Andreessen Horowitz asks whether private equity is cooked as tech buyouts shrink

Private equity’s share of global tech buyout deals has fallen from 34% in 2023 to 11% in early 2026. That is roughly two-thirds of its footprint gone in about three years.

The figure comes from Andreessen Horowitz partner Jen Kha, whose November 4, 2026 newsletter carries a blunt title: “Is Private Equity Cooked?” Coming from a venture firm, the question is a little like Coke publishing a think piece on Pepsi’s struggles. The numbers behind it still deserve a look.

The case against the buyout playbook

Kha opens with an observation that sounds like gossip from an LP dinner, but she backs it with data.

“Most people I talk to agree that tech buyouts are in a tough spot right now.”

Here is the odd part. Limited partners, the pension funds and endowments that supply the cash, keep re-upping with the same buyout managers anyway.

Kha’s explanation is habit. Tech buyouts have long been treated as the dependable corner of private markets, the place you put money when you want returns without drama.

Recent valuation marks challenge that reputation. In the first half of 2026, venture funds marked up their tech holdings by 16%, according to the report.

Buyout funds went the other direction over the same period. They marked their tech holdings down by 4%.

The longer view tells a similar story. Over the past decade, US buyout funds returned 14.5% annually and trailed the Russell 3000, the broad index covering most of the US stock market.

US venture funds returned 17.6% a year across that same decade. Put another way, investors paying private equity fees for illiquid, locked-up capital could have done better owning a plain index fund.

Debt, AI and a shrinking pile of capital

The report also points at leverage, which is the engine of a classic buyout. A firm buys a company using a lot of borrowed money, improves operations, and sells it later for more.

PE-backed middle-market companies from the 2019 through 2025 vintages carried net debt of between 4.7x and 6.0x adjusted EBITDA.

EBITDA is a rough proxy for a company’s operating cash earnings. The median S&P 500 company, by comparison, sits at around 2x.

Fundraising reflects the strain. Buyout fundraising dropped 16% in 2025 to $395 billion, and the report says it stayed weak through mid-2026.

Then there is AI. The report frames the current technology wave as one that favors venture’s style of investing over private equity’s.

Private equity traditionally prefers stable, predictable businesses with steady cash flows to service debt. Venture backs earlier-stage companies whose futures are harder to forecast, the kind of businesses that do not support large, predictable borrowing.

What this means for investors and founders

There is a mark-to-market caveat worth keeping in mind. Venture’s 16% markup in the first half of 2026 reflects valuations, not cash returned. Private valuations can be generous on the way up, and they are only proven when companies sell or go public.

The source matters too. Andreessen Horowitz raises venture capital for a living, so a report concluding that venture beats buyouts is not exactly a plot twist. The data points are specific and checkable, but readers should weigh the framing accordingly.

For the buyout firms themselves, the leverage numbers may be the bigger near-term concern. Portfolio companies carrying debt between 4.7x and 6.0x adjusted EBITDA have limited flexibility if growth slows or AI pressures pricing, and the 4% markdown in the first half of 2026 suggests some of that pressure is already showing up in valuations.