The private equity and venture capital industries showed positive signs of recovery in Brazil last year, following the severe hangover experienced after the 2021 boom.
But for the wheel to really start turning, stimulating the allocation of capital to invested funds and companies, two conditions will be necessary, according to Priscila Rodrigues, president of the Brazilian Association of Private Equity and Venture Capital (Abvcap): a drop in interest rates and an increase in investment outflows.
Considering the pace signaled by the Central Bank (BC) for easing monetary policy, a more robust recovery in industry is only expected to occur from 2027 onwards.
“What could have driven greater growth in 2025, an expectation that is now projected for 2026, but which I believe will actually happen perhaps more towards 2027, is the reduction in interest rates,” says Rodrigues, in an interview with NeoFeed .
She highlights that 2025 is on track to close with a positive balance. Recent data from Abvcap shows that private equity investments reached R$ 15.9 billion up to the third quarter, in 51 transactions. The numbers already exceed those of the entire year of 2024 – R$ 13.3 billion in 72 deals.
In venture capital, the accumulated figure of R$ 4.6 billion represents half of the R$ 9.2 billion invested in 2024. The R$ 2.1 billion recorded in the third quarter marks the highest quarterly volume of 2025 and a jump of 23.5% over the same period of the previous year.
Even if the Central Bank signals the start of interest rate cuts in 2026, the pace will be slower than necessary for private equity and venture capital to grow more intensely.
According to Rodrigues, the Selic rate cut is the essential catalyst to stimulate outflows and return resources to investors. This movement is fundamental for funds to raise new capital and invest in new companies.
“Outflows remain low due to the high interest rate environment. This tends to drive valuations down. Managers with good assets in their portfolios understand that now is not the time to exit,” says Rodrigues. “With more timid exits, fundraising becomes more complicated.”
The lack of resources comes at a time when the country presents a "blue ocean" of opportunities, with many quality companies facing difficulties in raising capital, according to the president of Abvcap.
Infrastructure is the sector that should "swim with ease," with private equity managers paying close attention to the energy demand driven by topics such as data centers and artificial intelligence (AI) .
In venture capital, interest remains in areas such as fintech, agritech, and logistics, but many managers are also beginning to look at companies that incorporate AI into their day-to-day operations.
Meanwhile, distressed asset funds, a subclass of private equity, are expected to continue their upward trend in 2026. " Distressed assets have gained significant momentum, with exclusive and dedicated funds raising capital more easily," he states.
Read below the main excerpts from the interview:
What was 2025 like for private equity and venture capital?
After the slowdown in the private equity and venture capital industry in the post-pandemic period, growth expectations emerged in 2024. And we continue to see this in 2025, with managers conducting due diligence and finding some investment opportunities. The market was positive for those with capital, with attractive prices and good opportunities, both in venture capital and private equity. Those with money were able to select interesting assets.
What was the dynamic like in each area?
In venture capital, we've been seeing smaller rounds for some time now. Those large rounds that occurred between 2020 and 2021 have decreased in size and remain at those levels, which shows the industry's maturation. There has also been greater diligence on the part of investees in the use of resources, as money has become scarce. After the trough in 2022 and 2023, we saw a recovery in 2024, which continued into 2025.
Priscila Rodrigues, president of Abvcap
And what about private equity?
The numbers show a lower volume of money being printed in the industry. The number of transactions is closer to historical levels, but the volume is not. This is because we are in a period of lower valuations , causing many transactions not to disclose the size of the checks, so as not to give the impression that the seller is selling off the company. In times of low valuations , many transactions do not have their values revealed. It seems that the average ticket price has fallen, but that's because the values were not disclosed.
What held back the volume of transactions? What needs to happen for us to see an increase in 2026?
What could have driven greater growth in 2025, an expectation that is now projected for 2026, but which may occur more in 2027, is the reduction in interest rates. Lower interest rates favor capital allocation. Companies announce more investment plans and seek alternative financing options. The scenario was positive for distressed assets , which recorded several restructuring transactions.
"The market was positive for those with capital, with attractive prices and good opportunities."
What was the outcome of the departures issue?
We didn't see many in 2025, and expectations are higher for 2026. Volumes remain low due to rising interest rates, which are putting pressure on valuations . Managers with good assets understand that it's not the time to exit. There were some isolated transactions, but there's still a large inventory to complete the cycle. 2025 was better than 2024, but expectations are much higher for 2026. This situation has negatively impacted fundraising , especially in private equity.
How?
The investor tells the manager: “You have a lot of companies in your portfolio, so sell them and then I'll allocate to the next cycle.” The industry operates on this cycle of investment, return, and raising capital for another fund. With timid exits, fundraising becomes more difficult, and investors have less appetite. This isn't just a Brazilian dynamic; the challenge is global. The main driver for stimulating more allocated volume is exits.
Has this same dynamic been seen in venture capital?
The industry still has plenty of dry powder , but there are difficulties in raising capital due to the CDI rate and a lack of visibility on valuations . This affects both private equity and venture capital. In recent years, we have seen the retail sector allocating significantly to venture capital, and this segment is experiencing this type of investment for the first time, awaiting returns.
Does the recovery depend on interest rates falling?
There is still a significant challenge with interest rates, which discourages Brazilian investors. Brazil has a very low percentage of alternative investments in its portfolio. The United Kingdom registers between 2.3% and 2.4% of GDP; in Brazil, it is 0.1% to 0.2%. Furthermore, we have a small industry. There is a scarcity of capital for good businesses. There is a blue ocean in the country, and good managers navigate it alone, with little competition. This makes allocation selective, and few transactions occur in competitive auctions.
"The main driver for stimulating more allocated volume is output."
How does the election affect the scenario?
Election years are always marked by caution due to the lack of visibility regarding the country's direction. The industry needs predictability, as these are long-term allocations. Unless it's a great bargain, investors prefer to wait. Once there is visibility, whether in the tax/political field or in macroeconomics, with controlled inflation, more assertive GDP growth, and falling interest rates, investors begin to analyze allocations.
Given all of this, it seems to be another positive year for distressed …
The themes of special situations , distressed assets , and turnaround have significant growth potential, as many companies need this capital. Managers are benefiting, and investors with diversified portfolios see opportunities. Distressed assets are gaining momentum, with exclusive and dedicated funds raising capital more easily.
Besides distressed , are there any other strong thesis emerging for 2026 in private equity?
There is an appetite for infrastructure investment theses. The country has many opportunities and asset prices are at good levels. It's a good time to enter. Within infrastructure, energy is attracting attention. There is an understanding that Brazil will need energy in the coming years, with investments in data centers. Theses dedicated to this type of allocation face fewer fundraising difficulties. Generalist funds, on the other hand, face more obstacles.
And venture capital? Is any area particularly prominent?
The focus remains on financial services and fintechs. But there is interest in companies that use artificial intelligence as a means to solve everyday problems, incorporated into their business model. There are also operations in logtechs, agritechs and, not least, in healthcare, with solutions that improve productivity and efficiency in the face of the sector's crisis.
