Medline closed out the week with a $7.2 billion debut. The largest US listing since 2021. The stock popped 41% on day one.

Meanwhile AI infrastructure continues to vacuum up capital at insane rates.

Two notable moves:

1. Databricks raised over $4 billion at a $134 billion valuation.

2. Lovable tripled its valuation to $6.6 billion in just five months.

The contrast between these stories tells you where the market is.

→Hungry for quality earnings. Desperate for AI exposure. Sometimes both.

Here’s what you need to know:

• PE-backed companies are getting liquidity again.

• Late-stage private companies are staying private longer and raising at public market valuations.

• LPs are watching to see if 2026 delivers the exit wave everyone’s been promised for two years now.

Let me walk you through what actually mattered this week.

The Medline story

On December 17, Medline priced its IPO at $29 per share. They moved 248.4 million shares. That’s $7.2 billion in gross proceeds. The stock opened at $41 the next morning and held there. A 41% pop. Market cap hit $54 billion.

This wasn’t some money-losing tech company with a good story. Medline manufactures over 190,000 medical products across 33 facilities. They reported $20.6 billion in revenue for the first nine months of 2025. Up more than 10% year-over-year. Positive free cash flow. Net income around $1.2 billion.

Blackstone, Carlyle, and Hellman & Friedman took this company private in 2021 for $34 billion. They put $2 billion into distribution infrastructure and vertical integration. The sponsors kept majority ownership but got meaningful liquidity. The company is using $4 billion of the proceeds to pay down debt (cutting annual interest expense by $300 million).

This is the playbook working as designed:

1. Buy a boring, profitable industrial business.

2. Make it better.

3. Exit when public markets reopen.

The 41% pop tells you something important. Public investors are tired of burning money on growth-at-all-costs tech IPOs.

They want earnings. They want cash flow. They want things that actually work.

AI infrastructure has infinite runway (for now)

Databricks closed a Series L on December 16. Over $4 billion. Valuation hit $134 billion. That’s up 34% from its $100 billion valuation in August and more than double its $62 billion valuation at the start of 2025.

Three raises in one year. All at high valuations.

The numbers behind it are pretty insane too. Databricks crossed a $4.8 billion revenue run-rate in Q3. Growing over 55% year-over-year. Net retention is north of 140%. Over 700 customers are spending more than $1 million annually. And the company generates positive free cash flow while growing at these rates.

Lead investors were Insight Partners, Fidelity, and JPMorgan Asset Management. The round included Blackstone, Andreessen Horowitz, Coatue, T. Rowe Price, Temasek, and Thrive Capital.

Databricks is using the capital to build Lakebase (serverless Postgres for AI agents), Agent Bricks (multi-agent platforms), and Databricks Apps. They’re also doing employee liquidity and keeping optionality for M&A. But mostly they’re staying private because they can.

Why go public when private markets will give you $4 billion at a $134 billion valuation?

And it’s not just Databricks. Lovable raised $330 million at a $6.6 billion valuation this week.

The company provides a “vibe-coding” platform where you build apps using natural language. They hit $200 million in ARR in less than 12 months. Over 100,000 projects are created daily on the platform. They tripled their valuation from $1.8 billion in July to $6.6 billion now. Five months.

The syndicate included CapitalG, Menlo Ventures, Nvidia’s venture arm, Salesforce Ventures, Databricks Ventures, Khosla, and Accel. To be fair when Nvidia, Salesforce, and Databricks are all in your round, you’re doing something right.

Biotech is stabilizing

After a brutal two years, biotech is finding its footing again. Two sizable deals closed this week.

Ambros Therapeutics raised $125 million in a Series A on December 16. RA Capital and Patient Square Capital led through their Enavate Sciences vehicle. Abiogen Pharma, Janus Henderson, Transhuman Capital, and Adage Capital participated. That’s a serious syndicate for a Series A. The size tells you the investors have seen compelling data.

Aeovian Pharmaceuticals closed a $55 million Series B the same day. Luma Group led. CTI Life Sciences, Foresite Capital, Apollo Health Ventures, Hevolution, Sofinnova, and venBio joined.

Aeovian is advancing AV078 for tuberous sclerosis complex-related epilepsy. It’s a rare disease with clear regulatory pathways. Orphan drug designation is almost guaranteed.

Chai Discovery also raised $130 million in a Series B this week.

They’re using generative AI to design antibodies and biologics. The company is pushing multiple AI-designed candidates toward clinical trials.

What does this mean? Biotech funding is rebounding. Investors are backing clinical-stage assets again, especially in rare disease and precision medicine. If you have healthcare mandates, this is your green light to lean back into biopharma.

The other deals that mattered

Nirvana Insurance raised $100 million at a $1.5 billion valuation on December 18. Valor Equity Partners led. Lightspeed and General Catalyst participated. The company nearly doubled its valuation in nine months. They were at $830 million in March.

Nirvana is AI-native commercial insurance. They started in trucking fleets using real-time telematics data from over 30 billion miles of driving. They handle underwriting, claims, and pricing. Trucking insurance costs are up around 20% industrywide. Nirvana uses AI and telematics to price risk accurately. Their in-house claims operation achieves twice the industry average closure rates.

The funding is building what they call an “AI-powered OS for insurance” and expanding beyond trucking. Insurtech is heating up again.

FINNY raised $17 million in a Series A on December 19. Venrock led. Activant, Altruist, William McNabb (former Vanguard CEO), Y Combinator, Maple VC, and Crossbeam Ventures participated.

FINNY provides AI-powered prospecting for financial advisors. Their proprietary F-Score engine analyzes liquidity events, career changes, and money-in-motion signals.

The company grew revenue 50x since January 2025. Over 400 firms use the platform. Advisors are generating $7.7 million in average new client assets annually through FINNY. This matters because RIAs are facing an organic growth squeeze. Schwab raised asset minimums for their referral programs. Advisors need new tools to find clients. Wealthtech funding is rebounding.

RedotPay closed a $107 million Series B this week.

They enable instant, low-cost payments via stablecoin technology.

Over 6 million users across 100+ markets. Annualized payment volume is north of $10 billion. They’re bridging traditional money and digital assets as stablecoin adoption accelerates.

Last Energy raised $100 million in a Series C on December 16. Astera Institute led. Last Energy develops 20-megawatt compact, modular nuclear reactors.

They’re using standardized components for mass production. The goal is to meet soaring energy demand from AI and cloud computing. Nuclear is back.

Exein closed a €100 million Series C on December 18. Blue Cloud Ventures led. J.P. Morgan, HV Capital, Intrepid Growth Partners, and Geodesic Capital participated. Exein is based in Rome.

They build AI-powered security that runs on the firmware of connected devices. Real-time IoT protection.

