Venture's biggest losers | PitchBook News Summary

1. Key Themes

VC fund performance dispersion makes manager access critical

Venture capital's return distribution is unusually wide, reinforcing why picking the right (often smaller) manager matters more than in other asset classes.

"VC has the widest gap between top- and bottom-quartile fund performance, according to PitchBook's Q4 2025 Global Fund Performance report. This makes access to the best managers critical, given their limited capacity to grow."

Evergreen/retail capital structurally mismatched with VC

The wave of evergreen fund products built for individual investors works for scalable asset classes but breaks down in venture, where capacity constraints punish size.

"While firms such as Blackstone and Apollo Global Management have had success launching evergreen products focused on easily scalable asset classes, such as infrastructure and large buyout, VC is inherently 'capacity constrained,' according to Callahan."

Liquidity and DPI are the dominant PE narrative

With traditional exits scarce, sophisticated GPs are building dedicated vehicles to solve LPs' liquidity problem — turning secondaries and continuation funds into a strategy rather than a stopgap.

"At the same time, the New York-based firm has been positioning itself to benefit from the liquidity needs of other GPs and LPs in the market. The firm is looking to raise up to $2 billion for New Mountain Atlas I... its first fund dedicated to backing continuation funds."

Fundraising green shoots amid concentration risk

Capital is starting to flow again, but disproportionately to a narrow set of winners — a "recovery" that could mask growing inequality among managers.

"Fundraising is showing signs of an early comeback across VC and PE, but the private capital ecosystem's concentration problem is only getting worse."

2. Contrarian Perspectives

Bigger isn't always better in alternative asset management

The prevailing narrative is that scale advantages (à la Blackstone, Apollo) are winning across private markets. Fairway Capital's thesis inverts this for venture: being small is the edge, not the liability.

"'We can truly look people in the eye and say, these are our best ideas going into this fund, and that's one of the benefits of being smaller,' Callahan said."

IPO booms can be a warning sign, not a bullish signal

Rather than reading Hong Kong's hot IPO market as a sign of market health, the piece flags it as a potential precursor to weakness — a classic late-cycle tell often ignored by deal-hungry participants.

"Hong Kong's IPO market is booming even as its secondary market sags, mirroring a well-documented pattern in which equity issuance waves tend to precede periods of weak broader market returns."

3. Companies Identified

Fairway Capital Management — Chicago-based VC/growth equity fund-of-funds manager. Mentioned as a case study for why evergreen structures may fail at scale in venture. "Fairway Private Equity & Venture Capital Opportunities Fund... aims to offer individuals access to funds and managers 'typically only available to large institutional investors.'"
New Mountain Capital — $60B alternative asset manager. Mentioned as a standout performer on exits/liquidity amid a tough market for peers. "New Mountain Capital has seen a steady stream of exits from its private equity portfolio, even as similar-sized peers have struggled."
Lincoln Investment Capital Holdings — Broker-dealer/RIA. Cited as a successful New Mountain exit showing strong AUM growth. "The Pennsylvania business grew its fee-based assets under management by around 75% over that period."
Cumming Group — Construction project management firm. Cited as another New Mountain exit (to Leonard Green & Partners) illustrating liquidity generation. "The deal gave the service provider to the construction industry a valuation of approximately $3 billion, including debt."
Blackstone / Apollo Global Management — Mentioned as examples of firms successfully scaling evergreen products in more scalable asset classes (contrast to VC). "Firms such as Blackstone and Apollo Global Management have had success launching evergreen products focused on easily scalable asset classes."
Nscale — UK AI infrastructure company. Notable for a large pre-IPO raise involving Nvidia. "Seeking $3.5 billion in pre-IPO financing—$1.5 billion in convertible notes plus $2 billion from Nvidia—ahead of a planned IPO as soon as this month."
Anthropic — AI company preparing IPO with top-tier banks. "Nearing decisions on Morgan Stanley and Goldman Sachs for lead underwriting roles on its planned IPO."
ICEYE — Finnish company topping European AI valuations. "Finland's ICEYE tops the valuation list for European AI companies that raised in the second quarter of this year, with a $10.5 billion post-money valuation."

4. People Identified

Kevin Callahan — Former COO of Adams Street Partners, founder of Fairway Capital Management. Cited as the architect of a contrarian "smaller is better" VC evergreen strategy. "VC is inherently 'capacity constrained,' according to Callahan."
Steven Klinsky — CEO of New Mountain Capital. Interviewed on liquidity strategy and defensible investing. Mentioned as thought leader on DPI and secondaries. "Talked to PitchBook about DPI, the secondary market and what defensible, non-cyclical investing looks like in practice."
Jakub Pachocki — OpenAI chief scientist. Mentioned regarding AI safety monitoring limitations. "Admits chain-of-thought monitoring is losing reliability as models get better at reasoning without verbalizing it."

5. Operating Insights

Stay deliberately small to preserve "best ideas only" discipline. Callahan's model suggests fund managers should resist scaling AUM even when investor demand (especially retail/evergreen capital) is available, since capacity constraints in venture make concentration a feature, not a bug: "these are our best ideas going into this fund, and that's one of the benefits of being smaller."
Build dedicated vehicles around LP pain points (liquidity) rather than waiting for market conditions to improve. New Mountain's continuation-fund vehicle is a tactical way to monetize the secondary/DPI crunch other GPs are facing rather than being a passive victim of it.
Watch issuance-to-secondary market divergence as a market-timing signal. The Hong Kong IPO/secondary market gap is a tactical pattern worth tracking before committing capital to hot IPO windows.

6. Overlooked Insights

AI reasoning transparency is degrading as models improve — a potentially major governance/safety issue getting buried in a side note: "OpenAI built a safety net around watching AI 'think' in plain language, and it's fraying... chain-of-thought monitoring is losing reliability as models get better at reasoning without verbalizing it." This has direct implications for AI-focused investors relying on interpretability as a risk-mitigation thesis.
A wave of take-private and consortium bids in UK/European mid-cap sectors (Spire Healthcare, Gamma Communications, Ingenia Communities) suggests PE is aggressively targeting public companies perceived as undervalued relative to private market comps — a quiet but notable uptick in public-to-private activity outside the mega-cap headlines.