Scaling with intent: How fund managers can grow beyond their flagship strategy

Over the last 15 years, private markets have expanded from $3T to an impressive $13T, with private equity, spanning buyout, growth, and venture, taking center stage. This growth was primarily powered by an increased appetite from institutional investors seeking higher returns. Despite inherent liquidity constraints, LPs kept investing in these assets to hedge against public markets. When strict rules like Basel III curtailed banks’ SME lending, a gap emerged that private debt was quick to fill. Private markets excel by meeting a unique trifecta of needs: they generate elevated returns, offer robust hedging benefits, and provide access to underserved sectors. This influx of capital introduced a new tension: how to scale without sacrificing returns. As funds grow, managers seek to diversify while striking a delicate balance between their reputation (TVPI) and their growth ambitions (AUM). 

In our recent conversations with fund managers across industries, almost half…