Private Markets in 2025: Shaky Ground, Steady Hands
Conditions are likely to remain uneven for private markets due to uncertainty.
Private Markets in 2025: Shaky Ground, Steady Hands
Despite swirling headwinds, private markets proved more resilient than they appeared in 2024. Fundraising was weak in 2024—hitting its lowest point since 2016—and public markets outperformed on returns. But the headlines obscure what really happened: capital deployment accelerated, LP confidence held firm, and private equity began climbing out of its multi-year fog.
McKinsey’s Global Private Markets Report 2025 asserts that this year’s story is one of reinvention under pressure. Facing a structurally higher interest rate environment, managers pivoted. New fund structures—evergreen vehicles, continuation funds, co-investments—are replacing the traditional playbook. Meanwhile, LPs are shifting from passive allocators to active participants, doubling down on GP stakes and secondaries.
Private equity, after two murky years, started to re-emerge. Distributions finally exceeded capital calls for the first time since 2015—a signal that liquidity is returning. Large-cap tech and software deals picked up, sponsors found ways to transact despite high entry multiples, and exit activity—especially sponsor-to-sponsor—began to hum again. The cost of financing eased, and with it came a quiet but notable uptick in both deal volume and confidence.
Meanwhile, GPs aren’t just buying—they’re building. Traditional financial engineering is giving way to real operational transformation, particularly in software businesses. Playbooks now emphasize product-led growth, recurring revenue expansion, pricing architecture and AI-enabled go-to-market acceleration. The days of passive ownership are done.
Venture capital had a harder time. Deal volume and valuations slid further, especially in early-stage and growth tech. But the shakeout may be healthy. Capital is consolidating around higher-quality companies with real revenue, real margins and clearer paths to profitability.
Across both PE and VC, the underlying shift is clear: value creation is back at the center. Operational capability—not just capital—is what separates winners from the rest. GPs with deep sector expertise, operator networks and a repeatable execution playbook are outpacing the pack.
LPs are taking note. In McKinsey’s latest survey, 30% said they plan to increase PE allocations in the next 12 months. That’s not blind optimism—it’s a bet that, even in a higher-rate world, private equity in software and tech still offers unmatched long-term upside for those willing to dig in and do the work.
The fog hasn’t cleared—but the best firms aren’t waiting for sunshine. They’re building in the haze.
Read more from McKinsey’s report here.
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About ElevenX Capital
ElevenX Capital is a venture studio and venture capital fund that builds companies from the ground up. Founded in 2014 by serial entrepreneur Anjli Jain, ElevenX redefines the traditional venture capital model by combining ideas, capital and talent to create and scale companies across various sectors, including cybersecurity, artificial intelligence, and education and workforce management. The firm brings together experienced entrepreneurs and value creation specialists in marketing, sales, engineering, talent, legal and finance to support the development of new ventures from inception to scale. ElevenX has offices in Miami, Florida and Gurgaon, India.
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