Continuation fund exits are likely to decline in 2026 after peaking this year. These vehicles surged in popularity when traditional exit routes were constrained by high rates, wide valuation gaps, and a closed IPO window. But conditions are better now: Financing costs have eased following multiple rate cuts, the IPO market is gradually reopening post-shutdown, and bid-ask spreads have narrowed as sponsors look to make deals. With conventional pathways improving, managers should rely less on continuation funds in the year ahead.

PE exits are expected to strengthen as managers refocus on liquidity. Sixty-one percent of PE professionals we surveyed anticipate better exit opportunities in the next six months. Despite a sharp drop in exit value from Q1 to Q3, exit volume rose 22%, and 2025 activity surpassed 2024. IPO momentum remains slow as the SEC clears a backlog, but managers are optimistic: Blackstone’s IPO activity has doubled year over year and the firm has high expectations for 2026.

The top 10 PE funds will capture over 40% of fundraising due to manager consolidation. US PE fundraising remains muted thanks to slow exits and softer distributions, pushing more commitments toward larger, established firms. With less capital to deploy, many LPs are opting for managers that offer broader strategies and greater operational scale. The concentration is notable: The 10 largest funds raised around 45.7% of 2025 capital, up from 34.5% in 2024.

Dealmakers appear to be entering 2026 with a pair of shared resolutions: return more capital to their LPs and finally translate AI hype into returns. Cheers to that.

Across the private markets landscape, our analysts have been busy charting what comes next. They've produced hundreds of pages of forward-looking insights across eight comprehensive reports spanning private capital markets and the industries they touch in the US, EMEA and APAC.

Dealmakers appear to be entering 2026 with a pair of shared resolutions: return more capital to their LPs and finally translate AI hype into returns. Cheers to that.

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ARTIFICIAL INTELLIGENCE

Seed investors will see outsized returns from AI agents in ecommerce. Commerce is an on-ramp for every major platform shift, from the internet to mobile, to cloud, and now to GenAI. Core infrastructure across payments, identity, fraud, loyalty, and inventory systems will be rebuilt, enabling autonomous transactions in the future.

AI drug discovery will be among the fastest-growing AI subsectors. AI technologies will double clinical trial success rates, increasing the number of trials and drugs coming to market. This will dramatically increase infrastructure and services that support clinical trials. We anticipate that the addressable market will grow at a 106% compound annual rate through 2030, to $60 billion.

AI-first drones will intensify pressure on legacy drone makers reliant on human pilots, as autonomous leaders like Anduril Industries and Shield AI gain ground. Conventional radar and sensor providers face similar challenges as AI-driven systems such as CHAOS Industries’ radars deliver faster responses. Advances in edge computing now enable land, sea, and air drone swarms to coordinate without central control. Swarms remain difficult to execute, but that complexity makes them an early investment opportunity.

VENTURE CAPITAL

ARTIFICIAL INTELLIGENCE

Early-stage activity is set to drive venture’s rebound in 2026. AI is sharpening investor focus and lowering the cost of company creation, setting the stage for more early-stage bets. At the same time, multistage firms with deep follow-on capital are moving aggressively into seed and Series A. Andreessen Horowitz alone has backed more than 300 early-stage deals since early 2024, and more large managers are likely to follow.

VC fundraising appears to have found its floor, with a gradual rebound likely in 2026 as liquidity improves and LP sentiment stabilizes. Exit activity is picking up, helping restart the venture flywheel, though 2025 totals remain soft at $55 billion across 451 funds. Liquidity constraints have kept LPs cautious and concentrated commitments with established managers, but negative cash flows are easing. If momentum holds, 2026 fundraising could reach $100 billion to $130 billion.

Liquidity will return, though recovery will remain uneven. Stabilizing valuations, expected rate cuts, and renewed investor appetite are helping reset expectations, with more startups aligning prices to fundamentals and investors increasingly accepting down rounds—the norm for two-thirds of 2025 unicorn IPOs. While valuation compression persists, this reset is clearing the way for more filings and a healthier exit market. We project 68 IPOs in 2026, in line with the decade average (excluding 2021).