The questions we get most often from our LP base right now are some version of: how does growth equity perform in this environment, and when does the exit window reopen?
These are fair questions. I want to give honest answers to both.
How Growth Equity Performs in Volatile Markets
Growth equity — as distinct from venture or buyout — has a specific risk profile that is worth understanding clearly.
Unlike venture, we are not making binary bets on companies that have not found product-market fit. Our typical investment has $5–30M ARR, positive gross margins, and a customer base that has already validated the product. That does not eliminate risk, but it changes its character substantially.
Unlike buyout, we are not using leverage to amplify returns. We do not depend on debt markets to execute our strategy. In an elevated rate environment, that is a meaningful structural advantage.
The historical data supports this framing. Looking at Cambridge Associates data from the 2008–2010 vintage years — the last time we had a comparable combination of elevated rates, multiple compression, and macroeconomic uncertainty — growth equity funds in the top quartile delivered 2.8x net TVPI. The asset class did not suffer the same drawdowns as late-stage venture.
When Does the Exit Window Reopen?
Honestly, we do not know — and anyone who tells you they do is guessing.
What we believe is that the exit window is a lagging indicator, not a leading one. Companies that are building durable businesses with strong unit economics in 2025 and 2026 will find paths to liquidity when markets normalize — whether that is through M&A from strategic acquirers (which remained active throughout 2023 and 2024), sponsor-to-sponsor transactions, or eventually the public markets.
Payscape's acquisition by Visa in 2024 is instructive. We did not time a hot IPO window. We built a company that a strategic acquirer wanted to own at any point in the cycle.
What We Tell Our LPs
We are deploying Fund IV with conviction. We are not waiting for macro clarity that may never fully arrive. We are investing in companies with the revenue, margins, and growth rates to earn a premium exit under a wide range of market conditions — and we are doing the operational work to help them get there.
That is the growth equity bet. It always has been.
