US private equity growth funds attracted a record $33.2 billion in capital during the first half of this year, marking a 36 percent increase from the previous year. This surge signals a strong recovery from the 2023 fundraising slump, with total fundraising across other private equity strategies growing 20 percent over the same period. The number of growth funds raising capital dipped to 87 from 96 a year earlier, yet large established managers and smaller specialist funds benefited from inflows driven by AI-related interest and valuations that remain below 2021 highs.

Jeff Machlin, managing partner of Wingman Growth Partners, noted the recovery is real but selective. Fundraising peaked in 2021 at $67 billion but collapsed to $29 billion in 2023 as investors pulled back amid profitability concerns and a lack of exits. However, growth equity has risen in each of the past two years.

A McKinsey survey of 296 institutional investors found 46 percent plan to increase allocations to growth private equity over the next three years. Chris Cavanagh of Guidepost Growth Equity observed that private company valuations have come down materially, offering more attractive multiples. The success of AI start-ups has further boosted appeal, with pension plans and endowments seeking exposure to potential technology winners like Open AI and Anthropic.

Despite this momentum, money has flowed heavily into a handful of large funds, with three funds including the $10 billion Thrive X fund, run by Joshua Kushner's Thrive Capital, accounting for more than half of first-half capital. Smaller, specialized funds like Blueprint Equity have also found success in this selective environment.