North American VC AUM to rise 38% by 2029, growth slows from previous period

North American venture capital (VC) assets under management (AUM) are projected to grow by 38% over the next five years, according to PitchBook. This growth, while significant, is slower than the previous five-year period, during which VC AUM doubled. As of the end of last year, VC AUM in North America stood at $1.36 trillion, and it is expected to reach $1.81 trillion by 2029.

This growth trajectory, however, is not without its complexities. Kyle Stanford, PitchBook's director of research for US venture, noted that current VC AUM has remained relatively flat since 2021, when it surged from $850 billion to $1.31 trillion. The market has since been in a phase of resetting after experiencing a flood of capital and sky-high valuations. Stanford emphasized that the key driver for future AUM growth will be the ability of companies to realize the value placed on startups, which in turn will attract more limited partners (LPs) and increase funding for VC.

California currently holds the lion's share of VC AUM in North America, accounting for 54%, while the Mid-Atlantic region contributes 20%. Notably, the Mid-Atlantic's market share has grown 2.6 times from 2019 to 2024. The exit environment will be crucial in driving or limiting future growth. While there have been some strong initial public offerings (IPOs) and eight unicorn exits so far this year, the overall pipeline for immediate listings remains uncertain due to market volatility.

Stanford expressed cautious optimism, suggesting that the best-case scenario would involve an increase in companies registering for public offerings in the fourth quarter, with listings in the first quarter of the following year potentially driving a liquidity surge. Despite the focus on AUM, Stanford argued that VC is fundamentally a returns game. A growing AUM indicates a strong market generating returns to sustain increased cash flow into the strategy, benefiting new startups and entrepreneurs.