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| The Daily Pitch |
| PE, VC and M&A |
| Your edge on global private capital markets |
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| Happy Monday. Today’s Daily Pitch looks at a fundraising slowdown in our US PE Middle Market Report, sponsored by Bespoke Partners, and explains why LPs are showing more confidence in Europe's first-time managers. Also: What will 2026 bring in US leveraged finance? Take our survey to share your thoughts on factors like credit spreads, inflation and AI. |
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| PE middle market feels a fundraising cold snap |
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By Madeline Shi, Sr. Private Equity Reporter
While 2025 is shaping up to be a lean year for PE fundraising, the icy blast is hitting the middle market particularly hard. Allocators are cooling on the segment, and mid-market GPs are finding their exits lagging the broader PE industry.
Both the total capital raised and the number of funds closed through September came in at less than half of last year's total haul. At the current pace, 2025 is poised to break from the robust mid-market fundraising of the past three years—each of which saw fundraising surpass $140 billion on an annualized basis.
In the first three quarters, PE firms closed 88 mid-market funds, defined as those raising from $100 million to $5 billion, according to our Q3 2025 US PE Middle Market Report. Those vehicles secured a collective $71 billion in commitments.
"Middle-market fundraising peaked in 2023 and 2024, but the lack of exits has finally caught up," said Kyle Walters, a PE analyst at PitchBook and co-author of the report. |
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The subdued fundraising momentum is unfolding against a relatively slower recovery in exits across the middle market.
Over the first three quarters of 2025, PE firms realized $78 billion in mid-market exits—defined as deals valued between $25 million and $1 billion. The sum accounted for only 29% of the total PE exit value over that period, the lowest share ever recorded.
The long-awaited recovery in PE exits was derailed earlier this year by a series of macroeconomic shocks—most notably tariffs, which placed greater pressure on smaller businesses than their larger counterparts. |
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| 9 essential controls to optimize cybersecurity |
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The right controls—human firewalls, frontline devices, etc.—can protect a fund from financial and reputational damage.
Learn more |
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• A surge in planned Moon missions is giving VC a boost. Startups developing landers, transfer vehicles and lunar utilities collected nearly $2 billion across 114 deals in 2025—and the market could reach $25 billion by the early 2030s. Read the report
• Wealthfront's Nasdaq debut ended with a modest 1.4% gain, closing at $14.19 after pricing at the top of its range. The restrained debut adds to a recent pattern of mixed fintech listings. Read more
• AI and automation deals bucked a wider slowdown in PE funding for the transportation and logistics sector in Q3. Read it now
• Our VC ecosystem rankings explore how AI investment and geopolitical dynamics are redrawing the boundaries of innovation and growth worldwide. See the rankings |
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| Europe's first-time funds see uptick in LP confidence |
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By Emily Lai, Private Equity Reporter
A maturing market and more family office participation have helped reverse the decline in LP commitment to Europe's first-time managers—a stark contrast to their US peers.
Newly established funds in Europe have raised €4.2 billion (about $4.9 billion) so far this year, already 23.5% above 2024's total, putting it on course to match both 2022 and 2023, according to PitchBook data.
Individual first-time funds are also getting bigger as the fund count falls for a fourth year.
Across the pond, North American first-time funds are still pulling in more capital on aggregate, with $7.2 billion secured this year, but that total is still 36% below that of last year, when $11.3 billion was raised. |
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"Over a longer period of time, the US has outperformed Europe in terms of first-time fund formation, but the pressure valve is getting released in Europe," said Ed Stubbings, founder of Ternion Alternatives and an advisory board member for both the British and US Emerging Manager Institutes.
Specifically, the development of the independent sponsor market—whereby firms originate and structure deals without raising a blind-pool fund upfront—has allowed would-be fund managers to build a track record.
Furthermore, while emerging managers will typically come under more scrutiny for their lack of track record, in an uncertain market, risks are increasingly seen as something to be managed rather than avoided.
"There is now more appetite among some investors to back emerging managers again," Stubbings said. "There used to be emerging manager programs at many LPs a decade ago, but then the allocations ended up getting eroded by large re-ups and also the denominator effect, but now LPs want to find alpha."
The increase in allocation from family offices and ultra-high-net-worth individuals into private markets also provides another source of capital for first-time funds. This capital is often more aligned with emerging funds, as the smaller ticket sizes these investors offer are not suited to mature managers raising much larger funds. These investors are also typically more flexible and dynamic with regard to where they deploy their capital.
"I would expect that those who are not in the space will have more appetite to look around for the niche opportunities, and maybe take a bit more risk with the hope of making the return as well," said Brendan Gallen, partner at law firm Reed Smith, who works on fund formation. |
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Smart reads that caught our eye.
• These Arizonans want nothing to do with Big Tech's data center development. City officials in Chandler, Arizona, unanimously rejected a proposal to rezone land in order to build a data center. [Politico]
• Several US states, including California and Massachusetts, are suing the Trump administration over its $100,000 H-1B visa fee. The states argue that the high fee was set at an arbitrary amount and creates illegal barriers for employers. [Bloomberg]
• What the INVEST Act means for VC investors: The new package of bills could raise the limit on how many secondary investments VC funds can make. [ | | | | | | | |
