# Private Equity Fundraising Declines for Fourth Consecutive Year

Selling B2B companies to PE becomes increasingly challenging

- **Source:** [SaaStr](https://www.saastr.com)
- **Published:** 2026-10-13
- **Topic:** [Finance](https://brifing.si/c/finance)
- **Original article:** <https://www.saastr.com/private-equity-fundraising-is-down-for-the-fourth-year-in-a-row-selling-your-b2b-company-to-pe-got-harder-again-in-2026/>
- **On Brifing:** https://brifing.si/s/b0bad470-d467-4b30-bf18-320730d4af23

## PE Fundraising Decline

U.S. private equity fundraising has declined for the fourth consecutive year in 2026. Through September 30, PE firms raised approximately $222 billion, annualizing to $296 billion, down from $330 billion in 2025 and a peak of $405 billion in 2023. This represents a 27% drop from the peak unless Q4 significantly outperforms.

## Middle-Market Impact

Middle-market U.S. private equity fundraising fell more than 43% to $94.8 billion in 2025, marking the worst year for this segment since 2018. This steep decline contrasts with the broader industry, affecting B2B companies typically valued between $10M to $75M in ARR, which rely on mid-market sponsors for exits.

## Fewer Funds Closing

The number of PE funds closing dropped 45.1% to 2,613 in Q1 2026, according to PitchBook. Fewer funds mean fewer firms with fresh capital to deploy, reducing the number of bidders in acquisition processes. Competitive tension between bidders is crucial for achieving favorable sale prices.

## Dry Powder Constraints

Despite $2 trillion in dry powder, much of it resides in older funds needing to return cash before raising new ones. This changes buyer behavior, making them more selective. Sponsors are underwriting AI risk and prioritizing profitability and free cash flow over growth to ensure exit math works.

## VC vs PE Fundraising

In Q1 2026, private equity fundraising dropped 29% to $385 billion, while venture capital raised $189 billion, down only 3.6%. LPs favor VC due to AI's appeal, whereas PE struggles with insufficient returns, making it harder for GPs to raise new funds.

## Exit Challenges

PE deal activity in Q1 2026 included 5,100 transactions valued at $481.6 billion. However, older funds needing to show returns before raising again complicate exits. Sponsors are cautious, focusing on cash flow and profitability, making it harder for B2B companies to secure favorable deals.

## B2B Company Outcomes

B2B companies still achieving strong sponsor outcomes are profitable, have robust retention data, and run wide processes to maintain multiple bidders. These factors are critical in a market where fewer funds and tougher diligence are the norm.

## Future Outlook

PitchBook predicts PE fundraising won't fully recover until exits remain high long enough to restore LP liquidity, which could take several more years. Selling to PE in 2026 means navigating fewer bidders and more rigorous diligence, emphasizing profitability and cash flow.

## Sources covering this story

- https://www.saastr.com/private-equity-fundraising-is-down-for-the-fourth-year-in-a-row-selling-your-b2b-company-to-pe-got-harder-again-in-2026/ — 

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_Summary written by Brifing from the original reporting. Copyright in the original article belongs to its publisher; read the full piece at the link above._