Over the last 20 years, private markets have grown into a $16 trillion industry, with bigger funds, broader investor bases, and more complex strategies. Yet while managers and investors have evolved, the infrastructure supporting them has barely moved. As fundraising slows, retail capital enters at scale, and compliance demands intensify, inefficiency in the back office can no longer be swept under the rug, writes Sonata One Chief Revenue Officer, Jason Meklinsky.
Two decades of transformation
In 2000, private equity AUM globally was around $600 billion according to data from Hamilton Lane. At the end of 2023, Preqin’s Future of Alternatives 2029 report put the figure in excess of $16 trillion, with projections topping $29 trillion by 2029.
The industry has changed dramatically:
- More managers, launching more funds – and launching them more frequently.
- Larger vehicles, often raising tens of billions from a concentrated group of investors.
- An expanding investor base—recently bolstered by US regulatory discussions around opening alternatives to 401(k) participants
- Growth in evergreen and perpetual structures, demanding new approaches to liquidity and administration.
- A more complex and fast-changing AML/CFT regulatory environment.
Managers have evolved too. The model of raising one or two closed-end funds from a handful of large institutions every few years has shifted. Today, many firms look more like full-fledged financial institutions: managing perpetual capital strategies, serving increasingly diverse investor segments. Over the last ten years, we’ve seen fund LP bases expand dramatically—typically more than doubling, and sometimes far beyond that.
Out of sight, out of mind
And yet, there’s one area that looks remarkably unchanged: the back office.
Behind the industry’s growth sits infrastructure that is creaking under pressure. Fragmented systems that don’t talk to one another, a patchwork of administrators, accountants, and lawyers and repetitive investor approvals every time capital moves.
This is more than inefficiency—it’s a foundational problem that drives up costs for managers and, ultimately, for investors.
Why it’s moving into focus
As long as funds were oversubscribed and margins healthy, these inefficiencies could be swept under the rug.
But today’s environment is different. Fundraising is tougher, margins are under pressure and retail capital is arriving at scale. Investors are also more aware of the fees being passed on to them.
The experience gap is also widening. In public markets, investors can buy a stock or ETF in seconds, with a consistent experience across platforms. In private markets, the same investor might complete the same KYC process several times for different funds managed by the same GP. That’s friction—and in a competitive fundraising environment, friction costs capital.
Private markets are becoming more liquid, but investor access still takes weeks. It should take moments.
What investors and managers are looking for
What we see in the market today is clear. Managers are looking for ways to raise capital more efficiently, reduce costs, and free up time to focus on performance. They’re also under growing pressure to scale their operations without adding headcount or complexity.
Investors—whether they are large pensions or individual accredited investors—are demanding a simpler, more consistent experience. They want a single point of access, where they can view, subscribe to, and manage all their private markets investments with the same ease they experience in public markets. Why can’t the investor have both? One platform to invest with ease, public or private.
All signs point to the same conclusion: the industry needs a common “pipe” that connects managers and investors. The question is no longer if, but how fast.
Connecting the private markets
That’s exactly what we’re building at Sonata One: one platform underpinned by common standards, harmonising the investor journey with expert support across the entire fund lifecycle.
- Investors onboard once, across the private markets
- Managers raise capital faster with access to more than 53k investors, already on our platform
- The industry benefits from greater simplicity and scalability – enhancing investor access and reducing regulatory risk
The next chapter for private markets
Change is underway, and the influx of retail capital will accelerate it. Private markets are no longer “alternatives”—they are fast becoming a core part of institutional and individual portfolios alike, blurring the line between public and private.
To sustain this growth, the underlying infrastructure must catch up and deliver a seamless, enterprise-grade experience.
That’s what we’re making possible at Sonata One. Join our movement before you raise your next fund. You’ll be glad you did.
