What’s top of mind for private credit firms: Insights from 50+ market leaders
Posted by | Alok Tayal
In Q2 2025 I traveled across the US, meeting clients and prospects from over 50 lower-middle and middle-market private credit firms in 12 cities. My journey included the DealMAX conference in Las Vegas, a vibrant forum for private equity professionals and investment bankers navigating today’s evolving deal landscape.
The discussions I had highlighted a number of common challenges faced by private credit firms such as resource constraints, prolonged fundraising cycles, and a growing push towards specialization in a competitive market.
Below, I outline the top concerns of private credit firms and share actionable insights for industry leaders to help them overcome these challenges.
1. Bandwidth crunch: Creating capacity for growth
Lean teams are thinly stretched. They have to juggle live deals with portfolio monitoring, investor relations and beating competitors to close a deal. One recurring comment I heard was “Where’s my Private Credit associate when I need them?”, reflecting the pressure of growing mandates without enough people with an in-depth understanding of the private credit business. Too often, they have to work with investment banking or private equity associates who face a steep learning curve to get up to speed on the fundamentals of private credit.
Firms are addressing this by:
- Leveraging flexible resources
Exploring AI use cases in private credit operations, from financial model reviews and data pulls to desk research and KPI tracking, allowing human intelligence to focus on closing deals.
- Streamlining and tailoring processes
Prioritizing tailored thinking and quality control for each deal, shifting associates away from mundane tasks.
- Enhancing monitoring
Using standardized templates for portfolio reporting to improve consistency and efficiency.
–> By applying strategic resource allocation, custom thinking at the deal level, and process optimization – the core of how to scale a private credit firm – firms can scale without overextending their teams.
2. Fundraising pressure: Navigating longer cycles
General partners (GPs) noted that limited partners (LPs) are taking longer to commit to deals, alongside increasingly rigorous due diligence processes. Fundraising timelines are also expanding, requiring firms to become more proactive.
Firms are responding with:
- Earlier preparation
A more structured approach to how to prepare for private credit fundraising, including developing materials, models, and data rooms ahead of LP outreach.
- Sharpened investment theses : Clearly articulating their strengths in sourcing, structuring, or relationship networks to stand out in a crowded market.
- Strategic LP targeting : Building outreach lists based on fund strategy, check size, and prior engagement history.
- Aligned reporting: Creating templates that address LP priorities, such as pipeline
–> Proactive preparation and a compelling, focused narrative can accelerate fundraising in a competitive environment.
3. Need to specialize: Going deeper in select sectors
Rather than casting a wide net, firms are focusing on targeted private credit deal sourcing strategies concentrating on two or three sectors where they have a sourcing or underwriting edge. This enables proactive origination and strengthens investor narratives.
Firms are pursuing this by:
- Developing sector-specific primers
Analyzing trends, tailwinds, and regulatory shifts to build internal expertise.
- Creating market maps
Identifying borrowers, intermediaries, and co-investment partners to enhance origination.
- Using screening scorecards
Qualifying inbound opportunities quickly with sector-specific criteria.
- Tracking Competitive Intelligence:
Monitoring other lenders to refine positioning and identify gaps.
Some firms are also building mini-databases of borrowers and referral sources, enabling monthly deal flow tracking and a confident go-to-market strategy.
–> Deep sector specialization fosters a stronger deal flow and resonates with both LPs and borrowers.
Looking ahead
Private credit firms are adapting to a challenging market with resilience, focusing on smarter resource use, sharper positioning, and specialized strategies. By addressing bandwidth constraints, streamlining fundraising, and deepening sector expertise, firms can stay competitive.
