Tech PE's fundraising recovery is leaving tourists behind

Technology-focused private equity fundraising has shown a modest recovery in Q3, driven by two prominent managers who accounted for a significant portion of the increase. One of those managers, software investor PSG Equity, recently closed its third European fund at over €4.4 billion, surpassing its predecessor by nearly 70%. Another notable investor, Francisco Partners, raised substantial amounts for both its flagship and mid-market funds, both exceeding their targets within eight months of fundraising.

These recent fundings followed a significant slowdown in Q1, which began with the launch of Anthropic's AI agent, Claude Cowork, and a subsequent decline in SaaS valuations due to the introduction of plugins that extended the tool's capabilities. Despite the recent rebound, fundraising remains largely unchanged, with PSG and Francisco Partners accounting for over 80% of the total.

Experts in the field, such as Gabrielle Joseph and Philippe Crochet, emphasize the importance of sector expertise in attracting limited partners (LPs). However, for those who have adopted software for ease of use without developing deep expertise, the market may be more challenging. Francisco Partners' Agility Fund family received a strong performance score in PitchBook's 2025 league tables, placing the firm in the top three globally.

Fund managers acknowledge that LPs may be cautious about committing to tech investments, as they seek clarity on pricing future assets amidst the expected widening gap between AI winners and losers. This complexity is further exacerbated by the need for managers to assess AI resilience and opportunities within companies, introducing new criteria and key performance indicators (KPIs) to navigate the rapidly evolving landscape.