Limited Partners continued to pour money into private markets in 2019, as $888 billion was raised across 1,064 funds, the most ever on an annual basis according to data from Pitchbook.
The Pitchbook 2019 Annual Private Fund Strategies Report showed record investment in private equity firms and venture capital firms raising a little less than 2018, but still holding strong.
Private equity firms raised more money than in any previous year, securing nearly a half a trillion dollars, the data showed. In total, 353 funds raised a combined $474.1 billion during the year, a year-on-year rise on last year’s total, which was boosted significantly by Softbank’s $100 billion Vision Fund. Although 2019 did not see any funds on that scale, some gigantic vehicles from Blackstone, Advent International and Vista Equity Partners, each of which surpassed $15 billion, helped drive last year’s total to record levels.
The data showed the trend of huge PE funds is continuing. Mega-funds accounted for more than half of the total capital raised in the past two years, and vehicles of $1 billion or more accounted for more than a quarter of all PE funds and nearly 85 percent of capital raised in 2019.
Capital raised for venture funds dropped 14.5 percent from 2018, but maintained similar levels of the past four years. In 2018 Sequoia closed its massive $8 billion fund, which skewed totals upwards, meaning a drop was expected this year. The data also showed a 6.2 percent decline in the total count of venture funds for 2019, the fourth consecutive annual drop. There were 436 funds closed last year, the lowest total since 2013. Fewer funds with sustained totals raised means there are more larger VC funds.
The authors of the Pitchbook report predicted a bright immediate future for venture capital. “Heading into 2020, the fundraising outlook for VC remains bright. US-based funds in 2019 had a gargantuan year for investment realizations and saw exit value more than double YoY, which will eventually turn into distributions to LPs. As LPs receive their cash, we expect them to recycle it into new venture funds,” the report read.