Total 2025 funding is now €170 million including debt. They’re accelerating their next-gen platform and pursuing M&A for US and APAC expansion.

Adaptive Security raised $81 million in a Series B on December 18. Bain Capital Ventures led. Nvidia’s venture arm, OpenAI Startup Fund, Andreessen Horowitz, Capital One Ventures, and Citi Ventures joined.

Adaptive simulates realistic deepfake scenarios to train security teams.

They founded in early 2025 and already have $146.5 million in total funding. Demand for deepfake defense is accelerating as AI-generated fraud escalates.

Europe Is Waking Up

On December 19, Germany announced a €150 billion fund to mobilize private capital into infrastructure, defense, energy, and technology. That’s roughly $152 billion. It’s a multi-year vehicle with government anchor commitment designed to crowd in institutional LPs and strategic corporates.

This is a major policy shift for Europe’s largest economy. European LPs have been capital-constrained for years. This fund could unlock significant co-investment opportunities.

Verisure completed Europe’s largest PE-backed IPO ever this week. They raised €3.2 billion at a €13.7 billion valuation. EQT exited via a continuation vehicle structure. Between Germany’s new fund and Verisure’s successful exit European growth equity is heating up again.

Other moves this week

Thoma Bravo is reportedly exploring a merger of Auctane with WWEX Group to form a roughly $12 billion combined entity.

This was reported December 12 with ongoing discussions throughout the week. Auctane provides multi-carrier shipping software for e-commerce. WWEX is third-party logistics. The proposed structure includes $500 million in new equity. Classic buy-and-build consolidation in logistics tech. Transaction is still in negotiation.

The Full Deal List

Here’s everything between $14 million and $4 billion that closed this week. I’m not going to repeat what I already covered above.

These are the additional deals you should know about.

Octane raised $100 million in a Series F on December 18. They provide point-of-sale financing for powersports dealerships → motorcycles, ATVs, boats, RVs. Late-stage capital for market expansion.

Runware closed a $50 million Series A on December 16. They provide unified high-speed AI model deployment infrastructure. Demand for scalable AI inference is driving this.

Nanit raised $50 million in growth equity on December 16. AI-powered baby monitors with sleep tracking and breathing monitoring. Over a million families use the platform. They’re scaling their subscription revenue base and expanding retail distribution.

Mirelo raised a $41 million seed on December 16. They build generative audio infrastructure for developers. Large seed signals strong conviction in audio AI applications.

Codoxo closed a $35 million Series C on December 17. They use AI to detect fraud, waste, and abuse in healthcare payment systems. Healthcare payment integrity is a $100 billion+ TAM. They’re scaling sales into commercial payers and government programs.

Echo raised $35 million in a Series A on December 16. AI-powered secure software infrastructure focused on securing AI model deployments and data pipelines.

Neurable closed a $35 million Series A on December 19. They develop noninvasive brain-computer interface technology for consumer wearables.

Valerie Health raised $30 million on December 16. Oak HC/FT and General Catalyst led. Thrive Capital, Menlo Ventures, and OpenAI Startup Fund participated. They use AI agents to automate medical administrative tasks.

Thread Bank closed $30.5 million on December 16. Embedded banking infrastructure for third-party platforms.

Vital Lyfe raised a $24 million seed on December 16. Clean water solutions in off-grid settings. Large seed suggests proven technology or strong pilot results.

HEN Technologies raised $20 million in Series A plus $2 million in debt on December 17. Oversubscribed round. They provide intelligent fire suppression systems.

Manifold closed an $18 million Series B on December 19. AI platform for life sciences R&D.

HawkEye 360 secured $150 million in acquisition financing on December 19. They completed acquisition of Innovative Signal Analysis supported by equity and debt. Space-based RF intelligence consolidation.

Cosan raised $15 million in growth equity on December 19. Connected chronic care management platform helping providers extend care beyond the clinic.

Wearlinq closed a $14 million Series A on December 19. Wearable health monitoring and diagnosis solutions.

Some macro stuff

The S&P 500 is trading around 6,850. Up roughly 15% year-to-date. Wall Street strategists are projecting 2026 year-end targets between 7,100 and 8,000. Median is around 7,500. That implies 10-15% upside driven by earnings growth, not multiple expansion.

→US IPO count hit 344 year-to-date through December 21.

That’s up 56% versus 221 IPOs in the same period last year. Medline’s success reinforces that the window is open for high-quality, profitable businesses.

→The Fed cut rates by 25 basis points on December 10 to 3.5%-3.75%.

That was the third consecutive cut. But the December dot plot signaled only one additional cut in 2026. Markets digested this “hawkish cut” throughout this week. Translation: rates are staying higher than people hoped.

→Private credit continues expanding.

BlackRock’s pending acquisition of HPS Investment Partners is accelerating PE firms’ build-out of credit arms. TPG bought Angelo Gordon in 2023. Brookfield invested in Castlelake in 2024. Others are racing to integrate private credit as a strategic financing tool.

Two Reports Worth Reading

Rothschild & Co published their Growth Equity Update on December 11. Q4 2025 US VC fundraising hit $63.3 billion. Up 31% versus Q4 2024. AI companies captured 52% of Q4 deals. Anthropic raised $15 billion. Project Prometheus raised $6.2 billion. Anysphere raised $2.3 billion. Data center raises totaled $3.4 billion in Q4 with two rounds over $1 billion.

The takeaway is simple. AI’s dominance isn’t slowing. You need to either own AI infrastructure leaders or own AI-enabled vertical SaaS businesses. Everything else is harder right now.

The second report came from ITIF analyzing US Census Bureau data on December 19. VC-backed firms account for just 0.2% of US firms but employ 12.5% of the workforce. Firms that are both VC-backed and adopt advanced tech like AI, robotics, and 3D printing represent only 0.07% of firms but employ 8.6% of total workers. That’s an odds ratio of 12,677.

What this means for us → VC-backed, tech-forward companies are wildly disproportionate job creators. For portfolio strategy, back companies that aggressively adopt automation and AI to drive productivity. They scale faster and create more enterprise value.

Quick Things You Should Know

• Robotics funding surged in Q2 2025. Deals hit $8.8 billion globally with triple-digit growth versus prior quarters. Humanoid robotics companies like Apptronik, Neura Robotics, and 1X Technologies captured outsized investor interest.

• SpaceX IPO rumors are intensifying. Morgan Stanley is reportedly the front-runner to lead a potential 2026 offering. Current private valuation is over $500 billion.

• Cerebras Systems filed for a US IPO after a prior delay. They compete with Nvidia in AI training chips.

• Germany lifted Uniper’s dividend ban paving the way for an energy company IPO. Another signal that European capital markets are reopening.

