Private markets after the stress test: HarbourVest’s Scott Voss on what’s next

After a turbulent period for global markets, private assets emerged from 2025 not unscathed, but largely intact.

According to Scott Voss, managing director at HarbourVest, the year functioned less as a breaking point than as a revealing stress test that clarified which strategies were built for endurance, and which were not.

Speaking with InvestmentNews, Voss outlines why scale now defines opportunity, why AI has moved beyond a technology theme, and why net asset value is becoming private equity’s most prized currency.

Voss frames 2025 as a year dominated by forces largely outside investors’ control. “Much of the volatility in 2025 was due to macro or geopolitical factors that were generally out of the investor’s control,” he says, pointing to “interest rates, inflation, tariff policy, AI, sovereignty and other types of conflict.”

Throughout the year, surprises around rates, inflation, and tariffs “heavily influenced volatility in the public markets,” while geopolitical conflicts such as Russia/Ukraine and Israel/Hamas “tended not to move markets in the same way.”

Against that backdrop, private markets proved more resilient than many expected. “When we reflect on the private market health markers for 2025, including investment activity, exit activity, secondary volume, and fundraising, all but one (fundraising) reached record highs (excluding the 2021 stimulus induced anomaly year),” Voss says. “The bottom appears to have been in mid-2024 at which point investment activity has led the rebound.”

That resilience was reinforced by landmark transactions. “We also saw record deals in private markets, including EA, OpenAI, and SpaceX, as well as the Medline IPO in the US and Verisure IPO in Europe (both record PE-backed IPOs),” Voss says. While the IPO market staged a partial comeback and post-offering performance was mixed, he emphasizes that “generally, equity markets and private markets were resilient. With respect to private markets, there is a benefit to longer-duration horizons when faced with shorter-duration uncertainty.”

Uneven recovery

Not every segment shared equally in the recovery. “If there is a part of the market that has been left behind or where we would like to see a comeback, it would be fundraising and sponsor-to-sponsor deal activity,” Voss says. Both, he adds, are “critical for a healthy functioning market,” yet have lagged longer-term trends.

Looking ahead, Voss argues that size and scale will continue to define private markets in 2026. “Size and scale defined 2025 and we believe it will continue into 2026,” he says. On the exit front, he suggests the market could see offerings from companies such as Anthropic, OpenAI, and SpaceX “price at $500 billion, $1 trillion, even $1.5 trillion,” with companies able to raise “$10 of billions.” By comparison, Voss notes, “the largest venture backed IPO ever was Facebook raising at a valuation of $104 billion.”

Scale is also being reinforced by financing dynamics. Public-to-private transactions are expected to remain prominent, not only in the US but also in Europe and Japan. “Scale is being driven by the reality that at the upper end of the market, equity sponsors have more sources of capital from the credit markets, both private credit and syndicated loans, to get these deals done,” Voss explains. He adds that institutional capital outside of traditional private equity, including sovereign wealth funds and pensions, allows transactions to occur at even greater size.

In contrast, the mid-market remains constrained despite its sheer scale. Voss points to “30,000 private PE-backed companies sitting in portfolios with total value approaching $4 trillion,” yet sponsor-to-sponsor transactions remain limited. “I think this is because we are in a new interest rate and valuation regime,” he says. “Deals that got done at the top of the market in 2021 when borrowing costs were at all time lows, need to grow into those valuations over elongated hold periods before we see a trade.”

AI redefinition

Artificial intelligence, meanwhile, has undergone a fundamental redefinition. “Looking back 10 years, we talked about AI in our venture portfolios, but it seemed like science fiction,” Voss says. That perception changed rapidly. “Then, just a few years ago, in November 2022, we had the ChatGPT moment and AI became instant reality.”

Today, AI cuts across all asset classes. “In the public markets, it defines the business strategies for the largest, most highly valued public companies in the world,” Voss says, noting its growing prominence in capital expenditure budgets. In private markets, companies such as OpenAI and Anthropic “are being financed at values approaching half a trillion dollars. That makes them top 20 companies in the world, regardless of public or private.”

Crucially, AI is no longer just a growth or venture story. “Private credit managers and infrastructure funds, when discussing the top three themes they are investing in, many cite AI (through data centers, compute, or power) as going to be at the center of one or more of these themes,” Voss says. “This is why AI is not only an asset class but in some cases is consuming other asset classes.”

Technology is also reshaping the structure of private markets themselves. Voss describes an expanding ecosystem of platforms designed to support every stage of the private equity lifecycle, from raising capital and investing to reporting and exits. “There is a whole industry of technology companies being purpose-built to deliver efficiencies to each part of this value proposition with an exclusive focus on private markets,” he says.

These platforms promise greater transparency, potentially including more frequent pricing, improved insight into operational performance, and enhanced liquidity. “It will make private markets accessible to a broader universe of investors,” Voss says. At the same time, he cautions that transparency comes at a cost. “One of the advantages of private markets, and specifically their outperformance potential, is information advantage, what top performing funds call information asymmetry. If the industry loses that information advantage, it will probably become harder to deliver alpha.”

Bifurcation and evergreen funds

As a result, Voss believes the industry is heading toward a split. “I believe the industry will bifurcate,” he says. One segment will focus on transparency, liquidity, and accessibility, while another will resemble traditional private equity as it has existed for decades. “Each model will serve different investor needs and risk-return profiles,” he says.

That bifurcation is closely tied to the growing importance of net asset value. “New vehicles are being built to give investors access to private markets, specifically open-ended funds called Evergreens,” Voss says. The opportunity is already significant, with the category having grown to “half a trillion dollars in AUM today” and expected to double over the next five years.

“One of the big selling points of Evergreens is that the investor steps into a near fully funded portfolio,” Voss explains. The challenge, however, is supply. “One of the challenges for the Evergreen manager is finding high-quality, fully funded portfolios to seed their Evergreen funds at launch.” In his view, the best source of those portfolios is existing NAV in the heart of the value creation phase. “These highly curated portfolios need to be built up over time (typically 5–10 years) to the point where they are ripe to be bought to seed the next Evergreen fund.”

The imbalance between supply and demand is already influencing pricing. Voss notes that fundraising for traditional closed-end funds is at record lows, while Evergreen fundraising is at record highs. “The supply-demand dynamic may be very similar to the pricing of commodities, including gold, silver, copper, oil and gas,” he says.

As the market evolves, Voss urges investors to rethink diversification. “If the first question is ‘Do you have an allocation to private equity?’ and the answer is ‘yes,’ the next question should be ‘How do you have it?’” he says. While smaller, mid-cap strategies have historically outperformed, he emphasizes that they come with “greater risk and dispersion,” compared with large-cap investments that benefit from scale, established market positions, and more predictable business models.

The same logic applies to today’s bifurcated private markets. Some investors will choose one approach, others will blend both. “Many will choose both, recognizing the complementary nature of these private market allocations, in the same way they have thought about large cap and small mid cap historically,” Voss says.

Rising risk

Finally, Voss warns that as capital crowds into the same themes, consensus risk is rising. Drawing on social psychologist Irving Janis, he highlights the danger of groupthink and “the illusion of invulnerability and collective rationalization that occurs when groups converge on popular themes without adequate critical examination.”

After listing what he saw as the defining topics of 2025—AI, private credit, and wealth—Voss poses a rhetorical challenge. “I’m not making a prediction,” he says, “but if these were the year-end headlines: AI and its Valuation Reckoning; The Private Credit Contagion; Liquidity Glut Created by Inflows from Wealth and Retail—would you be surprised?”