Uncharted No More: Capital Sources in the Independent Sponsor Sector

Our 2025 Independent Sponsor Report highlights a turning point in private equity: independent sponsors have moved from the margins to the mainstream, reshaping how deals are financed and executed. With insights from more than 170 professionals active in the sector, the Report zeroes in on the evolving mix of capital sources fueling this growth — from the enduring dominance of family offices to the rising role of SBIC funds and the shifting preferences around mequity and buyout capital.

Capital Sources

The top capital sources for this year’s independent respondents are family offices (cited by 62% of independent sponsor respondents), high-net-worth individuals (cited by 55%), SBIC funds (cited by 53%) and mezzanine funds that co-invest (referred to hereafter as “mequity” funds) (cited by 45%). One-stop funds (funds that underwrite all the debt and equity), buyout funds and independent sponsors’ own funds trailed behind.

Over the years, we have seen some significant changes in the capital sources relied upon by respondents. The biggest shift has been with SBICs, which have seen a 19-percentage point increase in popularity over the past three years. However, we have seen a decrease in the popularity of mequity funds, buyout funds, and use of independent sponsors’ own funds as capital sources.

One constant in all the years of our Report has been the dominance of family offices as the top capital source for independent sponsor respondents. Family offices did experience an uncharacteristic dip in popularity last year, though they still remained the most popular source that year and have bounced back this year.

Younger firms (those in existence for five years or less) are more likely than their older firm peers (those in existence for six years or more) to rely on family offices (68% of younger firms versus 57% of older firms), high-net-worth individuals (61% versus 49%) and one-stop funds (36% versus 27%). Younger firms are less likely to rely on mequity funds (41% of younger firms versus 48% of older firms) and buyout funds (20% versus 27%).

“The independent sponsor space used to be considered the Wild West of private equity, but today it is a mature asset class staffed by GPs with deep experience and backed by a well-established capital base eager to invest deal-by-deal in an organized, responsive manner,” noted Tarrus Richardson, Founder and CEO, IMB Partners.

Family offices are also the most likely lead investor (cited by 22% of respondents). SBICs (cited by 18% of respondents), mequity funds (cited by 13%), buyout funds (cited by 11%) and one-stop funds (cited by 11%) were the next most likely lead investors. Fifteen percent of respondents had no lead investors.

Fifty-nine percent of respondents often use repeat funding relationships.

“The high percentage of repeat funding relationships speaks to the institutionalization of the independent sponsor space,” said Caroline Dallas, director, GEM.

“Additionally, I think the caliber of LP that is interested in this area has gone up exponentially,” she noted. “We’ve seen a significant increase in the amount of buyout funds, institutional investors and institutional-like family offices and endowments who are now interested in this space.”