Dry powder refers to the committed but undeployed capital that private market fund managers have available to invest. When an LP commits capital to a fund and the GP has not yet called it for investment, that uncalled capital represents dry powder. Global dry powder across all private market strategies exceeded $3.7 trillion in 2025, a record level that has significant implications for deal pricing and market dynamics.
High dry powder levels create competitive pressure in deal markets. When many GPs are chasing the same deals with large pools of capital, purchase price multiples tend to expand, potentially compressing future returns. Conversely, periods of reduced dry powder (often following market dislocations) can create attractive entry points for disciplined deployers.
Dry powder levels vary significantly by strategy. Private equity buyout funds hold the largest absolute amount, while real estate and infrastructure dry powder has grown rapidly. Venture capital dry powder relative to deal volume creates different dynamics than buyout dry powder. Our platform tracks estimated dry powder by strategy through fund size and deployment pace analysis.
For GPs, managing dry powder is a balancing act. Deploying too quickly risks overpaying for assets, while deploying too slowly means LPs are paying management fees on unproductive capital. The investment period (typically 3-5 years) creates a natural deadline for deployment. GPs that consistently deploy within their investment period while maintaining return discipline are viewed favorably by LP allocators.
Dry powder levels are a key input for GP stakes valuation. A GP with significant uncalled capital has a pipeline of future management fees and potential carried interest. Conversely, a GP that has fully deployed its current fund and has not yet raised a successor is in a more precarious position. Our platform helps GP stakes investors evaluate deployment status and fundraising pipeline.
The relationship between dry powder and deal activity is not perfectly correlated. Market conditions, leverage availability, and seller expectations all influence the pace of capital deployment. Periods of market dislocation often see dry powder accumulate as deal activity slows, creating potential for above-average returns when deployment eventually accelerates.