Venture capitalists love the spotlight. They’re on X, they’re in the White House, and they’re constantly chasing press coverage of Series A deals into B2B SaaS companies that might become the next Salesforce, but could just as likely fold in a few years.
Today’s VCs hold an inordinate amount of cultural capital, and for good reason: They fund many of the companies that undergird not only our economy, but our social fabric, and they are often instrumental in shaping tomorrow’s trends. But still, they represent a small fraction of the broader investment landscape, which is why I’m always astounded by the sheer scale of the private equity industry.
I spent the past few months reporting on Ares Management, an alternative asset manager that spun out of Apollo in the late 1990s. Originally, I was interested in the firm because of its role in the booming field of private credit, which has become such a buzzword that it seems like high finance’s equivalent of AI (and they’re related, with much of new private credit capital going to fund data centers).
Ares’ bread and butter business is lending to other alternative assets firms like KKR and Apollo, raising money to help fund their buyouts of middle market companies that most venture firms would never be interested in (though that’s changing), and occasionally taking small equity stakes themselves. The strategy has paid off, especially with the rise of private equity more broadly after the 2008 financial crisis, with Ares now aiming to grow its assets under management to $750 billion by 2028. Compare that to Insight Partners, one of the larger venture players dabbling in private equity, which has $90 billion.
As with tokenization, private credit is taking on an increasingly greater role in our economy as companies take longer to go public or decide never to go public at all. Rather than turning to public markets for funding, they must look to other means, with firms like Ares waiting in the wings.
For everyday investors, that limits the type of companies where they can put their money—though some firms like Apollo are starting to offer vehicles like ETFs, as well as tokenized funds, that provide access to private companies. Critics argue that the lack of transparency, however, creates a whole host of potential problems.
A firm like Ares may have less name recognition than a Sequoia or Andreessen Horowitz, though it has arguably a greater role in shaping how money moves in our economy (and they’re taking on a higher profile through sports, with three Ares executives among the new Baltimore Orioles leadership group). These are the “masters of the universe” that Tom Wolfe famously wrote about in his 1987 Wall Street classic The Bonfire of the Vanities, but they’re often more hidden from view. You can read my feature on Ares’ rise, including its unique structure of a CEO and two co-presidents leading its next era of growth.
