Apac investors cool on venture capital despite returns topping global private markets in 2025

[SINGAPORE] Venture capital (VC) returns improved in 2025, but investor sentiment for the asset class remains largely unchanged.

Among private asset classes globally, VC returned 22 per cent in 2025, indicated a report by indices provider MSCI, with private equity a distant second at 13.3 per cent.

In Asia-Pacific, VC returned 15.3 per cent in 2025, the highest among asset classes. One of the hottest asset classes in recent years, private credit only returned 5 per cent in 2025 in Apac.

VC substantially ramped up returns in the fourth quarter of 2025 with a 7.2 per cent quarterly return – its best quarter since 2021, indicated MSCI. The asset class’ 19 per cent internal rate of return (IRR) in 2025 also pushed it to the top of the performance table after three years of mixed returns.

In 2024, VC’s IRR was under 5 per cent, and was negative in 2023.

Despite the market leading returns in 2025, investors are not piling into VC to ride the resurgence wave.

For 2026, investors are largely allocating similar amounts to VC as they did in 2025, an investor sentiment survey by Coller Capital found.

More than half the investors (60 per cent) are leaving the allocation to VC unchanged, while 25 per cent are looking to decrease their allocations. Only 15 per cent of investors are looking to increase their allocations in 2026, a shade higher than the 14 per cent in 2025.

“Selectivity in Apac is a question of how capital is deployed, not whether it continues to flow,” said Coller Capital in its report.

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Bucking the global trend

Instead, Apac investors are continuing to build out their investment programmes, with 53 per cent saying they want to increase the number of general partner (GP) relationships over the next three years, upping the number of funds they are investing in.

This bucks the global trend where 23 per cent are looking to reduce the number of GP relationships within the same time period, and 39 per cent are looking to maintain the current number of GP relationships.

“It’s a reminder that the LP (limited partner) base is not monolithic – and that regional perspectives are becoming an increasingly important part of how private markets evolve,” said Peter Kim, head of Apac at Coller Capital.

Geopolitics weigh heavily on the minds of Apac investors, with 47 per cent citing that it influences their private markets allocation decisions. This is significantly higher compared to the global average of 37 per cent of investors.

“This barometer makes clear that Asia-Pacific investors are navigating a different set of considerations to their peers elsewhere,” said Kim.

Private credit is also getting a cooler reception from investors, with only 29 per cent looking to increase allocations in 2026, down from 42 per cent in 2025. Around 13 per cent of investors are looking to reduce allocations into private credit in 2026, up from 12 per cent in 2025.

Despite wanting to increase the number of GP relationships, 70 per cent of Apac investors view newly established private credit funds as less attractive.

Globally, only 18 per cent of investors believe that there is a systemic problem with private credit, while the majority, or 53 per cent, believe that there is isolated risk above and beyond initial expectations. The remaining 28 per cent are comfortable that the risk in the asset class is in line with expectations.

“Investors appear to have a more nuanced take on private credit than is evident in some media reporting,” said the Coller Capital survey.