2025's top investors: Our Global League Tables have been updated to reflect Q1's most active investors by region, industry, and more—plus top advisors, acquirers, and law firms. See the rankings.
Tech VC trends: You can access previews of our new client-only reports on enterprise SaaS and crypto, two verticals that had a huge Q1 for deal value.
Private credit focus: Our US Private Credit Monitor provides a high-level view of estimated volume and counts, spread distribution, and much more. We've also launched our quarterly survey, where you can help us understand the trends you're seeing. |
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A message from Fidelity Private SharesSM
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Retain top talent: Download guide on equity compensation strategies
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Retaining top talent goes beyond perks like snacks and unlimited PTO. Ownership through equity is a powerful retention strategy. By the time you reach Series B or C, early equity grants are vesting, making key employees prime targets for competitors. Compensation expectations are shifting, and you may need a strategy that goes beyond one-time grants to keep your top performers engaged for the long haul and attract new talent.
Download the guide now to learn how to evolve your equity compensation strategies and retain your top talent.
Ready to see Fidelity in action? Schedule a demo at FidelityPrivateShares.com. Mention PitchBook to get 20% off your first-year paid subscription.
PitchBook and Fidelity Private Shares LLC are not affiliated |
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PE in 2025: Unrealized and unsettled
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The handoff from 2024 to 2025 came with a bit of a buzz.
There was a growing sense that we might be heading into a new cycle, one defined by stronger growth, lower interest rates, and a clearer runway for buyout dealmakers.
That optimism may have been short-lived.
Q1 brought renewed uncertainty, particularly around trade policy. Talk of new tariffs had been swirling for weeks, and when they were officially announced in early April, it prompted many companies to hit the brakes on big decisions. That kind of wait-and-see environment tends to freeze business activity.
Private equity is not immune to these pressures. While PE is often seen as more resilient in the face of short-term noise, buyout dealmaking still hinges on stable conditions, predictable financing, and healthy exit channels.
Deal and exit activity improved throughout 2024, but those gains merely brought activity back to long-term trend levels, not beyond. Looking forward, the macro backdrop appears unlikely to support continued momentum.
On the exit side, there is still a hefty backlog. We estimate that close to $100 billion in exit overhang has built up relative to what long-term trends would suggest. Clearing that backlog would require a sustained period of above-trend exit activity, which seems unlikely in the near term.
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| Click for a larger view of this chart on buyout fund NAVs. |
This exit drag is slowing the capital recycling mechanism. The median holding period for buyout-backed companies is 3.5 years, and more than 30% have been held for 5+ years; both figures are at decade highs.
As realizations slow, fund NAVs are aging. Roughly 40% of buyout fund NAV, or about $826 billion, is 7+ years old.
Typically, buyout fund NAV peaks around year five or six at about 80% of the total commitment size. In recent vintages, NAV has peaked higher and later, and it's not winding down as quickly as expected. This pattern suggests GPs may be either unable or reluctant to realize investments.
All of this has kept a lid on distributions. The result is a growing mismatch between the distributions LPs expect and the capital currently being returned.
Given the current level of fund NAVs, we estimate that distribution demand in 2027 will be close to $360 billion, which is far more than the $191 billion distributed in 2024.
You can read more about the buyout landscape in our free report: Q2 2025 Quantitative Perspectives: False Start
Please reach out if you have any questions or feedback.
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A tale of two markets: AI strength and VC weakness
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Tariff tensions have delayed VC's anticipated liquidity rebound to Q4 at the earliest.
For most sectors, this means continued fundraising challenges and softening valuations, particularly at later stages.
But for AI, the story is strikingly different.
In Q1 2025, AI & ML captured over 70% of VC deal value and one-third of deal count, with valuations and deal sizes commanding significant premiums.
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| AI's share of deal value has skyrocketed up from 25% in 2022. |
Outside of this AI-driven surge, the broader VC landscape remains sluggish.
Over a quarter of rounds were flat or down, valuation growth between rounds remained modest, and many mature startups are deferring their next raise.
Although the one-year IRR turned positive, it's more a signal of a bottoming market than a bounce back. And while secondaries and early-stage M&A offer glimmers of liquidity, their impact remains limited.
Overall, 2025 is shaping up to be a bifurcated market.
AI continues to defy gravity, while the rest of VC grapples with a volatile market and elevated valuation overhangs.
Until there is more policy certainty, expectations for a broader recovery may need to wait until next year.
For more data and analysis, download the full report: US VC Valuations and Returns Report
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