Private Equity fundraising continues to improve nationally, thanks in large part to smaller funds, which led the way in the third quarter of this year. According to PitchBook, while the overall number of funds increased significantly last quarter, the average size of funds has been concentrated on the lower end.
The average fund size dropped from $714.6 million during the third quarter last year, to $500 million during the same period this year. The median fund size also decreased, highlighting the sharp increase in smaller funds, and not merely a lack of large funds. The median size dropped from $391 million to $250 million. Additionally, 33 funds of $500 million or less closed in Q3 2013, compared to 17 funds in the same period last year.
According to PitchBook, there are strong signals that this trend will continue, including the relative youth of the firms raising these types of funds. Five first-time funds were raised in Q3 2013, and four of those were $500 million or under. And of the 46 total funds raised last quarter, 29 of them were under $500 million and not first time funds. About half were second funds, or funds that represented a change in strategy.
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