Everyone Loves Tech – Including Private Equity

November 26, 2019

One of the most important questions in private equity is – Who’s popular?  Where’s the smart money going?  Based upon a recent report out of private equity data provider Pitchbook, the answer is tech – short for technology.

Assets Under Management

The true test of whether something is popular in the investment world is what?  It’s assets under management or AUM.  What would you guess AUM in the private equity sector focused on tech has done over the past 13 years?  Slowly increased, moderately increased, or booming?

The answer, of course, is booming. 

The following figure is Pitchbook’s accounting of tech-focused private equity AUM from 2006 to 2019 (through March 2019). 

Fascinatingly, private equity AUM for technology-focused investments was a measly $50 million in 2006.  Amazingly, half of that was dry powder (dry powder is money investors have put into private equity funds that private equity asset managers have yet to invest). 

The figure jumped somewhat in 2007 to around $75 million.  Then, the global recession led to a small cutback.  Since 2008, every year has seen private equity tech-focused funds attract more funding.  By 2013, the AUM in these tech-focused funds had increased to $100 million.  Since 2013, AUM have more than doubled to over $250 million as of March 31, 2019.  Unless something very surprising happens with interest, investor interest in tech-focused private equity investments may surpass $300 million by the end of the year.  Amazingly massive.

Source: Pitchbook

Companies Behind the Massive Fundraising

With fundraising growing leaps and bounds, which firms are leading the fundraising efforts.  Unsurprisingly, two of the three so-called big three tech firms have increased their tech focus by mammoth amounts.  The two companies – Thoma Bravo and Vista Equity Partners.  Others behind the rise are Silver Lake, Francisco Partners and Insight Partners.

The Change

The shift to tech represents a different role than the traditional role private equity has played as the rescuer of troubled or financially attractive firms.  Most tech companies generally have no need for private equity money or the typical skillset of a private equity firm, but the numbers continue to rise as private equity firms entering the field accumulate activity figures on the level of big tech companies like Microsoft, Amazon, and Google. 

The real driver behind the private equity industry’s focus is the outperformance of the industry relative to other PE-focused funds.  If you can’t be them, join them appears to be the driving force behind the large and growing interest of private equity investors.


Private equity interest in tech-focused investments is booming.  Assets under management has gone from around just $50 million in 2006 to close to $250 million as of March 31, 2019.  It is truly a good time to be a technology entrepreneur or a private equity investor interested in cutting-edge technology.

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