Fund manager raises $1.2bn for investment in funds, secondaries, and early-stage companies
October 15, 2024 (Preqin News) – Chicago-based alternative assets manager Adams Street Partners has raised more than $1.2bn for its latest venture capital (VC) fund group, which comprises three vehicles and will invest in funds, secondaries, and early-stage companies.
Venture Innovation Fund Program IV is more than 40% larger than its predecessor program. The venture program attracted commitments from institutional investors across three continents, including family offices, foundations, and wealth platforms.
‘We believe venture capital will continue to drive the digital transformation of the global economy, with technologies like artificial intelligence poised to accelerate innovation across every industry, sector, and geography,’ Brijesh Jeevarathnam, Partner and Global Head of Fund Investments at Adams Street, said, announcing the close of the program.
Adams Street’s Global Investor Survey earlier this year found that LPs expect private markets to play a ‘pivotal role’ in areas such as AI, with 40% of respondents anticipating the best investment opportunities will be in tech and healthcare. A similar proportion (39%) of LPs believed persistently elevated interest rates and inflation were the most significant macroeconomic challenge facing private markets, although this had dropped from 55% the previous year.
The effects of elevated rates on venture capital have been more pronounced than in some other asset classes, such as private debt and infrastructure, which are seen as being inflation-resistant.
Historically, venture capital funds accounted for around 20-25% of total private equity fundraising. During venture capital’s boom years of 2021 and 2022, this rose to 29.5% and 30.22%, respectively. Fundraising conditions worsened from 2023, partly due to a lack of distributions to investors, and VC’s share of private equity fundraising fell to just 14.1%, according to Preqin data. That trend has continued, with VC funds accounting for 13.7% of private equity capital raised so far this year.
Private capital and VC fundraising 2016–2024 YTD
Source: Preqin Pro. Data as of October 2024
With interest rates persistently high and exits harder to achieve, Preqin forecasts global VC fundraising will remain subdued over the next two years, before recovering in 2026 and rising to $181bn in 2029, according to the Future of Alternatives 2029 report.
Venture capital funds focused on technology companies, which accounted for 64% of VC assets under management as of December 2023, have delivered higher returns with less risk than other VC funds, according to a new Preqin Insights+ report, Strategy in Focus: Tech, published today. Tech-focused venture funds have delivered a median net IRR of 16.3% with a standard deviation of 21.3% for funds of vintage 2012–2021.
‘VC tech has weathered a difficult period over the past three years, but there are some promising tailwinds,’ wrote Michael Patterson, Senior Associate, Research Insights at Preqin. ‘The top of the interest-rate cycle appears to have been reached, which will provide some tailwind to technology valuations and may help induce more exits in 2025. If the asset class can release more distributions back to LPs, that could also assist a fundraising recovery.’
The opinions and facts included within the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin providing the information in this content accepts no liability for any decisions taken in relation to the above.