• Mid-market M&A hit a four-year low in Q4. Deal count is at the lowest level since 2021. Strategics are stepping up, but the PE exit environment remains challenging despite Medline’s success.

• NYC pension completed a $5 billion secondary sale in May 2025. It’s still being cited as a template for large LP-led secondary transactions. Blackstone was the sole buyer across 125 funds.

Implications

I see five main things to think about.

First, the IPO exit path is real again. Medline proved PE-backed industrials can exit at scale.

Second, AI infrastructure operates on a different playbook. Databricks raised $4 billion like it was nothing. If you’re sourcing, look for companies building infrastructure that enables AI workloads. Data platforms. Security layers. Orchestration tools. These companies have pricing power that other sectors don’t.

Third, biotech is stabilizing but you need to be selective. Over $180 million in rounds this week signals the funding thaw is real.

Fourth, secondary liquidity tools are evolving. Continuation vehicles, GP-led secondaries, and LP secondary sales are growing.

Fifth, Europe is heating up. Germany’s €150 billion fund plus Verisure’s successful IPO equals momentum.

That’s the week. See you next time.

Disclaimer: This note is for information only. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

At some point I started wondering: is there actually a sensible way PE and crypto to fit together? Is this already happening? If so, where and how? Those questions sent me into the research that follows → trying to understand where crypto really meshes with PE, where it doesn’t, and what the data actually says.

I know it’s a bit long but I really do think some of it is quite interesting.

My short answer is this: yes, they can work together. But probably not in the way most people think.

The relationship has clearly evolved. What started as wild speculation and “degen” bets is turning into something much more strategic and infrastructure-focused.

The pattern I see is this: instead of piling into Bitcoin or chasing the next hot token, the more serious PE players are going after the boring, plumbing-type stuff (custody platforms, payment rails, tokenisation technology).

And increasingly, they’re also looking at how blockchain can quietly reshape their own operations behind the scenes.

There have been some insane success stories. Pantera Capital pulled off a 51.9% net IRR over nearly a decade (Pantera, 2022). Union Square Ventures turned a $5m Coinbase bet into $4.6bn (CNBC, 2021).

But the 2022 blow-ups showed the other side: Sequoia wrote off $213.5m in FTX (TechCrunch, 2022), and a bunch of high-profile crypto companies went to zero almost overnight.

For me, those extremes highlight a simple truth: whether PE and crypto “work together” depends entirely on how you do it.

→What you invest in, at what point in the cycle, and with how much real expertise.

The firms that are still standing look very different from the tourists who got wiped out. They’re focusing on regulated infrastructure companies, not casino tokens. And they’re treating blockchain as an operational tool first, an asset class second.

The early days

When I look back at the 2013–2020 period, it feels like PE/VC’s “wild west” phase in crypto: some of the best returns the industry has ever seen… and some of the worst flops.

Take Pantera. They launched what’s widely cited as the first institutional crypto fund in July 2013, buying Bitcoin at about $65 (Wikipedia). That contrarian bet turned into lifetime returns of 131,165%. So every dollar became roughly $1,311 (Hedgeweek, 2024). Today they manage around $5.2bn (Pantera, 2024).

Then there’s Coinbase. Union Square Ventures put in $5m at $0.20 per share in 2013, when Coinbase had ~100,000 users (CNBC, 2021). At the 2021 IPO, that stake was worth $4.6bn. Andreessen Horowitz did even better: a $25m Series B turned into roughly $9.7bn (CNBC, 2021).

Capital flows followed the mania. Annual funding went from roughly $3–7bn (2018–2020) to $28bn in 2021 (Statista, 2024). I also read that Tiger Global was reportedly doing 1.3 deals per day at the peak, with 81 deals in a single quarter (CNBC, 2021). I think that pace says a lot about the mindset at the time.

Some stories were also slower burns. Circle, backed by Goldman Sachs with a $50m Series C in 2015 (Wikipedia; Bitcoinist), pivoted multiple times before finding its edge with USDC, its dollar stablecoin.

Fast-forward to 2025: USDC is the #2 stablecoin with ~$61bn in circulation, Circle generated $1.68bn in annual revenue, and it IPO’d at a $6.9bn valuation, raising $1.1bn (Wikipedia, 2025).

Kraken went for a much more conservative path: they raised about $606m (PitchBook), avoided major hacks, and even secured a Wyoming bank charter becoming one of the few “crypto banks” in the U.S.

In hindsight, they look almost boring. And that’s probably why they’re still here.

Then came the disasters.

FTX collapsed in November 2022 and wiped out $32bn in equity value and over $10bn in customer funds (Chicago Fed, 2023). Just months earlier top-tier firms like Sequoia, SoftBank, Tiger Global, and BlackRock had invested at that same $32bn valuation. Sequoia alone lost $213.5m (TechCrunch, 2022; CNBC, 2022). Ontario Teachers’ Pension Plan lost $95m (Low Risk Rules, 2022).

BlockFi is another example of how interconnected everything was. It hit a $4.8bn valuation in March 2021 (VISION_FACTORY, 2024). Then Terra/Luna blew up in May 2022. BlockFi saw $4.4bn in customer outflows (Chicago Fed, 2023). Three Arrows Capital defaulted on $80m of unsecured loans.

By the time FTX failed, BlockFi had $275m of exposure to FTX US, and that was game over. 662,427 customers ended up with frozen accounts and the equity holders were wiped out.

For me that period is the clearest demonstration of how quickly over-levered, opaque structures can implode.

What the Industry Actually Learned

Looking back, I’d say 2013–2022 fundamentally rewired how serious investors approach crypto.

A few lessons really stand out for me:

• You can’t shortcut due diligence. The Tiger Global 2021 “spray and pray” approach with 1.3 deals per day just doesn’t work in a space with this much complexity. Big brand co-investors, celebrity backers, charismatic founders → none of that replaces audited financials, proof-of-reserves, third-party attestations, and proper technical and legal work.

• Regulation isn’t the enemy → it’s an edge. The firms that treated compliance as a core competency are mostly still here. Those who used offshore entities to avoid regulation (like FTX in the Bahamas) took existential risk.

• Centralization was the real widowmaker. Almost every big 2022 blow-up was a centralized platform: FTX, BlockFi, Celsius, Voyager. All pooled customer funds and created single points of failure. By contrast, decentralized protocols like Uniswap and Aave survived largely intact because they removed human discretion over client money.

Where things stand today

When I look at PE’s engagement with crypto in 2024–2025, it feels like a pivot from “casino” to “infrastructure.”

