U.S. private equity firms have raised significantly less capital in 2026, continuing a downward trend that began in 2023. This decline is making it harder for B2B companies, especially those in the mid-market, to sell to private equity buyers amid a contrasting surge in venture capital activity driven by AI investment.
- US private equity fundraising down 27% from 2023 peak
- Mid-market PE fundraising falls 43% in 2025, reducing potential B2B buyers
- VC funding thrives on rapid AI investment rounds and solid returns
What happened
Private equity fundraising in the United States continues to decline for the fourth year in a row, with Q3 2026 data showing funds raised at approximately $222 billion. When annualized, this suggests a total near $296 billion in 2026, trailing behind 2025's $330 billion and well below the 2023 peak of about $405 billion. This downward trajectory reflects challenges faced by general partners trying to raise new funds amid stagnant returns from prior investments.
The most acute impacts are evident in the mid-market segment, which primarily targets B2B companies with revenues between $10 million and $75 million. Fundraising for these middle-market private equity firms dropped 43% in 2025 to $94.8 billion, marking the lowest level since 2018. The number of funds closing deals also declined sharply by over 45%, leading to a diminished pool of buyers with fresh capital available for acquisitions.
Why it matters
For many B2B founders, private equity has historically served as the most viable exit route, particularly more likely than IPOs or strategic sales. With fewer funds raising capital and deploying it, founders now face a tougher market environment as competitive tension between multiple bidders has greatly reduced. This lack of alternatives directly impacts sale prices and negotiating leverage.
The private equity slowdown contrasts sharply with the venture capital sector, where investment volumes remain robust, buoyed by high-profile AI financing rounds. Institutional investors continue to provide capital to venture funds seeking exposure to AI technologies while pulling back from private equity funds that are struggling to deliver liquidity and returns. This sector divergence is reshaping exit landscapes for SaaS operators and other B2B companies.
What to watch next
Private equity deal activity still shows strength with over 5,000 transactions and nearly $482 billion in deal value in early 2026, supported by dry powder exceeding $2 trillion and improving borrowing conditions. However, much of this capital is tied to older funds needing to demonstrate returns before new fundraising can ramp up, potentially delaying a full recovery in the sector’s fundraising capabilities.
B2B SaaS companies with strong profitability, resilient customer retention metrics—especially those proving value in AI contexts—and broad auction processes drawing multiple bidders will continue to secure the best sale outcomes. Observers should monitor future exit volume and value as a key indicator of when limited partner liquidity will improve, enabling private equity firms to aggressively fund new deals and restore a healthier environment for sellers.