#251: Raising a VC Fund in 2025: Liquidity, AI, and a Tale of Two Markets
There are now 10x more private investment firms than public companies.
Let that sink in.
Private markets are no longer the “alternative.” They are the market.
In a conversation with Turner Novak on The Peel, Samir Kaji (CEO of Allocate) unpacked the seismic shifts reshaping private investing. His message was clear:
whether you’re building a fund or deploying into one, the game has changed.
Private Markets: From Alternative to Anchor
Today, there are 10x more private investment firms than public companies. The number of U.S. public companies has fallen from ~8,000 to ~4,000 since the 1990s, while nearly 90% of $100M+ revenue companies are still private. SpaceX and OpenAI? Both private. Both worth hundreds of billions.
The implication: private markets aren’t a sidecar anymore. They are the core. But navigating them — as a GP, LP, or individual — is more complex than ever.
Raising a Fund? Expect Resistance.
Raising capital has become a grind. Especially for emerging managers.
It’s now common for fundraising cycles to take 18–24 months.
Only ~20% of firms that raise a Fund I ever make it to Fund IV.
Liquidity remains a gating issue — and LP capital is increasingly concentrated in established firms.
In short: it’s a tale of two markets. The obvious, brand-name firms are still raising quickly. Everyone else is in a prolonged uphill climb.
So what works?
“The best emerging managers are those who can consistently win within their niche — either because of real or perceived advantages in sourcing, judgment, or brand.”
Clear theses, tight narratives, strong networks. That’s the new baseline.
Venture Has Fragmented — But That’s Not Bad
Venture isn’t one game anymore. It's a barbell:
On one end, mega-shops raising $1B+ vehicles focused on growth equity and innovation capital.
On the other, small funds deploying at seed, closer to the garage-stage roots of VC.
Each plays by different rules. The key is aligning strategy and fund size with where you actually have the right to win.
Samir puts it plainly:
“Play a game you can win. Fund size is strategy.”
If you raise a $100M fund but can't lead deals or win allocations in competitive rounds, you’ve mismatched your ambition with your execution capacity.
Secondaries Are Becoming Primary
In a world of delayed IPOs, secondaries are increasingly a core portfolio tool — not a signal of weakness.
The stigma is fading. In fact, Samir argues that secondary sales (especially at Series C/D) are essential for returning capital in a realistic time frame:
“Many managers could have DPI’d 4x if they had taken money off the table during 2021’s peak. Instead, some are sitting on 2x TVPI and unrealized upside.”
The smart GPs are treating secondaries as proactive liquidity management — not defensive maneuvers.
AI Is Here — But Utility Still Matters
AI is showing up everywhere: in deal flow, diligence, manager evaluation, and internal fund ops. But Samir makes a sharp point: novelty doesn’t matter unless it sticks.
“It’s easy for me to use an AI tool. It’s even easier to cancel if it doesn’t add real utility.”
From churn-prone “curiosity revenue” in early-stage AI companies to GPT-powered workflows for GPs, the opportunity is massive — but so is the noise. Founders and fund managers alike need to focus on defensibility, retention, and measurable impact.
Bottom Line
Private markets are bigger, more crowded, and more complex than ever. But the edge still goes to those who specialize, adapt, and manage liquidity with discipline.
If you're raising a fund in this market — sharpen your thesis, size your fund realistically, and treat AI like any other tool: powerful, but only if it works.
That’s all for today folks! Thanks for your support and spreading the word! Share this on Twitter or LinkedIn to help grow “the crew!”
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Interesting, thanks !!