Pure crypto investments actually fell in 2024 → down 25% to $1.57bn, with blockchain investments down 27% to $2.99bn (S&P Global, 2025). On the surface that looks bearish but I think it hides a more interesting story: the big traditional PE players aren’t walking away but shifting into tokenisation of real-world assets and infrastructure.

BlackRock is the standout. In March 2024, it launched the BUIDL tokenised fund, which already has $2.9bn in assets (Gate.com, 2025). That’s the largest tokenised money market fund so far. Larry Fink is openly saying that “every stock, every bond will be on one general ledger”. They actually followed up with a $47m investment in Securitize in May 2024 (Investax, 2024).

Apollo launched ACRED in January 2025. It’s a tokenized private credit fund with $1.2bn deployed across six blockchains (Medium, 2024). KKR made a blockchain investment in ParaFi in 2021 (CoinDesk, 2021). And Hamilton Lane has tokenised eight feeder funds and cut minimums from $1m+ to $10k (CAIA, 2025) which is a huge shift in access.

The projections are a bit wild but all point in the same direction. Roland Berger sees a $10tn tokenization market by 2030. Citi thinks private markets tokenization could grow 80x to $4tn by 2030. BCG estimates tokenized funds alone could hit $600bn by 2030.

Institutional sentiment backs this up. EY (2024) found 83% of institutional investors plan to increase digital asset allocations in 2025. Of those who already invest in crypto, 64% expect to allocate more in the next three years. And even among those with no crypto exposure yet, 45% say they plan to enter within three years.

The recovery after 2022 has been surprisingly strong. Spot Bitcoin ETF approvals in January 2024 were a big psychological and regulatory milestone. The share of institutions who think crypto will deliver the best returns in 2025 jumped from 2% to 12% (EY, 2024).

Regulation is the big catalyst.

The SEC’s approval of spot Bitcoin ETFs in January 2024 was one thing. Then came the Trump administration’s pro-crypto tilt. The GENIUS Act introduced a federal stablecoin framework, and SEC Chair Paul Atkins launched “Project Crypto” in July 2025 to build clearer rules (Sidley; Fintech and Digital Assets, 2025). In Europe, MiCA went fully live in January 2025 (Coincub, 2025).

But the scars from FTX and BlockFi haven’t faded. You can see that in deal mix: money has moved away from speculative consumer apps and into infrastructure that plugs into traditional finance.

Two Very Different Paths for PE

If you’re a PE firm, you basically face two ways of playing crypto:

1. Invest in crypto and blockchain companies as operating businesses.

2. Hold crypto assets directly.

Most of the evidence I’ve seen suggests that the first route is both more common and more sensible for traditional PE.

The company route fits PE’s muscle memory. Firms like KKR, Apollo, and Partners Group can treat a blockchain company like any other tech investment: take equity, push governance, drive value creation, plan an exit. Giants like Pantera, a16z, and Paradigm mostly follow this playbook: own the picks and shovels, not just the gold.

The direct holdings route is a totally different beast.

Custody is the first big roadblock. Until late 2025, there was serious uncertainty about which custodians actually cleared regulatory standards. Anchorage Digital remains the only federally chartered crypto bank in the U.S. (Oxford Academic, 2025). Running your own custody stack means managing private keys, hardware security modules, cold storage procedures, and hard-to-insure risk.

Accounting and reporting are another mess. Crypto trades 24/7, across dozens of venues, at different prices. For GAAP, digital assets are treated as intangible assets with impairment-only accounting: you must mark down losses immediately, but can’t mark up gains until you sell. That’s quite different from typical PE revaluations.

Regulation is fragmented. Crypto can fall under the SEC, CFTC, FinCEN, state money-transmitter laws, and more (Latham & Watkins, 2025). Each adds another compliance layer that’s unfamiliar to traditional PE.

And then there’s the LP angle. LPs are generally fine with PE firms doing equity deals in blockchain infra. But ask them to hold tokens directly and the comfort level drops sharply. The Pension Research Council notes that many LPs still struggle to fully understand the risks of digital asset funds (Upenn, 2025). PitchBook data shows that institutional LP capital is still relatively scarce in crypto funds; family offices and HNWIs are much more common (PitchBook, 2024).

Meanwhile, MicroStrategy is the poster child of the corporate “go all in on Bitcoin” approach. Traditional PE funds haven’t followed that path at scale.

When I weigh it up, the trade-off clearly favors company investments.

They leverage existing DD processes, avoid custody complexity, are easier to sell to LPs, sit within clearer regulatory frameworks, and allow active value creation. Direct holdings offer theoretical upside from price moves and liquidity, but that’s offset by crazy volatility regulatory overhang, and a poor fit with 7–10 year PE fund structures.

What could be coming next

If I zoom out, the future convergence of PE and crypto feels increasingly inevitable.

But not in the “YOLO into dog coins” way of 2021.

Tokenisation of real-world assets looks like the most compelling thesis right now. You’re basically talking about turning illiquid assets into programmable, tradable units.

Infrastructure looks strong too. The U.S. blockchain infrastructure market is forecast to grow from $29.35bn (2024) to $220.93bn by 2029, roughly 45% CAGR (Ainvest, 2025). And the World Economic Forum thinks decentralized physical infrastructure networks (DePIN) could reach $3.5tn by 2028 (SS&C Technologies, 2024).

Regulation has shifted meaningfully in 2025. The SEC’s Project Crypto under Atkins suggested that “most crypto assets are not securities” (Fintech and Digital Assets, 2025), which is a huge psychological shift. The GENIUS Act and CLARITY Act drew clearer lines on stablecoins and SEC/CFTC roles (Smarsh, 2025). The FDIC dropped extra approval requirements for banks offering crypto, and the removal of SAB 121 eased balance sheet concerns (Fintech and Digital Assets, 2025). Europe’s MiCA now offers pan-EU legal certainty (Coincub, 2025).

Risks are still very real. Bitcoin’s volatility at ~83% annualized is tough to fit into conservative mandates.

Hacks took $2.47bn in H1 2025 alone. Smart contract bugs and protocol failures remain non-trivial.

Expert sentiment is split. Franklin Templeton’s Jenny Johnson sums up the “infrastructure” view nicely: blockchain is the “picks and shovels” play → not about guessing Bitcoin’s price, but owning the rails underneath (SS&C, 2024).

a16z’s 2025 State of Crypto calls 2025 “the year crypto went mainstream,” framing it as critical financial infrastructure (a16z, 2025).

On the other side, you’ve got people like Elizabeth Warren saying crypto is a “highly volatile speculative asset class that poses extreme risk”.

I guess both statements can be true for different parts of the market.

So should PE embrace crypto?

Personally, I think the answer is “yes, but selectively and with humility.”

The evidence points toward targeted, infrastructure-focused engagement rather than either full-on evangelism or complete rejection.

