The Future of Private Funds: What We Learned from the Kayo 2024 Women in Private Funds Conference

Attending investment industry conferences is more than just a chance to network; it's an opportunity to gain fresh insights, stay ahead of emerging trends, and build meaningful connections that can shape both individual careers and entire organizations. 

At Dakota, we know the power of these events firsthand – our team regularly attends conferences like the Women in Private Funds to stay on the pulse of industry shifts and bring back actionable insights.

This year’s Kayo Women in Private Funds Conference held in early October was no exception. With a dynamic lineup of speakers and panels, the event provided a deep dive into growth strategies, ESG integration, and the evolving landscape of private markets. I walked away from the event inspired and armed with key takeaways that I knew could benefit our broader community.

In this article, we’ve listed out the most important highlights from the event, focusing on actionable advice for institutional investors, emerging managers, and family offices alike. By the end of this, whether you’re navigating the world of private funds or just looking for strategic insights to apply to your own role, you’ll have takeaways that will keep you informed and ahead of the curve.

Growth Metrics: The KPIs That Matter Most

During the opening workshop, a member from a leading private equity and venture capital firm focused on scaling growth-stage technology and software companies based in New York, emphasized the importance of understanding leading vs. lagging indicators in measuring business success.

Key performance indicators like market size, revenue growth, and customer retention are vital to building a sustainable business. They also highlighted the power of compounding retention rates and urged investors to analyze customer churn to better gauge a business's health and positioning. Lastly, they emphasized that companies should also leverage modern tools like ChatGPT to enhance decision-making at the board level.

Institutional Investor Outlook: Where’s the Focus?

Leaders from a lower middle-market investment firm, a prominent endowment, and a global investment management firm highlighted key areas of focus for the future.

The lower middle-market investment firm emphasized their commitment to funds led by experienced operators who can drive operational improvements and navigate economic cycles. This strategy allows them to maintain stability in uncertain markets. 

Meanwhile, the endowment is working to understand how AI will affect sectors like healthcare, biotech, energy, food, and the future of work. Rather than engaging in traditional venture capital with its long lock-up periods, they are pursuing opportunities where AI can have a real-world impact within public market opportunities. 

The $17 billion global investment management firm is taking a thematic investing approach, targeting sectors like education, healthcare, and energy transition. They emphasize the importance of understanding a manager’s edge – whether that’s through deep sector expertise or a unique investment process. Successful managers must be able to not only demonstrate past success but show why their strategies will continue to generate returns in the future.

As we can see, institutional investors are increasingly looking for fund managers who bring both financial expertise and operational value, focusing on long-term, sustainable growth in sectors poised for transformation.

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The Rise of Evergreen Funds and Private Wealth Solutions

With high-net-worth individuals showing increased interest in private markets, the panel on Private Wealth Solutions explored the growing role of evergreen funds. These flexible structures are designed to provide more liquidity and easier access for investors who traditionally struggled with the high minimums and long lock-up periods of conventional private equity funds.

A private market firm based in Philadelphia has grown its private wealth team to accommodate this demand - offering evergreen products that appeal to high-net-worth investors seeking diversification. Meanwhile, another RIA based in New York emphasized the importance of educating investors on the benefits of illiquidity and focusing on long-term capital rather than short-term returns.

ESG and Sustainability: A Critical Focus

The conversation around ESG and impact investing was a central focus at the conference. A member from an investment management firm and other panelists noted that LPs show varying levels of commitment to ESG - some fully embracing it, while others are hesitant due to political pressures.

Firms emphasized that ESG is not a trade-off for returns, but rather an important  risk management tool. Another panelist at a New York based private credit firm underscored this by making a clear distinction between product and process in their ESG approach. On the product side, they focus on aligning investments with investor priorities, steering clear of political debates. The tension surrounding ESG has, in fact, sharpened strategies and made firms smarter. On the process side, they ensure that their ESG practices fulfill the specific mandates of each fund without compromising returns.

This distinction between product and process allows firms like theirs to successfully navigate the ESG landscape, delivering both impact and performance. 

The discussion clarified that integrating ESG into investment processes supports not only financial growth but also long-term sustainability - addressing critical issues like climate change, human rights, and responsible labor practices. While the anti-ESG movement has stirred debate, it has ultimately refined the industry’s understanding, making it more focused and effective.

Opportunities and Challenges for Emerging Managers

With LPs favoring larger, established firms, Emerging managers continue to face a tough fundraising environment. However, the panel highlighted that creative strategies and strong relationships can and have been helping new managers stand out.

For instance, family offices and larger firms are more willing to provide seed capital or anchor investments, but only to those who maintain consistent, meaningful communication and clearly demonstrate their unique value proposition.

Rather than sending generic updates to a wide audience, the panel emphasized the importance of targeted touch points with LPs that fit your strategy. Focus on short, transparent updates – such as new deals or fundraising progress – and schedule follow-ups to keep the relationship alive. Avoid simply sending a data room link and ensure your team is delivering a unified message to LPs, and more importantly make sure you have a clear, differentiated story and 2-3 year runway for fundraising.

The key takeaway: build ongoing, thoughtful relationships with LPs, and provide them with insights they can share with their investment committees. This approach helps emerging managers cut through the noise in a crowded market.

At Dakota, we have taken the initiative to start our own monthly show called the Emerging Manager Growth Show where we highlight best practices for emerging managers, and how to make the most of a small budget.

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Family Offices: A Growing Force in Private Markets

Family offices are playing an increasingly significant role in the private markets, with their influence expected to grow substantially over the next decade. The panel highlighted that there are approximately 10,000 single-family offices and 5,000 multi-family offices globally, with this number expected to double by 2030. As family offices continue to expand, they are projected to surpass hedge funds in terms of AUM.

Family offices are particularly interested in customized asset allocation and tax-efficient strategies, tailoring their investments to meet the specific needs of their clients. Many are increasingly drawn to direct investments in private markets, preferring to bypass fund-level fees. For these investors, sectors like real estate, private credit, and private equity offer significant appeal due to their tangible assets and the potential for strong returns.

The panel also noted a shift in investment strategies across generations. While earlier generations of family offices favored direct investments, later generations are becoming more conservative and risk-averse, focusing on real estate and tax-efficient strategies to preserve wealth.

Emerging trends include family offices becoming more cost-conscious and professionalizing their operations, with many investing in technology, expanding their internal teams, and diversifying partnerships to ensure a more sophisticated approach to managing their wealth.

Family offices continue to be attracted to sectors like healthcare, infrastructure, and alternative credit, especially as traditional private credit becomes more challenging. They are also actively seeking distressed real estate opportunities, particularly in areas like multifamily housing, which remains underinvested.

In short, family offices are becoming a driving force in private markets, with a focus on customized, tax-efficient investments, direct investing, and a continued appetite for private equity and real estate – all while professionalizing their operations to better manage their growing influence.

Stay Ahead With These Strategic Insights

The Kayo 2024 Women in Private Funds Conference shed light on many emerging trends and challenges in the private markets. From the evolving role of KPIs in growth strategies to the rise of evergreen funds and the critical importance of ESG, the insights shared at this event will undoubtedly shape the future of private funds. Whether you're an institutional investor, an emerging manager, or part of a family office, the key takeaway is clear: adaptability and strategic thinking will be essential to navigating the path forward.

To view upcoming conferences, book a demo of Dakota Marketplace!

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Written By: Eliza Breed, Head of Private Funds

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