Acuity Knowledge Partners survey reveals optimistic outlook for private equity and VC, despite rising competition

Competition for private equity and venture capital funds has increased in recent months, but fundraising conditions should improve in 2022, according to Acuity Knowledge Partners' (Acuity) global Private Equity (PE) and Venture Capital (VC) survey.

Respondents representing over 80 firms spanning North America, Europe and Asia, reported on their outlooks, concerns and business plans for 2022.

Respondents indicated that, amid the positive fundraising environment, funds available to deploy are likely to increase, with more than half of respondents expecting levels of dry powder to remain high for some time.

According to the results off the survey, the PE and VC sector remains strongly optimistic about fundraising. Despite many respondents (74 per cent) experiencing increasing competition for funds recently, almost the same number (72 per cent) still believe the quality of fundraising opportunities should improve in 2022; 21 per cent expect it to remain the same. Regionally, UK- and Europe-based firms are more optimistic about fundraising. Over 80 per cent of respondents from these regions expect an increase in fundraising, while only about 70 per cent of respondents from the US and Asia expect growth.

In general, the PE and VC sector expects valuation levels to remain elevated. About 90 per cent of respondents expect valuation levels to increase or stay at current levels. While respondents did not indicate that high valuations impacted exit decisions, 58 per cent rate high valuations as a major concern. In an environment of soaring valuations, finding targets with the right valuation is difficult; almost all respondents agree with this. The level of difficulty seems moderate to difficult, with 81 per cent of the respondents rating it between 5 and 8 or more on a scale of 1 to 10.

PE and VC firms are augmenting their teams with outside support. Nearly half of the firms currently not using this business model are likely to outsource or are open to outsourcing. Notably, 90 per cent of associates and 89 per cent of vice presidents surveyed are open to outsourcing, which is greater than the level of support seen in senior management. This is atypical in comparison to other sectors where the decision to outsource is generally made by senior management. Overall, the acceptance of outsourcing is high across designations