If I were a PE CIO designing a strategy, here’s how I’d approach it:

• Lean into infrastructure, avoid pure speculation. Focus on custody, payments, compliance, tokenisation, developer tools, so not meme coins or yield farms

• Keep the time horizon long. 5–7+ years, in line with how long it takes real infrastructure to scale

• Take risk seriously. Diversify across use cases, cap exposure, and insist on proper technical, legal, and regulatory work

• Invest in internal knowledge. Hire people who actually understand blockchains, partner with technical experts, and train deal teams

The regulatory stars are aligning in a way that now favours institutional participation: rule-making over enforcement, ETF approvals, clearer frameworks.

Tokenization, to me, is the cleanest fit for PE. It touches PE’s core strengths: structuring, governance, distribution, and operational improvement. It also opens up new investor bases. Not surprisingly, 63% of institutional investors rank tokenized private equity as their #1 or #2 alternative choice (BitcoinEthereumNews, 2025).

The way I see it, blockchain is gradually becoming financial infrastructure in the same way the internet became information infrastructure. Ignoring it entirely feels risky. But jumping in without discipline is equally dangerous.

My sense is that 2026 will be a pretty interesting entry window: regs are clearer, valuations are off the peak, and infrastructure is maturing but not yet fully priced. Bain expects an acceleration phase around 2027–2030. Firms positioning now in the right parts of the stack could be in a strong spot if that plays out.

For me, the verdict is this: PE and crypto can absolutely work together.

But only if PE treats blockchain as infrastructure, applies the same discipline it uses elsewhere, and is willing to stomach volatility while the framework of the next financial system are being laid.

This newsletter is for informational purposes only and is not intended as financial advice. The insights provided are illustrative and should not be the sole basis for investment decisions. Readers should conduct their own research and consult professional advisors before investing. The authors and publishers are not liable for any financial losses resulting from actions taken based on this content. Investing in the stock market involves risk, including potential loss of capital.

Let’s break it down.

Big deals & capital flows

AI mega-rounds are still the main event.

• Nscale (UK) just pulled off Europe’s largest-ever Series B: $1.1B. Backers included Aker ASA (Norway’s industrial giant), plus Microsoft, NVIDIA, and OpenAI.
  Their pitch is building “AI factories” → essentially hyperscale data centres designed purely for model training and inference. Europe needs its own AI infrastructure and not just to rent from the US hyperscalers.

• Modular (US) raised $250M Series C at a $1.6B valuation. They’re tackling one of the stickiest moats in tech: Nvidia’s CUDA dominance. The startup is building a chip-agnostic platform so developers can run AI across AMD, Apple, Intel, and more.
  Backers: U.S. Innovative Tech Fund, GV, Greylock, DFJ Growth, General Catalyst.

• Distyl AI (US) added $175M Series B at a ~$1.2B valuation.
  Their focus is on crunching enterprise data faster with AI-native tools. Lightspeed, Coatue, Dell, DST and Khosla were all in.

Fintech and health held their own.

• Oura (Finland) raised $875M Series E, valuing the smart ring maker at $11B. It was once a quirky sleep tracker. It’s now positioning as a global health platform. Think Apple Watch but on your finger.

• Judi Health (US) (formerly Capital Rx) closed a $400M Series F. They build tech to unify pharmacy and benefits administration for health plans, serving 50M+ members.
  Wellington led; Goldman Sachs Growth, GC, B Capital, and Generation IM all joined.

• Tide (UK) raised $120M Series F at a $1.5B valuation. The SME banking app already serves 1.6M small businesses in the UK and India.
  TPG led, with Apax Digital in. Tide says expansion into Europe is next.

Defense tech got its share.

• Auterion (US) secured $130M Series B to push its drone-swarm operating system. Already working with the Pentagon, the company wants to power autonomous fleets across air, land, and sea.
  Investors: Bessemer and Lakestar.

Cross-border money everywhere. That’s the main theme here.

Sovereign wealth funds from Singapore and Abu Dhabi, corporate strategics like NVIDIA and Dell are all lining up to buy into category leaders.

Exits & liquidity

The IPO window is genuinely open again.

→Netskope (US), the cloud security giant, raised $908M on Nasdaq. Valuation landed around $7.3B, roughly in line with its last private mark. It traded up on debut.

→StubHub (US) raised nearly $800M and listed at an $8.6B valuation. Investors finally got liquidity on a company that’s been circling public markets for years.

→And in Europe, Verisure (Switzerland) just announced plans to IPO in Stockholm at a potential $16B valuation. The Hellman & Friedman–backed security services firm is pitching strong growth plus a debt paydown story.

M&A chatter is also picking up.

Rumors have Electronic Arts (EA) in talks for a $50B PE-led take-private. That would be one of the largest buyouts in history.

On the industrial side, Union Pacific’s $85B merger with Norfolk Southern shows that boards are ready to swing big again.

Secondaries are the quiet hero, and will probably continue to be so.

Continuation vehicles are everywhere. Coller and TPG just closed another multi-billion-dollar one this week.

And with IPOs only just creaking open secondaries are providing the liquidity GPs and LPs desperately need.

Fundraising & capital formation

Capital is flowing back into funds. And not just to the usual suspects which is interesting.

• Aurora Capital Partners closed its seventh fund at $2.1B, its biggest ever. They focus on US mid-market buyouts and growth plays in industrials, aerospace, and tech-enabled services.

• Crux Capital (Dallas) raised $340M for its first fund, oversubscribed. They’re targeting lower mid-market companies with family-owned roots, the kind of old-school businesses that need growth capital to modernize.

• Painswick Capital (UK) secured $1.5B for its debut. They’re a spinout from larger European funds and focus on mid-sized tech and healthcare growth deals across Europe.

On the crossover side, KKR teamed with Capital Group to launch a hybrid retail fund mixing public equities and late-stage privates.

And Adams Street Partners rolled out ASPEN, an evergreen PE vehicle targeting individual investors.

To me the translation is this: LPs (pensions, SWFs, endowments) are doubling down on big brand funds but also leaving room for spinouts and creative crossover structures.

Macro & market signals

1. IPOs are back. Bankers had expected 155–195 IPOs by end of 2025, vs. 150 in 2024. Klarna’s IPO earlier this month, plus Netskope and StubHub now, are proving investors will support listings → if priced sensibly.

2. Rate cuts are underway. At its September meeting, the Federal Reserve trimmed its benchmark rate by 25 basis points bringing it to a range of 4.00%–4.25%. They also signalled further cuts may come as labor markets cool. This shift is meaningful: lower terminal rates make leverage cheaper, push up valuation multiples and unlock more M&A and buyout activity.

