2025 – What’s Ahead

In an effort to stay consistent and produce an annual “what’s ahead” piece for private markets, we’re forced to write this despite 2025 feeling like the most uncertain year as of late, which is saying something given the past half a decade….

Macro Outlook

From a macro perspective, projections across most asset classes are far from stellar, with forward looking returns expected to underperform years past. Nevertheless, growing demand persists across investor types for alternative investments as capital seeks outsized returns and allocators and advisors agree in their continued pursuit of sizable allocations to privates.

Venture Capital & Private Equity

Venture capital and private equity were less in favor in 2024 and thus far in 2025, though we believe they still deserve inclusion in broad mandate investment portfolios, specifically those with longer term time horizons and limited liquidity needs. That said, we think it makes sense to focus on more niche managers who offer some specialty to deliver the equivalent of alpha in their returns. Vintages matter considerably in this asset class, and investors from the past few years may be struggling given the historically sky-high valuations from the money printing zero interest rate era. Existing funds are currently challenged to exit their portfolios and deliver on current on-paper returns to investors (think DPI not MOIC), while also raising their latest funds. It’s certainly not an easy feat, but we feel the best managers should fare well, especially those with strong established investor bases. For this reason, managers raising for second, third, or nth vintages are likely to have more success in fundraising efforts than emerging managers.

Private Credit

Private credit seems to be highlighted daily by every investment newsletter nowadays. On the downside, there are some risks of a potential bubble forming due to weak underwriting standards or a need to scale too quickly for some investors. However, there exist many compelling opportunities with this structure of private investment, which has become a great fit for growing startups and small businesses alike as a replacement or complement to traditional equity. We think that hybrid approaches to income generating investments perform well in this environment and expect to see more businesses looking for multiple types of financing – which means more opportunities for creative private credit investors looking across both direct and fund opportunities.

A few capital intensive themes we are paying close attention to include aging infrastructure, grid degradation and strained transmission systems. The role of private capital in these markets offers promise amidst the return of public discourse to energy independence, resilience, and domestic industry. And where terms like climate are polarizing nowadays, rising food prices, public health and food security cast a new light on investments in agriculture, soil health, regenerative practices and related technologies as matters of national interest. This in addition to a scary climate reality. And while regulatory uncertainty presents real risk, we believe there will be some promising opportunities to invest in climate-adjacent spaces this year and beyond.

Real Estate

Real estate is a particularly difficult area to predict this year, though the inflationary-hedge characteristic of the asset class is attractive given the state of the current economy. Further, global housing shortages present a real need for supply, and we expect to see some attractive opportunities focused on certain markets, housing for aging populations, tourism & entertainment, among others.

Crypto Corner

Over the past several years, investing in the crypto space has meant cycling between the given get-rich-quick strategy of the moment; ICOs, DeFi, NFTs, and now memecoins. It remains to be seen how value additive these can be, though history suggests more of the same with these types of “pump-and-dump” strategies. However, there do seem to be a few positive underlying trends that have persisted through the noise. The first is Bitcoin, which is now a fixture in the portfolios of many investors, institutional and retail, propelled by approved ETFs and other tailwinds. Else, while less hyped than a few years back, there are positive things happening within the blockchain space from an innovation perspective, and we expect to see more real world applications this year, specifically in enterprise use cases.

Final Thoughts

While uncertainty abounds, it is a great time to look for alternative investment opportunities, and we expect these compelling asset classes to remain a growing piece of the modern investor’s asset allocation. Here’s to an exciting year ahead!