GP’s Current Fundraising Challenges, According to AI Chatbots

Authored by: Kyle Derkacz, Managing Director
Updated on: October 5, 2023

We Asked

What challenges are General Partners (GPs) currently facing when fundraising in the private equity industry?

Open AI ChatGPT

General Partners (GPs) face several challenges when fundraising in the contemporary private equity landscape...

Google Gemini

Fundraising in private equity has gotten tougher for GPs. Here are some of the key challenges they're facing:...

Gen II Expert Response:

While the ChatGPT response is by no means a one-size-fits-all for challenges every GP may face in raising LP capital commitments, the simple question posed to the chatbot has drawn a significant response, only some of which I have touched on above. No response, from humans nor ChatGPT, would be all-inclusive, but the eight points Chat GPT has returned are all realistic hurdles and challenges that a GP would need to block and tackle in the run-up to and execution of fundraising efforts in the private equity landscape.

The ChatGPT response detailed various challenges GPs face in the private equity fundraising environment. The significance of these challenges varies based on the GP's specific situation, such as their operational size, targeted fundraising, investment objectives, and historical performance. Although GPs, regardless of their size, can make significant fundraising achievements, the intricacies of gathering and presenting data to LPs necessitate a well-coordinated operational strategy. With varying LP requirements, ensuring data is accessible and user-friendly is crucial, as it often involves aggregating information from multiple sources and tailoring it to specific demands.

Regulatory scrutiny remains a constant focus for GPs in fundraising, especially with the introduction of new regulations for private fund advisers by the SEC. While these regulations present challenges, GPs that proactively address them can stand out from their peers. The emphasis on track records also varies for GPs; while established GPs may have an easier time due to their history, emerging GPs face a myriad of hurdles, from staffing and third-party engagement to managing LP expectations and regulatory demands. Regardless, both new and mature GPs confront interconnected challenges in the private equity fundraising landscape, and while the ChatGPT response isn't exhaustive, it highlights many of these complexities.