How smaller firms can compete in the age of megafunds

Private market allocations are set to surge 70% to nearly $24 billion by 2030. A huge portion of this growing pool of capital is being directed to megafunds.

Megafunds have invested heavily in institutional-grade operating models. They have centralised data architectures, automated workflows, integrated portfolio monitoring systems and real-time reporting capabilities. This infrastructure enables faster decision-making, more robust valuations and greater transparency for limited partners (LPs).

LPs are now placing greater emphasis on operational due diligence, data governance and reporting transparency. Allocations are increasingly influenced not only by track record, but by a manager’s ability to demonstrate institutional resilience and scalability.

For smaller managers, this shift raises the competitive baseline.

Many still rely on spreadsheets and PDF-driven reporting, manual NAV calculations and fragmented systems across service providers. These processes are error-prone, difficult to audit and don’t offer the transparency and analytical depth LPs now expect, leaving smaller managers susceptible to being screened out before performance is even assessed.

In today’s environment, operational weakness can prevent a fund from reaching the performance discussion at all.

As LP scrutiny intensifies, data quality is emerging as one of the most pressing operational challenges in private markets. Inconsistencies across reporting, valuation and portfolio data are no longer viewed as minor inefficiencies, but as indicators of operational risk. Managers that cannot present clear, coherent data often face longer due diligence processes and more searching questions during fundraising.

This also means that GPs can only offer limited transparency as to where capital is actually invested, pushing data standardisation and governance to the top of the agenda for LPs.

In a concentrated market, this is a material competitive disadvantage.

For smaller managers, the objective is not to match the scale of megafunds, but to put the right operational building blocks in place. Consistent data definitions, aligned reporting frameworks and stronger governance enable managers to meet rising LP expectations and engage more confidently during due diligence. Without this clarity, even compelling performance stories can struggle to cut through.

Managers that delay modernising their data infrastructure risk falling behind as megafunds continue to raise investor expectations around transparency and valuation accuracy.

For many of these smaller firms, AI could hold the operational key to competing in a more concentrated private markets landscape. AI can speed up due diligence, improve forecasting, strengthen valuation accuracy and help teams do more with fewer resources. 

AI’s ability to analyse vast volumes of information across inconsistent formats and turn it into usable insight is unparalleled. Deploying it compiles more reliable datasets for investment teams, supports stronger decision-making, and enables more accurate and transparent reporting back to LPs.

However, technology alone does not solve structural weaknesses. AI systems are only as effective as the data underpinning them. Firms with fragmented or poorly governed datasets will struggle to extract reliable insights. Without disciplined data architecture, automation initiatives risk becoming costly experiments rather than strategic advantages.

To make full use of AI, firms must ensure they’re building AI initiatives on the entire picture of asset data and using consistent formats.

Smaller managers are left with a choice. They can modernise their operating models to keep pace with rising LP expectations or differentiate themselves to service specialised areas of the market to justify structural differences.

To compete on a level playing field with larger managers, funds must invest now in data governance, scalable systems and operational resilience. This gives funds a strong operational offering, regardless of size. Those that fail to update risk being neglected because they don’t meet the new standards of capital allocators.

In a landscape shaped by scale, transparency and institutional rigour, modernisation is no longer optional; it’s the cost of entry.

As market competition intensifies, operational resilience becomes a competitive advantage rather than a support function. Managers need confidence that their structures, reporting and governance frameworks can withstand compressed timelines and heightened LP scrutiny.

At Vistra Fund Solutions, we support private markets managers across the full lifecycle of transactions. From fund structuring and cross-border administration to investor reporting and data management, we help ensure operational frameworks are deal-ready and scalable.

Our teams work closely with managers to strengthen governance, enhance transparency and deliver structured, reliable data that supports pricing, diligence and execution. As volumes increase and transactions grow more complex, having robust operational foundations in place can help reduce friction, protect timelines and reinforce investor confidence.

In a market that rewards preparedness as much as activity, the right operational partner can make a meaningful difference.

Contact us today to learn how Vistra Fund Solutions can support your fund’s growth and operational needs.

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Gulsey has over 20 years of experience in private equity and debt, working with LPs, GPs, and various fund administrators. Prior to Vistra, she held senior positions at Lehman Brothers, a Dutch pension fund, Goldman Sachs Asset Management and other major industry providers. 

Since joining Vistra in 2018, she has expanded the private equity and debt fund services business across the Americas and now oversees operations, supports business development, and leads a cross-border team serving diverse clients in venture capital, infrastructure, and private credit.