LGT Capital Partners released a new report arguing that venture capital should move from a niche corner of private‑market portfolios to a strategic asset class for investors with heavy exposure to volatile public equities. The firm, which manages $110 billion, notes that most value creation now occurs while companies remain private, as firms extend their pre‑public life.

The analysis warns that limited‑partner (LP) funds lacking dedicated VC allocations face outsized risk from concentrated public holdings. By incorporating VC, LPs can diversify against volatility and tap into early‑stage upside that traditional public markets cannot deliver.

KKR’s Arctos Capital, a platform that packages GP‑led funds, takes advantage of illiquid GP structures to generate higher returns for LPs. The strategy targets private‑market investors seeking alpha amid tightening liquidity in venture funds.

An upcoming IPO wave could unlock significant exits for VC‑backed companies, providing fresh liquidity to LPs and encouraging additional capital deployment into early‑stage ventures. The convergence of longer private stays, GP illiquidity, and IPO momentum signals a shift in how institutional investors view venture capital.