TLDR:
Key points:
- Venture capital had the lowest average commitment size at $20 million over the last 30 years.
- Average commitments rose over time, with exceptions during the financial crisis.
In private markets, an analysis of three main facets of the Cobalt market dataset—performance, fundraising, and cash flows—offers insights into fund commitments made by limited partners (LPs) across their portfolios. The average commitment sizes from 1990 through 2023 among buyout, venture capital, and credit funds showed notable trends and shifts:
Venture capital maintained the lowest average commitment size at $20 million. Average commitments generally increased over time, aligning with the growth of private equity. A significant drop in average commitments occurred during the financial crisis from 2009 to 2011. Surprisingly, credit funds had larger average commitment sizes than buyouts for nearly a decade from 2007 to 2017 despite buyout firms raising more funds during the same period. The current decade reveals a divergence with buyouts increasing average investment sizes by 64% while credit funds decreased by 74%.
Looking ahead, data from 2023 suggests that credit funds are nearing parity with venture capital averages for the first time since 1993. Factors contributing to this shift include high interest rates and changing trends in portfolio creation by investors. While buyouts may not sustain their recent growth, the expansion of fund sizes could impact future averages significantly post-2015.
It’s essential to note that this analysis serves for informational purposes only and does not constitute legal, tax, or investment advice. FactSet does not endorse or recommend any specific investments.
