The Future of Capital
Capital is moving again, but it is concentrating among fewer managers and taking longer to secure. Managers cannot control market conditions or allocator pacing, but they can control whether their strategy, organization, relationships and capital formation capabilities are ready when capital becomes available. In this piece, Leah Dillon, Chief Operating Officer and Head of Partner Engagement at Alliance Global Advisors, and Stacy Schiffman, Global Head of Executive Search at Alliance Search Partners, examine what managers can do now to compete for the next wave of capital.
Capital Flows
Forty percent of every dollar raised for real estate in 2025 was allocated to just ten funds. Alliance data shows that capital remains available for real estate investment as we approach the end of 2026. However, despite increased capital availability, competing for a share of those allocations is more difficult than ever. Investment management teams need to adjust their approach to align with the attributes investors prioritize: realizations, strategy viability, strength of team and active pipeline.
2Q26 Marked the Lowest Number of Fund Closings in Nine Quarters
Seventeen funds closed in the second quarter of 2026, down from 35 a year earlier, even as average fund size doubled to $2.1 billion from $1.0 billion in the first quarter. Fewer sponsors are completing raises. As in 2025, capital continues to consolidate into fewer, larger vehicles. Source: Institutional Real Estate, Inc., IRE.IQ Fundraising Hot Sheet, Q2/2026, "Fundraising Trends, Q2/24–Q2/26." Source: PERE, Full Year 2025 Fundraising Report, "Even More Time on the Road"; Preqin.
Today's Dry Powder Will Shape Tomorrow's Fundraising Environment
Dry powder is finally coming off the sidelines, which will lead to more invested capital. Managers that raised capital over the past three years will be deploying capital within their investment period windows in a better transaction environment. As capital is deployed, investors should see growth in net asset value driven by investment activity rather than appreciation. At the same time, managers are likely to return to market with re-up opportunities in 2027 and 2028, further crowding the fundraising environment. As the transaction market continues to open, realizations will also remain top of mind for investors.
"The firms earning commitments in 2027 and 2028 will be listening to their investors and closing loops on their open questions long before the ask. Investment managers should assess their market-readiness to remain competitive."
Stacy Schiffman · Global Head of Executive Search, Alliance Search PartnersThe average closed-end fund that closed in 2025 spent 25 months in fundraising mode, up from 23.7 months in 2024 and more than 60 percent longer than the 15 months managers were used to in 2020. While one of our goals at Alliance is to help capital formation teams reduce the amount of time spent fundraising, leadership should plan for a fundraising period of up to two years following launch.
Combined with a pre-launch investor listening tour, managers should plan for an approximately three-year capital formation cycle, even for a fund that is otherwise meeting investors' needs. Source: Preqin.
The Health of a Partner Relationship
An investor may not directly indicate that a relationship is compromised. Instead, managers may notice subtle changes over time: longer response times, fewer senior-level interactions or delays in providing feedback or commitments. Once a call that used to go straight to the CIO starts getting routed to an analyst, the relationship may have shifted. By the time an investor communicates that they won't be making a commitment, the decision may have been made months earlier.
The managers who retain their investors start the re-up conversation at the fund's midpoint, not at the end. The conversation should be holistic and not solely focused on the re-up. Waiting until the next vehicle is in market to start these conversations means competing with committee calendars and budget cycles that may have been established months earlier. Investors can become frustrated with managers who secure their capital and then don't meaningfully engage with them until the next fund. They want real partnership, not transactional relationships. Ongoing engagement and listening are critical to maintaining that relationship.
Investors need cash back in hand before they write another check. The trend is improving, but seven straight years of net outflows is a lot to ask any allocator to sit through. Source: Preqin.
"Managers do not lose mandates because they lack a strategy. They lose them because they stop developing the relationship. Relationships are developed over years. Be consistent, be transparent and treat them like a partner. This builds enduring like and trust."
