective with their capital, a welcome shift after the rapid-fire dealmaking before the start of the Fed's interest-rate-hiking cycle.

While distributions remain challenging for LPs, capital deployment trends highlight another critical factor in understanding private fund pacing and the extent to which managers have adjusted their deployment strategies from the days of near-zero interest rates.

For more data and analysis, read our free report: Quantitative Perspectives: US Market Insights

Clients can access prior editions of our LP-focused weekly commentary in this dedicated workspace.

Have a great weekend,

Zane Carmean, CFA, CAIA
Director, Quantitative Research

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Real assets beyond infrastructure

Infrastructure has, in many ways, been the belle of the private capital ball since the pandemic.

However, the real assets fund universe has not always been as profoundly dominated by one category as it was in 2020-2022. From 2008 to 2015, oil & gas funds made up anywhere from 17% to 44% of real assets capital raised.

As infrastructure's popularity has grown and allocators have increasingly sought exposure to the opportunities capitalizing on the decarbonization, digitalization, and deglobalization megatrends, other types of real assets have seen dwindling shares of commitments.

At least, that is, until recently.

In 2022, non-infrastructure funds made up just 3.5% of raised capital. In 2023, that figure jumped to 13%. And in 2024, it was 19%.

Part of this is attributable to a slowdown in infrastructure commitments contextualized by a challenging macro environment, limited distributions to allocators, and cyclicality in fundraising among megafund managers.

However, it is also due in part to a resurgence of interest in private oil & gas funds. In 2024, vehicles in the category raised $8.8 billion, their highest figure since 2019.

Now, with a pro-fossil-fuel production administration in the White House and private oil & gas funds disproportionately located in the US, an oil & gas fundraising revival is seemingly much more likely than it was a few years ago.

This is not to say that infrastructure is being pushed out of the spotlight. In fact, we are seeing more real assets funds investing in these spaces alongside other real assets categories, a trend that surfaced in some of the largest funds raised throughout 2024.

For more data and analysis across all strategies, download our free Global Private Market Fundraising Report.

PitchBook clients can read the full version of this commentary in our dedicated workspace.

Best,

Anikka Villegas
Analyst, Fund Strategies &
Sustainable Investing

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Thematic Research

Climate Tech M&A Review

Can your climate tech company find a buyer?

Acquisition interest varies by niche, but that is not to say there aren't opportunities—especially in fields like intermittent renewables and sustainable foods.

We analyzed a dataset of 10,000 companies to map an M&A outlook for a sector facing an uncertain few years:

Read the free research

Tech Landscape: Plant Biotech

In 2024, plant biotech startups secured $1.2 billion in VC funding, marking a 78% YoY increase—in contrast to the overall downturn in agtech.

Investor confidence remains strong, particularly in early-stage deals, as gene-editing technologies and biological inputs gain traction.

Our new research explores how CRISPR and AI are reshaping agriculture:

Read the free research

Battery Tech: The State of Solid-State

Solid-state batteries offer key advantages over traditional lithium-ion batteries, including higher energy density, increased safety, and faster charging.

Our new research explores the challenges that persist in scaling promising research developments into manufacturing and commercialization:

Read the free research

Market Updates

India Market Snapshot

India's private markets are navigating a mixed landscape—VC deal activity continues to battle headwinds, while PE has remained more resilient.

Our new report dives into the macro trends, key deals, and what's next as India heads into a shifting economic cycle:

Read the free report

Webinars & Events

Upcoming events to hear from our team:

March 26: Join us at the BVCA Private Credit Conference, where our head of EMEA credit research, Taron Wade, will give an overview of the private credit landscape and lead a fireside conversation on the challenges and opportunities shaping the market.

March 26-April 2: We're hosting two All In webinars that cover new data on female founders and the broader impact of women in VC. Our US-focused conversation is on March 26, while our Europe-focused event is on April 2.

March 27: Our webinar on the counter-drone industry has been rescheduled to a new date. Register here.

In the News

Our insights and data featured in the press:

• Why Klarna's IPO "represents a critical test case for the fintech sector." [Fortune]

• The aggregate valuation of US startups is now over $4 trillion, more than double 2020's total of $1.7 trillion. [FT]

• Largest managers and funds increasingly dominate private credit. [Alternative Credit Investor]

If you're a journalist interested in interviewing our analysts or requesting data, contact our PR team.

ICYMI

More of our recent research (* - report preview):

Market updates

• US PE Middle Market Report
• Quantitative Perspectives: US VC
• Southeast Asia Private Capital Breakdown
• MENA Private Capital Breakdown

Thematic research

• 12 Takeaways From Fintech Meetup
• VC-Backed Companies Becoming Active Buyers
• Innovation Spotlight: Irrigation Tech*
• Stablecoins
• The Techbio Investment Ecosystem

Industry & tech research

• Mobility Tech VC Trends*
• Information Security VC Trends*
• Food & Beverage CPG Report*

Credit research

• US Credit Markets Weekly Wrap*
• US High-Yield Bond Weekly Wrap*
• Global CLO Weekly Wrap*
• Global Distressed Credit Weekly Wrap*
• US Private Credit & Middle Market Weekly Wrap

Coming next week (subject to change)

• Real Estate Report
• Emerging Tech Indicator
• Clean Energy Overview*
• Gaming Report*
• Healthcare IT PE Update
• Sizing the US VC Secondaries Market

Thanks for reading! Feel free to email us any time with feedback, questions, or tips!

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PitchBook News - When dry powder stays dry

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