Private Capital in Focus: Venture Capital’s Comeback Year
This article was corrected May 4 for 2025 annual returns.
Venture capital led performance in private markets in 2025, posting a double-digit annual return and ending a three-year run during which it lagged most other asset classes. The rebound was partly driven by improving sentiment around late-stage company valuations. These gains are largely still on paper, however, as distribution activity remains below historical norms.
Closed-end venture-capital funds logged a 22.0% return, while buyout funds returned 10.1% for the year. Private credit registered a 9.8% annual return, bolstered by floating-rate loans that continued to pass through elevated rates to borrowers. Investor attention in private credit has likely already shifted to pressures in early 2026, however, with signs of software-related borrower stress and queues of redemption requests for some evergreen funds.
Real estate extended its difficult stretch, posting another negative quarter in Q4 and finishing the year as the weakest asset class. The sector has struggled to find a floor since 2022 and the onset of interest-rate hikes. Infrastructure finished 2025 at 12.8%, extending one of the most consistent runs in private markets — going a decade without a negative annual return.
Looking ahead, a pipeline of highly valued, late-stage venture-backed companies (several with anticipated mega-IPOs), could start to unlock the liquidity that limited partners have long been awaiting. The opening is far from guaranteed, however: 2026 has already seen renewed public-market volatility, pressure on software valuations and growing scrutiny of private-market valuations — any of which could delay the exits that would crystalize unrealized value.
Quarterly returns are calculated in USD using the Modified Dietz method and are not annualized. Calendar-year returns represent compounded quarterly returns. Data as of Q4 2025 from the MSCI Private Capital Universe.
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