Capital has always been powerful, but in today’s era of abundance, capital is no longer scarce. Differentiation in private markets will be determined not by the capacity to deploy capital, but by the ability to forge the most purposeful and unconventional partnerships. Alignment, trust, and purpose will become the sources of durable competitive advantage in private markets. 

Market statistics illustrate a remarkable transformation. Two decades ago, public companies outnumbered private equity–backed firms in the US three to one. Since then, the ratio has inverted. Globally, private capital has quadrupled in the past decade, ballooning to $13 trillion in 2025, with forecasts pointing to $20 trillion by 2030. Nearly 90 percent of US companies generating more than $100 million in revenue are privately held. 

Alignment, trust, and purpose will become the sources of durable competitive advantage in private markets.

Influence over the private businesses that drive jobs, innovation, and geopolitical agendas is increasingly concentrated. In the first half of 2025, 10 private equity firms accounted for over 25 percent of US fundraising. Their decisions will shape not just portfolios, but also economies and societies themselves.

This transformation is occurring in a market environment defined by uncertainty and change. Higher-for-longer rates, slower growth prospects, rapid technological disruption, and volatile geopolitics are forcing investors to abandon old playbooks. Earning yesterday’s returns will require twice as much effort, while yesterday’s upside case has become today’s base case. 

In this environment, the traditional Limited Partner (LP)–General Partner (GP) relationship is no longer sufficient. The LPs and GPs who thrive will be selective, intentional, and willing to embrace creative, unconventional forms of collaboration. They will treat partnership not as a contest of terms, but as a joint pursuit, in which meaningful partnerships capture a disproportionate share of ecosystem alpha. 

The next generation of LPs and GPs is stepping into a far more dynamic role: active partners, trusted collaborators, and purposeful stewards of scaled capital. Their advantage will rest on three foundations: alignment, trust, and purpose.

Alignment begins with clarity, conviction, and focus. Thematic alignment allows LPs and GPs to compound expertise, focus resources, and lean in with conviction when opportunities arise. At Texas Municipal Retirement System, we focus on investing in five global megatrends: digital transformation, health-care innovation, industrial resilience, energy modernization, and financial empowerment. This thematic orientation signals to partners that our capital brings insights and pattern recognition along with our dollars. 

Equally important is business alignment. With the influx of retail capital, the benefits of scale come with heightened complexity. Maintaining durable incentives, disciplined pacing, rigorous underwriting criteria, and transparent governance will be essential to sustaining trust. Scale without alignment dilutes accountability and, ultimately, returns. 

If alignment is the compass, trust is the currency. In private markets where opportunities move quickly, trust empowers partners to commit with agility, flexibility, and confidence. The next generation of LPs is earning trust not only by deploying capital but also by employing talent with GP experience, who speak the same language and understand the practical realities of sourcing, diligence, and execution. This credibility creates mutual understanding and enables LPs to act with speed and clarity. 

Trust also deepens when LPs are able to deliver unconventional value alongside their capital—sourcing transactions for managers, introducing founders, management teams, and ecosystem partners, orcatalyzing synergies across portfolio investments. These acts of partnership extend beyond writing a check—they prove the LP is invested in the GP’s success as much as their own. In a crowded market, compounding trust serves as the last true edge. 

Even with alignment and trust, the defining feature of the next-generation LPs and GPs will be purpose. The“ why” of capital matters more than ever. Private markets now dominate ownership of industries central to economic security, technological progress, and consumer well-being. 

With this concentration of power comes responsibility and a commitment to embrace creativity to solve the most significant problems facing consumers, enterprises, and societies to accelerate equity value creation. Ownership Works, which promotes broad-based ownership in private equity-backed companies to catalyze outsized investment outcomes ,is one such example. LPs and GPs, by virtue of controlling scaled, long-dated pools of capital, have a unique ability—and obligation—to explore both conventional and unconventional ways to compound capital.

The Milken Institute reminds us that ideas shape markets, institutions, and lives. The same is true of capital. Its power lies not in volume, but in the quality of its partnerships. The future of private markets will belong to the next generation of LPs and GPs who match capital with alignment, trust, and purpose. They will not only deliver returns but also help architect a more resilient, dynamic form of capitalism, transforming the lives of consumers, enterprises, and societies for the better.