Unlike illiquid private equity, private credit funds provide a steady stream of cash flow through coupon payments. This self-liquidating feature perfectly solves the liquidity needs of the private wealth channel, making it a far more suitable and popular alternative asset for that investor base.

A new, fast-growing segment is the middle-market CLO, which securitizes directly originated private credit loans instead of broadly syndicated ones. This structure represents a powerful convergence of liquid and private credit, growing from near-zero to 20% of total new CLO issuance and offering investors a new way to access private credit.

Unlike the asset-light software era dominated by venture equity, the current AI and defense tech cycle is asset-heavy, requiring massive capital for hardware and infrastructure. This fundamental shift makes private credit a necessary financing tool for growth companies, forcing a mental model change away from Silicon Valley's traditional debt aversion.

The financing for the next stage of AI development, particularly for data centers, will shift towards public and private credit markets. This includes unsecured, structured, and securitized debt, marking a crucial role for fixed income in enabling technological growth.

While fears of retail investors gambling on venture capital exist, the primary growth in retail alternatives is in yield-oriented strategies like private credit and infrastructure. These products meet the demand for high current income and lower volatility, especially for those in or near retirement, making them a more logical first step.

Private equity's reliance on terminal value for returns has created a liquidity crunch for LPs in the current high-rate environment. This has directly spurred demand for fund finance solutions—like NAV lending and GP structured transactions—to generate liquidity and support future fundraising.

David Cohen predicts that in a decade, the view of venture as a risky, "go big or go home" art form will be obsolete. As the asset class matures, it will inevitably adopt principles from public markets, like diversification and index-fund-like strategies. Venture will become more of a science, making it more stable and systematic.

The rigid 10-year fund model is outdated for companies staying private longer. The future is permanent capital vehicles with hedge fund-like structures, offering long durations and built-in redemption features for LPs who need liquidity.

Public markets favor asset-light models, creating a void for capital-intensive businesses. Private credit fills this gap with an "asset capture" model where they either receive high returns or seize valuable underlying assets upon default, securing a win either way.