Analyses Made Easy

Pitchbook’s Private Fund Strategies Report for Q3 2020*

*All figures and graphics are taken directly from the report itself.

Capital raised for private funds in the 12 months preceding September 2020 totaled $950.6B, down 7.0% YoY. The odds that 2020 is able to reach 2019’s of over $1T is small given its current standing at $629B.

The total fund count previously mentioned period was down 26.7% YoY to 1,753, which underlines the degree to which capital is now being concentrated in larger funds. This has contributed the appearance of a decidedly downward trajectory dating back to 2017’s high mark of 2,660 for fund count. Only 150 first-time funds closed prior to the end of September, putting 2020 on pace for 200 new funds in total. That is a slowdown compared to previous years. In 2017, 299 first-time funds closed on $36.8B in commitments, and the capital raised in 2019 was slightly higher but across only 277 funds (see graph).

VC managers have closed on the most first-time funds (90) in the first three-quarters of the year. Still, this is not on track to match previous years’ norm of 150. VC topped the list of private strategies in total commitments for first-time funds with $7.1B raised against PE’s $5.4 billion.

Viewed in terms of regions, North America represented 53.2% of capital raised for maiden funds and 50% of their fund count in the first nine months of 2020. This means that North America’s first-time fund managers were more successful than their international counterparts but less successful than their domestic colleagues, who took a more substantial majority of the global haul both in terms of fund count and capital raised (see graphs).

While VC dominated in the new fund count, it still lags substantially behind private equity in terms of total capital raised across all funds (see graph right). That should be qualified by noting that venture capital funds have a larger share of total dollars raised so far in 2020 than in 2019, and are almost on par with 2018’s totals. Meanwhile, the average fund across all strategies and geographies continued growing quickly, and the median fund’s swelling has accelerated (see graph left).

North America’s share of the capital raised by VC funds grew to more than 70% in 2020 so far, which is slightly up from 2019. That said, the amount of North American-based funds has slightly declined as a percentage of the global total. That has been driven by a spate of funds totaling $1B or more, in addition to strong numbers from the $500M-$1B bracket (see graphs). 

As the fund total and capital raised for VC funds continues to grow, it reached $81.5B in total for 2020 with (so far) over 420 funds. This year’s total is on pace to top 2019’s $87.6B, though the round count will continue to decline. Odds are that 2020 will not match 2018’s record-setting $120.8B raised over 942 funds. Yet dry powder levels are showing resilience despite global circumstances. There is a current overhang of $257B, the vast majority of which is made up of capital raised dating back to 2018 (see graph). The total potential of assets under management tops $900B. 

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