Brutal reality check hitting private markets: What our latest research revealed

The traditional narrative of private markets outperforming their public counterparts is fracturing under the weight of an inhospitable economic climate, a gruelling deal lull, and escalating investor scrutiny. As the landscape shifts, institutional investors are demanding a hard reality check, forcing fund managers to move past theoretical gains and prove their strategy through realised returns. 

SEC Newgate’s latest private markets research, based on a survey of institutional investors and in-depth interviews with mid-market General Partners (GPs), highlights this changing dynamic. Institutional appetite for private markets remains resilient, with 73% of Limited Partners (LPs) surveyed indicating appetite to expand allocations to the asset class. However, with 63% of current investors expecting a minimum rate of return of 16% or above, private markets must continue to justify their role in portfolios at a time when public markets have performed strongly.

For mid-market firms, this tension is felt even more sharply. Investors continue to see the segment’s advantages: LPs cite greater potential for value creation, specialist expertise and faster growth opportunities as the most attractive attributes of the mid-market. However, these are balanced against perceptions of higher risk and lower brand visibility at Investment Committee level compared with larger platforms.

For communications professionals, this means that the old playbook, relying primarily on track record, historical performance, and long-standing relationships, is becoming less effective. While these remain essential, they are increasingly the baseline rather than the differentiator.

Our roundtable discussion with senior communications, marketing and investor relations leaders, as well as advisers, reflected this shift. Participants agreed that the traditional fundraising narrative built around historical returns is becoming less powerful. Investors want evidence of how firms are navigating today’s environment, from slower exits and changing valuation dynamics to AI disruption and evolving portfolio risks. As one roundtable participant noted, LPs increasingly want fewer managers with deeper capabilities, increasing the pressure on firms to articulate a distinctive proposition rather than relying on past track record alone.

This is particularly important as larger platforms continue to attract capital based on perceived stability and scale. For mid-market firms, the opportunity is not necessarily to compete on size, but to communicate their advantages more effectively: sector expertise, specialist knowledge, proprietary sourcing, active ownership, the ability to generate real value and return capital at higher velocity.

AI is another area where communications will play a critical role. Roundtable participants noted that investors are actively looking for managers to demonstrate how they are responding to technological disruption – not through generic statements, but through practical, detailed examples of how AI is influencing investment decisions, portfolio management and operational improvement.

The message for communications leaders is that reputation management in private markets can no longer rely solely on amplifying past success. It needs to explain how value is being created in real time, how the portfolio is protected during periods of uncertainty, and why the firm’s strategy remains relevant in a market being reshaped by structural shifts, including changing liquidity dynamics and the AI revolution. 

Read our latest private markets research report here.