3. Geopolitics is messy. Europe is clearly funding its own AI and defence infrastructure. And the US–China tech split continues to drive forced exits and tighter foreign investment screening. Growth capital now comes with a geopolitical angle baked in.

Studies & reports of the week

• VC fund performance is improving.
  Carta’s Q2 2025 Fund Performance Report shows venture funds across vintages are returning capital faster than in prior cycles. 2017 funds have already distributed ~85% of paid-in capital, and even 2023 vintages are showing atypically high early returns. LPs are basically pushing for liquidity, and GPs are finding creative ways (secondaries, continuation vehicles, faster exits) to deliver it.

• Fund finance is getting a makeover.
  A new legal/finance note, “The Power of Precision” , highlights how lenders are adapting to delayed exits and tougher fundraising. Hybrid facilities, evergreen structures, and retail-friendly PE products are becoming more common. In practice: GPs now have more tools to bridge liquidity gaps while waiting for IPOs or trade sales.

Main takeaways are these: LPs are demanding liquidity, corporates are doubling down on strategic venture arms, and fund financing is evolving fast. All three are reshaping how growth capital gets raised, deployed, and recycled.

Recap of recap

AI rounds (Nscale, Modular, Oura, Distyl) are still commanding 9-figure checks.

IPOs are back (Netskope, StubHub, Verisure in the pipeline).

LPs are raising and allocating again, with secondaries keeping the liquidity machine humming.

The key shift: fundamentals finally matter.

Investors want growth and profitability paths, not just hype. The downturn reset is behind us, but the game has changed. Only top-tier companies get clean deals, everyone else has to settle for structure.

See you next week.

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

For me, Growth Capital Partners’ investment in Bridewell is a clean, real-world example of growth equity value creation.

In this case study, I walk through how GCP spotted a compelling opportunity in the UK’s fast-growing cybersecurity market, partnered with a strong management team, and executed a set of value-creation plays that took Bridewell from a promising UK consultancy to a market-leading, internationally scaled business.

Bridewell is a UK-headquartered cybersecurity services firm that protects critical national infrastructure and other high-assurance organisations. They run a 24/7 Security Operations Centre delivering Managed Detection & Response (MDR), and pair it with consulting (architecture, risk, compliance), penetration testing + data-privacy work.

The company leans on deep accreditations (multiple NCSC-assured services) and strong Microsoft security expertise with long-tenure clients and high retention - now with a growing US presence out of Houston. (Bridewell)

The thesis really boiled down to three pillars:

1. a big and growing market

2. a differentiated model focused on Critical National Infrastructure (CNI) (Bridewell)

3. an experienced team with a clear plan to scale. (Bridewell)

GCP’s partnership approach and hands-on value-add ultimately set up Bridewell’s successful exit to a European cybersecurity consortium involving I-TRACING (Sagard).

And this all created significant value for everyone involved as we are about to see. (Growth Capital)

Market context & investment rationale

The UK cybersecurity landscape in 2021

When GCP invested in Bridewell in March 2021, the UK cybersecurity market was already in overdrive.

Three forces were sort of powering this:

→Market size & growth: At the time, the UK cyber security sector generated £8.88B in annual revenue and supported 46,683 jobs, per the government’s 2021 sector analysis (UK Government). Later industry forecasts (published in 2025) now expect the UK market to reach USD 21.51B by 2030 at a 10.80% CAGR (Mordor Intelligence).

→Threat Landscape: NCSC handled 777 significant incidents in 2020–21, and the UK Government’s Cyber Security Breaches Survey 2021 found 39% of UK businesses identified a breach or attack (NCSC) (UK Government). And as you can probably imagine this has only gotten worse over the last five years.

→Regulatory Baseline (2021): Frameworks already in force -GDPR and the UK NIS Regulations (2018) - were pushing organisations toward higher cyber standards (UK Government).

And this regulatory momentum has been carrying today. By 2025, the regulatory tailwind strengthened further: DORA became applicable on 17 Jan 2025, and the UK published a Cyber Security and Resilience Bill policy statement in April 2025 (EU) (UK Government). An interesting point is also that by 2024–2025, UK Parliamentary sources were also describing the UK as the third most-targeted country globally (UK Parliament).

The managed security services opportunity

Here’s why the managed security services (MSSP) slice looked especially attractive:

1. Global market dynamics: MSS is projected (2025–2030) to grow from USD 39.47B in 2025 to USD 66.83B by 2030 - so that’s an 11.1% CAGR (MarketsandMarkets).

2. Skills shortage driving outsourcing: There’s a persistent shortage of cyber talent in this space. Plenty of big firms have SOCs but not enough people to run them optimally. So more often than not they outsource to MSSPs (Grand View Research).

3. Technology complexity: Many enterprises juggle 45–60 different security tools, which causes alert fatigue and integration gaps (Mordor Intelligence). And that, in turn, fuels demand for consolidated, managed solutions. (Mordor Intelligence)

Company overview: Bridewell's differentiated position

Business model & service portfolio

Bridewell carved out a strong position by focusing on the most demanding, defensible segments of the market:

Core Services:

-Managed security services: a 24/7 SOC with Managed Detection & Response (MDR)
-Cybersecurity consulting: architecture, risk management, compliance, and strategic advisory
-Penetration testing: offensive security and vulnerability assessments
-Data privacy: GDPR compliance and privacy consulting
-Target market focus: And importantly, Bridewell’s wheelhouse is protecting CNI and other organisations that need the highest levels of security.

Competitive differentiation

Here are the edges Bridewell leaned on - which made them win:

Regulatory excellence: Bridewell says it offers more NCSC-assured services than any other company. Its consultants and services are and have long been described as meeting the highest accreditation standards. With credibility and trust being so important in this space this really helped them a lot.

Technology partnerships: Bridewell also positioned itself as Microsoft’s leading cyber partner in the UK for CNI with a team that knows how to “squeeze the most from Microsoft’s stack”.

Client relationships: With retention consistently over 80%, 72% of customers have stuck around since 2013, 95% would recommend Bridewell, and ~60% of new business comes via referrals (Cybersecurity Excellence Awards).

Financial performance pre-investment

By 2021, the growth momentum was already there:

New business wins jumped 361% in 2021, with over half of that landing in Q3 2021 alone. (Bridewell)

GCP's Investment Thesis

Core Investment Pillars

1. Market Opportunity: GCP saw a big runway in cyber → especially managed services for CNI. They cited a global cyber market projection of $258bn by 2025, with MSS alone at $46.4bn.

2. Differentiated market position: Bridewell’s CNI focus and regulated-sector depth created stickiness, higher switching costs, and longer-term relationships.

3. Scalable business model: The blend of recurring MSS and project-based consulting gave solid cash-flow visibility with room to expand margins (Growth Capital).

