PE's paper gains aren't reaching LPs

There is a growing gap between what middle-market buyout portfolios look like on paper and what LPs receive in distributions.

Funds that were launched between 2018 and 2021 are generating below-average distributed value to paid-in (DPI), even though valuations—in the form of total value to paid-in (TVPI)—show relatively healthy portfolios.

For these vintages, TVPI is trending below the 2015 and 2016 vintages, though still in line with or slightly above the 2006-2014 period. However, DPI is consistently trending below prior levels—for example, the 2015 vintage generated a DPI of 1.14x at year 7 compared to 0.57x for the 2019 vintage.

It is clear that the link between these two metrics broke as a result of elevated multiples paid by sponsors in 2021 and the subsequent dearth of exits for these assets. The ratio of DPI to TVPI in recent vintages has declined considerably compared to earlier vintages.

This phenomenon is linked to an aging backlog of assets on PE firms’ books, which is limiting distributions to LPs, accelerating the proliferation of liquidity tools such as continuation funds, and hampering fundraising in the middle market.

What will break the deadlock? Will DPI meet TVPI, or vice versa? Rising rates may be one catalyst; as The Wall Street Journal reported this week, using PitchBook data, PE-backed companies face an impending $300 billion maturity wall that will soon force GPs to make difficult decisions.

Read more in our Q3 US PE Middle Market Report.

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Venture has spent three years waiting for the IPO window to reopen, with $6 trillion now tied up in US unicorns alone. The hope is that when the window does reopen, a backlog of IPO-ready companies that have been patiently waiting for years will rush out in a wave and finally return capital to LPs.

But our research finds that if that wave materializes, it is unlikely to come from this so-called backlog. At the start of 2023, PitchBook’s VC Time to Exit Predictor, which estimates when individual VC-backed companies are likely to exit, gave 254 US companies better-than-even odds of going public by the end of 2025. Only 53 did, and just 58 still look likely to list in the next three years.

Many of the rest have found what an IPO would have given them in private markets. Nearly 75% of the backlog has raised new funding since 2023, mostly at higher valuations, and deals at Databricks and Scale AI paid out employees and early investors without a listing.

The market they were waiting for has also moved on. AI has put pure-play software companies under pressure to prove their value, while a new generation of AI companies, led by Anthropic, has jumped to the front of the line. The backlog now makes up less than one-third of today’s IPO pipeline of companies expected to list within the next three years.

For investors, that changes where IPO liquidity is likely to come from. The next listings depend on a different set of companies and on how public markets receive them.

That reception is far from certain. AI jitters rattled tech stocks earlier this month, sending the Nasdaq to its worst week since June. Halfway around the world, China’s AI stocks have already plunged. An index of AI and chip leaders has fallen 40% in under four months, and robotics maker Unitree’s shares have roughly halved since their August debut-day peak.

Our Q4 2026 analyst note The US VC IPO Backlog Is a Myth looks at the IPOs that history said should have happened and identifies the companies now closest to the window.

Anthropic: What the S-1 Proves

Anthropic’s public filing shows a business earning far more than outsiders could see.

Revenue is running at approximately $68 billion a year, and Q2 2026 was the company’s first quarter with an operating profit. The filing also shows less protection for investors than the growth suggests. Most revenue is pay-as-you-go. Anthropic has committed at least $855 billion to compute, most of it payable whether it uses the capacity. One founder share holds 50.1% of the vote.

Download the report

Nov. 3-5 | ILPA Summit New York. PitchBook will have representatives onsite throughout the conference. On Nov. 5, Juan Mier, lead analyst for fund strategies, will share insights on the trends and data shaping the private markets. Register →

Nov. 11 | What the 2026 Sustainable Investment Survey reveals. In this webinar, principal analyst Hilary Wiek and senior analyst Anikka Villegas will unpack how investors are thinking about AI, diversity, and the attractiveness of sustainable investment opportunities in 2026. Register →

Our insights and data featured in the press:

• Of the 33,853 PE-backed companies globally at the end of September, 8,074, or nearly 24%, have been held for at least seven years. [The Wall Street Journal]

• Private market investors have poured $1.1 trillion into AI companies since 2022. [The New York Times]

• “Private equity firms are putting more money into defense, and they are changing how they do it,” said Jim Corridore, lead industrials analyst. [CNBC]

• About one quarter of loans still due in 2028 and 2029 have junk ratings of CCC-plus or below. [The Wall Street Journal]

• Spark Capital is poised to turn its $777 million in investments made into Anthropic since 2023 into $10.9 billion if the company achieves a $1.5 trillion valuation. [The New York Times]

• “Individual money is less sensitive to price, and a book that leans on it lets the banks price the deal higher than institutions alone would support,” said senior analyst Harrison Rolfes. [Business Insider]

• Climate-specialist venture funds are on track to raise less than $1 billion this year, their weakest showing since 2015. [Fortune]

• Andreessen Horowitz has raised $5 billion through August, a collective haul that represents nearly 20% of all venture capital funds raised in the US so far in 2026. [Forbes]

More of our recent research:

Market updates

Q2 Private Capital Indexes
• Q3 US PE Breakdown
• Q1 2026 PitchBook Benchmarks with preliminary Q2 2026 Data
• Q3 PitchBook-NVCA Venture Monitor

Thematic research

Prediction Markets Go Head-to-Head
• The Continuation of Continuation Funds
• Private by Choice: Europe’s Rise in PE Take-Privates

Industry & tech research

Inference Chip Startups Are Just Starting Their Bull Run
• Physical AI Software and Data Infrastructure
• Investing in AI and Datacenters
• Q3 2026 Fintech Report

Credit research

US Credit Markets Weekly Wrap
• US High-Yield Bond Weekly Wrap
• Global CLO Weekly Wrap
• Global Distressed Credit Weekly Wrap
• US Private Credit & Middle Market Weekly Wrap

Coming next week (subject to change)

Q3 2026 AI Report
• October 2026 Global Markets Snapshot
• Q3 2026 US VC Fundraising & Returns Report
• Q3 2026 Medtech Report
• 2026 Global Fund Performance Report (as of Q1 2026)
• Q3 2026 Food & Beverage CPG Report