The investment landscape in 2025 is ripe with opportunities for launching a fund. Whether you’re a seasoned fund manager or an entrepreneur eyeing the alternative investments space, the current macro environment, coupled with evolving investor preferences, makes now an ideal time to establish a fund. From private equity to hedge funds, the diversity of investment strategies allows you to tailor your fund to specific market dynamics. This article outlines 10 compelling reasons to set up a fund right now, explores key fund investment strategies (Private Equity, Venture Capital, Real Estate, Hedge Funds, Trust Funds, and others), and provides recent macro data (no older than March 2025) to support your decision. Let’s dive into why 2025 is the year to act.
1. Record Levels of Dry Powder Waiting to Be Deployed
Private markets are sitting on unprecedented levels of capital, with $2 trillion in dry powder as of January 2025, according to MSCI Research. This liquidity signals strong investor appetite for new funds, particularly in private equity (PE), venture capital (VC), and private credit. Setting up a fund now allows you to tap into this capital surplus, especially as limited partners (LPs) seek fresh opportunities amid low distribution rates from existing funds.
2. Rebound in Dealmaking Activity
Global private equity dealmaking rebounded by 14% to $2 trillion in 2024, marking the third-most-active year on record, per McKinsey’s Global Private Markets Report. This momentum is expected to continue into 2025, driven by improving macro conditions and increased M&A activity. Launching a fund now positions you to capitalize on this uptick, whether through buyouts, growth equity, or VC deals.
3. Rising Demand for Alternative Investments
Retail and institutional investors are increasingly diversifying into alternative assets to hedge against market volatility. By 2025, private equity, real estate, and hedge funds are projected to drive returns, with global private market assets under management (AUM) expected to reach $12 trillion by 2029, according to Preqin. A new fund can attract capital from investors seeking exposure to these high-growth asset classes.
4. Favorable Regulatory Environment in Key Jurisdictions
Jurisdictions like India, Luxembourg, and Singapore are streamlining regulations to attract fund managers. For example, India eliminated the angel tax and simplified foreign venture capital investor (FVCI) registrations in 2024, boosting VC activity to $13.7 billion, a 1.4x increase from 2023. Launching a fund in these regions now leverages these reforms for easier setup and fundraising.
5. Technological Innovation Driving Opportunities
The rise of AI, blockchain, and green tech is creating new investment frontiers. Venture capital funds focused on AI startups or private equity funds targeting tech-driven companies (e.g., Anthropic’s $4 billion raise from Amazon in 2024) are seeing strong interest. Setting up a fund now allows you to capture these trends, particularly in VC or growth equity strategies.
6. Secondary Markets Gaining Traction
The private equity secondary market is booming, with 9-10% of primary PE commitments traded annually, up from 5-8% a decade ago, per J.P. Morgan. This growth provides liquidity options for LPs, making your fund more attractive to investors wary of illiquidity. A fund with a secondary strategy or exposure to secondaries can capitalize on this trend.
7. Shift Toward Sustainable and ESG Investments
Investors are prioritizing environmental, social, and governance (ESG) criteria. Private capital funds targeting energy transition (e.g., green mobility) delivered a 290% five-year cumulative return as of Q3 2024, outpacing traditional VC and buyout returns. Launching an ESG-focused fund in PE, VC, or real estate aligns with this demand and attracts capital from sustainability-driven LPs.
8. Evergreen Fund Structures Gaining Popularity
Open-ended evergreen funds accounted for 50% of alternative commitments at J.P. Morgan in 2024, offering investors episodic liquidity compared to traditional drawdown structures. Setting up an evergreen fund now caters to retail and institutional investors seeking flexibility, broadening your investor base.
9. Emerging Markets Offering High-Growth Opportunities
Emerging markets like India, Brazil, and Mexico are seeing robust VC and PE activity. India’s VC funding hit $13.7 billion in 2024, while Latin America’s VC reached $15.9 billion in H1 2022, signaling long-term potential. A fund targeting these regions can capture high-growth sectors like fintech, deep tech, and green energy.
10. Expanding Retail Investor Demand
Retail investors are increasingly allocating capital to alternative investments, with $23 billion raised by retail-oriented private equity funds in 2024, according to J.P. Morgan. Platforms like Fundway make fund setup accessible, enabling you to attract this growing investor base. Launching a fund now positions you to capture retail capital through flexible structures like evergreen funds or semiliquid vehicles, broadening your fundraising potential.
Ready to launch your fund?
Use Fundway Pricing Calculator to estimate setup costs and connect with top service providers in jurisdictions like the US, Singapore, or Luxembourg. Start planning today to position your fund for success in 2025’s dynamic market.