4. International expansion potential: The UK model looked exportable, especially to the US with its ~$58bn cyber market.

5. Exceptional management team

And with that, the strategic playbook for GCP might have looked a bit like this:
Geographic Expansion → use UK strength to move into the US and Europe
Service Line Extension → widen managed services and tech offerings
Strategic M&A →bolt on complementary capabilities and expand presence
Operational scaling → build the systems/processes to support fast growth

Let’s have a look at how this four year journey might have looked:

Value Creation Journey (2021–2025)

Year 1: Foundation Building (2021)

Immediate post-investment growth
Headcount jumped from 49 to 128, with a target of 200 by end-2022 (Bridewell).

Market recognition
Bridewell picked up Cyber Business of the Year at The National Cyber Awards 2021 and also won SME 100 Growth (Under £10M) and Tech Company of the Year at the Thames Valley SME Growth Awards (Bridewell).

Operational excellence
They opened five new UK regional offices and added Paul Driver as Non-Executive Chair (Bridewell).

Year 2: International Expansion (2022)

US market entry
Bridewell announced its push into the $58bn US market after GCP’s investment (Bridewell) and chose Houston’s Energy Corridor for its office location (Business Wire).

Continued growth
The company reported a 156% increase in headcount and 50% revenue growth (Bridewell). This was driven by MDR demand, new working models, and appetite for broader cyber transformation (Bridewell).

Years 3–4: Scaling & strategic development (2023–2024)

Strategic acquisitions
Bridewell bought Arculus Cyber Security. This added ~15% to headcount (they retained all Arculus staff actually )and tripled public-sector revenue (Bridewell).

Technology innovation
It also invested in proprietary IP (Cybiquity) to bring more automation, data, and AI into the stack and improve MSSP margins (Growth Capital).

Talent development
The Bridewell Academy launched/expanded to bring in graduates, apprentices, and career-switchers (Growth Capital).

Operational excellence
A CFO hire and tighter finance reporting/KPIs rounded out the operating cadence (Growth Capital).

GCP's value creation toolkit

Here’s how GCP supported the journey:

→ Strategic growth initiatives: hands-on help via their Growth Toolkit and Network.

→International expansion support: practical help getting into the US and building local operations.

→M&A execution: backing Bridewell on sourcing, evaluating, and integrating deals.

→Operational scaling: putting in the systems/processes to grow without losing quality.

→Technology investment: supporting proprietary platform development to sharpen delivery and margins.

And when it came to 2025, signals started to show which were interesting for exit opportunities:

It’s also interesting to note Bridewell’s reputation within the industry over the years.

By 2021, Bridewell says it was the second-largest—and one of the fastest-growing—privately owned cyber services firms in the UK (Bridewell).

Bridewell also ranked 30th in the South of England’s 2023 Fast Growth 50 (Fast Growth 50 / Bridewell).

And GCP cited it had been growing 43% CAGR since 2021 (Growth Capital).

The company also managed to maintain its competitive edge over the years. This was done via:
-Regulatory leadership with the most NCSC-assured services
-Deep CNI expertise and close customer relationships
-Technology leverage, especially around Microsoft
-A strong culture and solid retention

Exit strategy & value realisation

In February 2025, GCP signed a definitive agreement to realise its investment in Bridewell to a group including Oakley Capital, Eurazeo, and Sagard NewGen, delivering a 9.3x return for Fund V.

The transaction completed in May 2025.

The exit rationale must have been the following:

1. Market consolidation: Europe’s cyber services space was consolidating as players chased scale (Sagard)

2. Strategic fit: Pairing Bridewell with I-TRACING created an independent European cybersecurity services champion (Sagard) which essentially combined national leaders in the UK and France (Sagard)

3. Platform for further growth: Under common ownership, the goal would be to build the leading pure-play group in Europe and keep scaling across Europe and the US (Sagard)

Here’s a quick summary of the approximate value creation made:

Financial return: A 9.3x return over ~4 years (Growth Capital) equates to about ~74.6% IRR → a really strong outcome in growth equity

And operationally speaking the company had been transformed:

-Revenue and headcount grew significantly during GCP’s hold
-Expanded internationally with a US footprint
-Completed a strategic acquisition (Arculus)
-Built proprietary tech (Cybiquity)
-Upped operational capabilities and governance

Now it’s time to reflect.

What made this investment successful?

1. Market timing: GCP leaned in right as demand for MSS and CNI protection accelerated

2. Management partnership: As Anthony Young put it: “I would like to thank GCP for their invaluable support over the last four years. They understood our business, and their focus on partnership, sustainable ambitious growth and people development has aligned perfectly with our culture as we scaled.” (Sagard)

3. Systematic value creation: The team ran multiple plays: geographic, capability, and operational → in a methodical way

4. Strategic patience: A roughly four-year hold gave enough time for real transformation while riding consolidation trends

5. Industry expertise: GCP’s experience in tech services helped them pick and execute the right levers

Here’s why the case resonates more broadly:

Cybersecurity is defensive growth → Even when the macro wobbles, cyber stays high priority.
Specialisation pays → Deep expertise (like CNI) can support better margins and faster growth
MSS tailwinds → Outsourcing security operations creates durable, recurring revenue for well-positioned providers
Internationally replicable →Proven models travel well across mature markets (Bridewell)

Critical questions & analytical reflections

While researching this case, several questions emerged that I believe would be crucial to understanding the full investment story:

On market timing & defensibility: The 2021 entry timing looks obvious in hindsight, but I'm curious about GCP's conviction level given the competitive dynamics. With cyber being such a hot sector, how did they assess whether Bridewell could maintain its CNI differentiation as larger players like Accenture or IBM inevitably moved into this space? The regulatory moats seem strong but I wonder if there were concerns about commoditisation as the market matured.

On value creation sequencing: Looking at the timeline, the Arculus acquisition in 2023-24 seems well-timed - after proving the US model but before exit processes began. But I wonder about integration challenges: cyber services are relationship-heavy businesses, and cultural fit becomes crucial. How did they ensure the acquisition accelerated rather than distracted from core growth?

Broader pattern recognition: This case reminds me of the broader "picks and shovels" approach in high-growth sectors. Rather than betting on specific cyber technologies that might become obsolete, Bridewell positioned itself as infrastructure - the boring but essential services layer. I see similar patterns in other defensive niches like compliance software or data privacy services.

What I'd dant to investigate further:

• How did customer concentration evolve? CNI clients are sticky but the market is finite

• What was the actual margin profile improvement from the Cybiquity platform investment?

• How did they balance maintaining boutique culture with scaling to 200+ people?

These questions reflect what I find intellectually engaging about growth equity - it's not just about riding market trends.

