Happy Friday, funds family!

We recently surveyed GPs and LPs across asset classes to get a pulse on the private markets. We wanted to see how folks are feeling, where capital is moving, and what’s keeping sponsors and investors up at night.

This post kicks off a four-part series breaking down the results. 📊 

In this installment, we’re zooming in on:

1. Overall market sentiment – How optimistic (or pessimistic) participants feel heading into the rest of 2025.

2. Manager & asset selection – What LPs are prioritizing, what they’re avoiding, and how they’re picking GPs.

3. Check size trends – Whether LPs are writing bigger or smaller tickets this year.

Thanks for reading! Now, let’s dive in 👇

🗣️ Overall Market Sentiment: GPs bullish, LPs cautiously optimistic

When asked about their outlook for the private markets over the next 12 months within their primary asset class, the majority of respondents expressed optimism:

• 64% of all participants identified as somewhat or very optimistic

• Only 13% of all participants said they were somewhat pessimistic

• GPs were more bullish than LPs: 67% of GPs leaned optimistic, compared to just 54% of LPs

While sentiment is net positive, the gap between GPs and LPs suggests that optimism may be more tempered on the capital allocation side.

💼 Manager Selection: Track record is still king

LPs shared what matters most when selecting a GP. The results weren’t surprising, but they were definitive:

• 82% of LPs selected track record as a critical factor

• 73% pointed to fund strategy

• 50% emphasized GP commitment

• Legal/business terms and projected returns were each selected by just 23% of LPs

We also asked which types of LPs are most active in the market right now. The majority of LP respondents in this survey were individual investors, followed by family offices and fund-of-funds. We also had corporate allocators (including banks).

🧪 First-Time Manager Selection: Flat or falling

We asked LPs how their appetite for investing with first-time or emerging GPs has changed this year.

• 45% reported no change

• 37% said their appetite had decreased 

• Only 18% said interest had increased

While nearly half of LPs haven’t shifted their position, the balance is tilting downward: those decreasing their interest outnumber those increasing by more than 2 to 1.

⚠️ Top Challenges: Valuations, exits, and deal flow

We asked LPs to identify the biggest challenges they face when evaluating investment opportunities in today’s market. The top three stood out clearly:

• 64% cited valuation concerns, making it the most frequently selected challenge

• 46% pointed to uncertainty around exit opportunities (e.g., IPOs, acquisitions, secondary sales)

• 32% said they’re facing a lack of quality deal flow

Meanwhile, 27% flagged fraud or misrepresentation risk as a key concern.

📌 Asset Class Outlook: Real estate rising, hedge funds falling

We asked LPs which asset classes they expect to prioritize or de-prioritize over the next year. A few clear trends emerged:

Prioritizing:

• Real Estate (64%)

• Private Equity (55%)

• Venture Capital (32%)

De-prioritizing:

• Hedge Funds (50%)

• Venture Capital (36%)

• Private Credit and Digital Assets (32% each)

📝 Note: Interestingly, venture capital showed up on both lists—some LPs are leaning in (32%), others are backing off (36%). 

🏗️ Fund Size Preferences: LPs favor mid-sized funds

We asked LPs what size of funds or syndications they’re most inclined to invest in over the next year.

• 64% preferred funds between $10 million and $100 million

• 18% favored smaller funds under $10 million

• 18% leaned toward larger funds between $100 million and $1 billion

To be fair, this data might also be skewed based on the surveyed population. High net worth investors and smaller family offices may favor smaller funds as compared with pensions, endowments, and other very large institutions (which made up a small percentage of our survey results).

💸 LP Check Sizes: Mostly steady with a tilt upward

We asked LPs how they expect their check sizes to change over the next 12 months.

• 50% said their check sizes will stay the same

• 45% plan to increase (most of those said “somewhat”)

• Only 5% expect to decrease

🦁 What We’re Seeing in the Wild

Over the last 12 months, we’ve seen strong interest in small/medium business private equity and private credit. Cash flow is so hot right now.🔥 

In the last three months or so, we’ve also seen a marked uptick in venture capital. Perhas the VC winter starting in 2022-2023 is starting to end. 🧊 

For reference, the funds we represent are typically raising between $25 million and $250 million. That being said, we do work with smaller funds, and some of our clients are larger (~$500 million).

We also continue to see quite a lot of co-GP / seed investor activity, where a large investor takes a stake in an emerging manager. 🤝 

/ WRAPPING THE CASE

⚠️ Note: This newsletter is for informational purposes only and nothing should be considered legal advice. For that, hire a lawyer! I am a lawyer, but not your lawyer (unless I actually am your lawyer because you’ve signed an engagement letter and we’re working together). This newsletter may be considered attorney advertising.