ASC Advisors May 2025 Newsletter
ASC Advisors May 2025 Newsletter
Welcome to ASC Advisors’ monthly newsletter, where we provide thoughts around recent developments affecting the alternative investment management industry, as well as provide updates on our firm and team.
Venture Capital’s Recalibration
Economic uncertainty, supply chain recalibration, limited exit options and ongoing market volatility triggered in part by tariff policies present the main challenges across various alternative investment strategies and have particularly impacted the outlook for VC's in 2025, according to recent Pitchbook data. Despite these challenges, venture deal activity in Q1 2025 matched prior quarters with 3,990 deals worth $91.5 billion, although a significant concentration (71%) of those investments were in AI startups, such as OpenAI and Anthropic. Overall, while the AI sector remains strong, a cautious approach in the broader venture capitalist space is expected to cause a slowdown in startup funding and subdued M&A activity for the rest of 2025.
From Alternative to Mainstream
The volatility of global stock markets amidst the Trump Administration's start-stop tariff policy and global trade repositioning underscored how larger, public alternative investment firms like Blackstone, KKR, and Apollo now closely resemble traditional financial institutions in both their structure and market sensitivity. Historically insulated from short-term market shifts, these firms have faced steeper declines in share prices compared to banks and insurers. This has been driven by a number of factors, including broader exposure to the markets through both levered portfolio companies and increased potential for defaults across private credit portfolios. That, coupled with a depressed M&A outlook and resulting exit opportunities, has caused limited partners to continue scaling back.
Furthermore, given the substantial growth in private credit institutions and lending activity outside of traditional banks, hedge funds have increasingly stepped in to provide additional liquidity, particularly during periods of increased market stress. This trend, which can result in the unwinding of heavily leveraged positions during enhanced volatility, has the potential to impact bond markets and further highlights how deeply embedded alternative investment managers have become in the broader financial system
Lowering the Regulatory Threshold
On April 7, the UK government and the Financial Conduct Authority (FCA) proposed raising the threshold for "full-scope" regulation of alternative investment fund managers from £100 million to £5 billion in assets under management. This initiative aims to reduce regulatory burdens on smaller private equity and hedge funds by alleviating regulatory burdens and enabling them to grow without facing disproportionate compliance costs. The reforms are part of a broader initiative to enhance the UK's attractiveness as an investment hub and comes amid recent global market volatility. Critics have expressed concerns that such deregulation could increase systemic risks and diminish financial oversight amongst smaller alternative investment managers. This will be an interesting area to watch, both in the UK and across other regions, as both they and their respective regulators look to continue to attract and accommodate investment managers as the volatile global marketplace continues to shift.
Firm News
ASC Advisors Paid Ad LinkedIn Research - As LinkedIn continues to evolve as an effective tool for managers to reach key stakeholder audiences, strategically leveraging paid ad targeting campaigns to enhance the reach and impact of firm key business milestones, portfolio company announcements, and thought leadership material is becoming increasingly more important. ASC Advisors recently completed a study looking at how leading PE (both large and middle-market) and Hedge Fund managers are using LinkedIn ads to reach LPs, portfolio company management teams and recruits. Stay tuned for our full report.
AIMA Webinar - On May 15, Steven H. Bruce will join Peter Greene, Partner at Schulte Roth, to discuss Communicating with Investors in Volatile Markets. You can register for the webinar at this link.
GAIM Ops Cayman 2025 - Steven H. Bruce was joined onstage at GAIM Ops Cayman 2025 by renowned journalist Bethany McLean for a fireside chat to discuss the evolving role of hedge funds in her reporting and the current investment management media landscape.
