Apr 16, 2021 - Economy

Private investment funds explore new strategies with extra capital

Illustration of a giant pipe with a torrent of money coming out.  

Illustration: Aïda Amer/Axios

Limited partners in private investment funds are sitting on extra cash, leaving room for "new ideas," according to a survey conducted by placement agent Eaton Partners between March 23 and April 7.

By the numbers: 58% of respondents say they've already identified the managers with whom they'll re-up in 2021, but still have available budget to invest in new managers or strategies.

  • Another 17% say they've allocated relatively little capital so far this year, adding themselves to the "open to new ideas" cohort.

Inside the numbers: Venture capital may be the biggest beneficiary.

  • 61% of respondents say they plan to increase VC exposure in 2021, which is up from around 40% in a similar survey last September.
  • 54% plan to increase exposure to growth equity (which is where we're seeing a ton of new fund strategies, from both VC and LBO firms).
  • Across all strategies, LPs say North America is where they expect to most increase allocation.

My thought bubble: There just doesn't seem to be any significant fear of the sort of public equities correction that could awake denominator effects, let alone one that could create downward pricing pressure on existing unicorns.

  • 23% of respondents say they have no concerns about inflation this year, while 71% say they are only "somewhat concerned."
  • Sounds like they're on the same page as Axios' Felix Salmon, who today writes not to panic about an inflation increase, even if it occurs.

The bottom line: Up and to the right. Rinse. Repeat.

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