In the private markets, one of the most persistent challenges investors face is measuring performance in a meaningful way.
If you've ever tried to compare fund performance across managers or strategies, you know the difficulty firsthand. There's no S&P 500 equivalent for private equity. No Barclays Aggregate for private credit. No Russell 2000 for venture capital.
That lack of standardization creates uncertainty, making it harder to justify allocation decisions, evaluate manager selection, or even determine whether a 15% net IRR truly represents alpha generation or simply beta capture during a favorable vintage year.
At Dakota, we hear this frustration constantly from LPs, GPs, consultants, and investment committees. We believe benchmarks shouldn't be opaque or fragmented. They should be a clear, reliable tool for navigating private markets with confidence.
In this article, we'll explore why private fund benchmarks matter, what structural challenges have made them so elusive, and how Dakota is addressing these gaps.
Why Benchmarks Matter in Private Markets
Private market returns don't exist in isolation. A net IRR, DPI, or TVPI figure only becomes meaningful when contextualized against peer funds pursuing comparable strategies within the same vintage year. Without that frame of reference, performance metrics lose interpretive value. A 15% IRR might appear strong in absolute terms, but could represent median performance for a 2020 vintage buyout fund.
This context proves critical not only for performance attribution but for capital allocation decisions. Investment committees, CIOs, and institutional consultants rely on peer benchmarks to distinguish genuine alpha generation from market beta, separating skillful managers from those who simply rode favorable tailwinds. Benchmarks also serve as an accountability mechanism. When pension trustees, family office principals, or endowment boards ask "How is our private markets portfolio performing relative to peers?" benchmarks provide the standardized framework to answer with precision and conviction.
At every level (from emerging managers to large institutional allocators) benchmarks introduce structure and transparency to an asset class often characterized by information asymmetry. They transform complex, illiquid performance data into comprehensible insights, ultimately strengthening fiduciary accountability and stakeholder confidence.
The Structural Challenges Behind Private Markets Benchmarking
Despite their fundamental importance, robust benchmarks in private markets have remained frustratingly difficult to construct. Three core structural barriers explain why:
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Data Quality and Availability: Private funds lack standardized performance reporting, making apples-to-apples comparisons complex. Data is fragmented across multiple sources with varying formats, update cadences, and quality levels. There is also a significant amount of data to collect, clean, and accurately assign before meaningful benchmarking can occur. Survivorship bias further skews results, as underperforming funds often disappear from datasets entirely.
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Reporting Barriers to Transparency: Many managers remain reluctant to share detailed performance data due to competitive concerns and confidentiality considerations, limiting the comprehensive datasets needed for robust benchmarking.
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Timing and Vintage Complexity: Private fund data reports quarterly with significant lags, and performance depends heavily on vintage year timing. Without proper normalization across different market entry points, comparisons can be misleading.
How Dakota Brings Clarity to Benchmarking
Dakota has launched comprehensive Private Fund Performance Benchmarks spanning private equity, private credit, venture capital, private real estate, and real assets, directly addressing the industry's most pressing benchmarking challenges.
Here's what differentiates Dakota's approach:
- Comprehensive Coverage Across Asset Classes: Our benchmarks draw from a curated universe of over 12,000 private funds, providing statistically robust performance intelligence across vintage years, geographies, fund sizes, and sub-asset classes. This breadth minimizes survivorship bias and enables granular peer group construction.
- Quartile Distributions: Beyond simple medians, our benchmarks show full performance distributions with quartile spreads and rankings. This granularity allows investors to assess not just average outcomes, but the full range of manager skill dispersion within each strategy and vintage cohort.
- Vintage Year Cohort Analysis: Our platform enables vintage-year-specific comparisons, controlling for deployment environment and economic cycle effects. This ensures performance evaluation reflects manager skill rather than entry timing luck.
- Integration with Dakota Marketplace: dakota’s benchmarks live within the Dakota Marketplace platform, which tracks 160,000+ private companies and over 2,000 new private market transactions each month. This growing integration, designed to connect company and transaction data with fund-level insights, offers investors a powerful 360° market view to contextualize performance and identify emerging opportunities.
- Actionable Analysis: More than historical scorecards, Dakota Benchmarks enable investors to identify where specific managers rank relative to peers. This transforms benchmarking from backward-looking reporting into forward-looking manager selection and portfolio construction.
For limited partners, consultants, and general partners alike, Dakota Benchmarks introduce transparency and rigor where opacity and fragmentation have historically prevailed.
Use Benchmarks to Invest with Conviction
Private markets thrive on information advantages and relationship-driven insights. But without robust benchmarks, even sophisticated data analysis lacks essential context. Dakota is addressing this gap by delivering curated, methodologically consistent, and transparent benchmarks that provide the comparative framework private market investors need.
When both limited partners and general partners have access to accurate data, statistically valid peer comparisons, and integrated market intelligence, they can make better-informed decisions with greater precision and conviction.
Benchmarks aren’t merely measurement tools. They serve as the foundation for smarter capital allocation, more transparent manager communication, stronger fiduciary accountability, and ultimately, better investment outcomes across the private markets ecosystem.
Book a demo of Dakota Marketplace to discover how our Private Fund Benchmarks can transform the way you evaluate performance, conduct manager due diligence, and allocate capital across private markets.
