NEW YORK, April 17, 2025 – In a rapidly changing market landscape, private market investors are transforming their investment strategies and priorities while navigating new risks and opportunities driven by technological innovations, according to KPMG Private Markets Pulse: Private market investment priorities, a new study released by KPMG LLP, the US audit, tax and advisory firm.
KPMG US surveyed more than 300 US private equity (PE), asset management, venture capital (VC) and family office investors across a variety of industries and sectors to capture investor sentiment around innovation cycles, new growth fronts and evolving definitions of “value” in the private markets.
“Private market investors are prioritizing a combination of financial performance metrics and scalability potential when assessing investment opportunities,” said Tarek Ebeid, KPMG Private Leader and Partner in Charge – Northern California Audit Practice, KPMG US. “They remain cautious about risks, placing increasing value on comprehensive reporting and governance measures. Founders seeking funding should articulate their company’s strengths, future potential and comprehensive risk management strategies with clarity and transparency. This approach will help attract investment, maintain investor confidence and foster trust.”
Investors are increasingly prioritizing companies that demonstrate a robust track record of innovation and a proactive approach to adopting emerging technologies underscoring the importance of staying ahead of technological curves to maintain competitive advantage and capitalize on new market opportunities. They also expect AI to transform nearly every facet of portfolio companies within the next year, with the greatest impact on data analytics and business intelligence (52%), cybersecurity (52%) and finance and accounting (50%).
As technology adoption increases, so do the risks associated with capturing and analyzing large volumes of data. Eighty-one percent of investors say cybersecurity and data reporting measures in investment decisions have increased in importance over the past year, consistent with a prior KPMG survey of private companies in which 66% of financial function leaders cite cybersecurity as the most relevant area of reporting beyond financial statements. As companies increasingly rely on digital infrastructure, robust cybersecurity measures are essential to safeguard against potential threats and ensure long-term stability.
Private market investors are also recognizing that long-term resilience and sustainable growth are closely linked to strong governance, ethical practices and social responsibility. While financial performance, future projections and return on investment (ROI) remain the top considerations, governance and non-financial reporting are increasingly critical to driving investor confidence.
Private equity investors are more focused on pricing and profitability (63%).
Venture capitalists place more importance on evaluating a company’s unique value proposition (56%)
Asset managers are prioritizing the evaluation of a company’s technological capabilities and innovation pipeline (56%).
Seventy-seven percent of investors report an increased focus on governance over the past 18 months, emphasizing the importance of robust and effective governance in financial reporting for companies in mitigating risk associated with material financial misstatements and fraud. This not only enhances investor confidence but also builds trust with stakeholders and improves market reputation.
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