Leah Dillon · Chief Operating Officer and Head of Partner Engagement, Alliance Global AdvisorsTwo Fronts, One Commitment
Capital commitments can come through two paths. Some investors identify a manager directly and bring the opportunity to their consultant for review. In other cases, the consultant identifies the manager first to fill a gap in an investor's portfolio. Either path can work, but only if both sides are on board. A manager who has built a relationship with the investor but not the consultant, or the reverse, is exposed at the point of decision. Understanding how each prospect actually decides is critical.
At IREI's August 2026 panel on second-quarter fundraising data, Alliance raised an important question: is capital earmarked for real estate shifting to infrastructure? The panel acknowledged the potential trend, while noting that data to quantify the shift remains limited. Source: IRE.IQ 2Q26 Fundraising Report Review Webinar Recap, August 18, 2026.
Alliance Search Partners is already seeing this shift reflected in hiring trends. More managers want one hire who can run both fundraising and client service for continuity of messaging and to ensure that investor feedback is heard by the investment manager.
One Story, Told Everywhere
Successful fundraising requires alignment across leadership, investments, operations, finance, marketing and investor relations.
Diligence is where the cracks start to show. If the fundraiser, the product specialist and the investment team describe the same fund three different ways in three different rooms, an investor will interpret that inconsistency as execution risk. The firms that raise capital and retain investors are consistent, transparent and aligned: investment teams own the strategy, sales owns the relationship and both work together to deliver a consistent investor experience.
Performance Plus
Performance needs to remain competitive for like strategies of a similar vintage, or it will become a key determinant in due diligence. Performance track records require careful scrutiny due to limited reporting consistency. What separates a strong manager is whether the strategy is suitable for the future, and thus, strong performance is expected to continue, the quality of the investment team, to drive unique sourcing opportunities and execute business plans, transparency and responsiveness. The same goes for scarcity. A formal closing date driven by pre-specified assets or compelling terms can help create urgency and move investors toward closing. Sophisticated investors can recognize the difference between a manufactured deadline and a deadline with tangible consequences.
Most institutional managers built their distribution functions around consultants and institutional allocators, not private wealth platforms. At this scale, the channel warrants the same reporting discipline and messaging clarity institutional investors expect.
Preparing for the Future of Capital
Every number above points in the same direction. More capital is moving, but it is going to fewer managers, taking longer to close and arriving through channels that barely mattered five years ago. The managers best positioned to compete for the next wave of capital will be those that prepare well before they formally go to market.
Alongside its full suite of GP solutions, Alliance Global Advisors and Alliance Search Partners work with investment managers to organize and prepare distribution teams for the future of capital.
Masha Rzoski, Vice President, Marketing | mrzoski@alliance-globaladvisors.com
Connect to learn more.Founded in 2020, Alliance Global Advisors is a women-owned consulting firm focused on developing strategic growth solutions for real asset investment managers. Advising clients with over $1.5 trillion in assets under management, Alliance partners with organizations to provide an informed, independent perspective, continued education and innovative guidance on structuring investment products to attract evolving sources of capital in a competitive environment. Through this work, Alliance helps senior management teams strengthen decision-making, enhance institutional readiness and position their platforms for long-term value creation and performance.
- Preqin/CRE Daily, March 2026.
- PERE, Full Year 2025 Fundraising Report, "A Rebound Year."
- Institutional Real Estate, Inc., IRE.IQ Fundraising Hot Sheet, Q2/2026, "Fundraising Trends, Q2/24–Q2/26."
- PERE, Full Year 2025 Fundraising Report, "Even More Time on the Road"; Preqin.
- Preqin.
- IRE.IQ 2Q26 Fundraising Report Review Webinar Recap, August 18, 2026.
- 2025 JLL Private Wealth Tracker, published April 28, 2025.
Disclaimer: This blog was originally published in September 2026 and will be updated periodically to reflect changes in the industry. The content may contain or cite personal and/or professional opinions that differ from the views of Alliance Global Advisors.