You also need to make complex operational bets on how businesses can evolve while maintaining their competitive core.

My conclusion

If you’re studying growth equity in tech services I feel like Bridewell is a tidy example of how to do it well.

By backing a quality business in a growing market, partnering tightly with management, and executing a thoughtful value-creation plan, GCP helped turn a strong UK consultancy into a European leader (Sagard).

The 9.3x return over four years underlines how operational improvement, strategic expansion, and smart positioning- so not financial engineering - can drive outstanding outcomes.

For me, the takeaways are these:

→Sector specialisation and deep market knowledge
→A genuine partnership approach with management
→Systematic value creation across multiple dimensions
→Patient capital to enable real change
→And sharp timing on exit to crystallise value

Sources

Growth Capital; Bridewell; Sagard; Mordor Intelligence; UK Government; NCSC; UK Parliament; MarketsandMarkets; Grand View Research; Business Wire; Fast Growth 50; Author; Calculation

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

It's more like a mix different universes. Each with its own rules, networks, and secret handshakes.

The UK is like New York's sophisticated European cousin: fast-paced, internationally minded, and everyone knows everyone.

Germany is the methodical engineer of the group: decentralised, relationship-focused, and full of hidden gems if you know where to look.

France is the tight-knit family reunion: warm once you're in, but you better know the right people and speak the language.

And today I make an attempt at explaining how deal sourcing actually works across Europe's three biggest markets → the very simplified version :).

Together, these three countries account for the majority of European private equity and VC activity, with French startups alone raising €15.2B in 2022 compared to Germany's €11.6B.

And the shift toward proactive deal origination is clear across all markets - 97% of private equity dealmakers now engage in direct sourcing.

Meaning systematic outbound efforts are critical for mid-market funds.

A quick note on where this comes from: this is just my understanding from living and working in the UK, Germany, and France at different points, speaking with founders, investors, and operators in each market, and reading a lot of blogs, reports, and articles. 

I’m still learning, and I fully expect there are exceptions to almost everything below. I just figured it would be interesting to write about.

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European Growth Equity Sourcing: TL;DR Comparison

A simple model that travels well

Sourcing works best as two engines running together.

The inbound engine catches opportunities from bankers, boutiques, VC referrals, portfolio CEOs, and founders who already know the fund.

The outbound engine maps narrow niches, watches for signals of momentum, and reaches out with something immediately useful.

Keeping the system light and measurable will tend to help here.

For example this can look like having a short weekly habit of: new targets added, first meetings held, and opportunities qualified. Habits like this are likely tend to compound.

And offering real help before any sort of talk about valuation (customer introductions, hiring help, pricing benchmarks, channel partners) is going to be a consistent differentiator across all three countries.

United Kingdom → fast, crowded, and process-driven

London concentrates founders, bankers, and global capital.

And that density creates velocity. Many growth rounds are intermediated, and competitive tension appears early.

Because the UK features established tech-focused intermediaries like GP Bullhound and Arma Partners regularly running competitive processes building relationships with select boutiques becomes really important. Many growth rounds will involve formal auctions, especially for larger deals. It’s in this context that clarity about cheque size, sectors, and what 'good' looks like will make those relationships productive.

Pre-emption is often the edge. One reliable way to get there is to watch for simple public signals - think things like enterprise hiring spikes, a new “Enterprise” tier on the pricing page, or a notable logo win. And the trick is then to engage before a formal process starts.

Another important point is specificity beats slogans. What I mean is offering two customer introductions that can happen this week, a crisp US go-to-market draft, or a shortlist for a CRO/VP Sales role are things that will signal real partnerships.

UK founders usually expect speed, numbers, and a clean process.

Following that mentality, a good first conversation spends more time on their motion (pipeline shape, retention, win rates, CAC payback) than on a fund pitch.

And then ends with two concrete actions to deliver within a week and a transparent outline of next steps.

Common pitfalls in the UK will be things like reacting only once a banker calls, sending generic “we add value” emails, and negotiating so hard on minor points that the founder worries about working together post-deal. That’s how you lose.

Germany → decentralised, patient, and trust-first

The thing about Germany is it just isn’t one market; it is several hubs with distinct flavours.

Berlin accounts for roughly 18% of German startups while Bavaria/Munich captures about 19%, compared to Paris hosting 54% of French startups.

This geographic spread creates opportunities for those willing to establish local presence across multiple cities.

Berlin has strong product-led and consumer energy. Munich leans into industrial and deep B2B. Hamburg and the Rhine-Ruhr region bring e-commerce, logistics, and media.

This spread rewards presence.

Regular on-site days in different hubs, small founder coffees, and participation in focused trade fairs and meetups will likely tend to open doors that email alone does not. Recent data shows Berlin and Bavaria/Munich account for a large share of new startups which proves the nature of this multi-hub ecosystem. (DB Reality)

Another important point I think is that many German companies bootstrap longer and avoid broad auctions until later. As a result, off-market conversations are common → but they are relationship-dependent. And warm paths via earlier VCs, trusted advisors, or corporate partners usually outperform cold outreach.

Practical help builds credibility quickly: things like a short “value audit” with two pricing experiments that suit DACH enterprise buyers, two warm customer intros in Germany or the US, or a reference from a founder who has worked with the fund’s operators.

An important operational consideration: German investment processes involve more formality including things like notarisation requirements that can add weeks to deal timelines. So planning for these administrative steps early prevents last-minute delays and demonstrates market sophistication to founders.

Timelines are often longer, and patience pays.

Trust is earned by doing small things reliably → following through on promised intros, sharing benchmarks that are actually comparable, and showing up in person more than once.

Over-indexing on Berlin alone, pushing for speed before trust exists, or treating Germany like a single city are the recurring mistakes. Another point is it also helps to plan for a bit more process formality e.g., notarisation steps can add time.

France → Paris-centric, community-driven, and credibility-sensitive

Paris concentrates founders, VCs, accelerators, and public co-investors.

This level of density creates strong community pathways.

Institutional players like Bpifrance (which both co-invests and connects companies to suitable investors), Station F (supporting 1,000+ startups annually), and established boutiques like Clipperton form a network where warm introductions carry significant weight.

And when in France or dealing with the French → Language matters.

So having a French-speaking team member, French materials for founder-facing docs, and a light familiarity with process norms (board cadence, employee equity conventions) will most certainly lower friction immediately.

Because the ecosystem is community-first, consistent presence often matters more than volume.

Office hours with accelerators, small functional breakfasts (for example, CTO or CRO roundtables), and friendly “pipeline swaps” with seed/Series A funds create visibility without noise. Things like co-leading with a trusted local GP or partnering alongside Bpifrance can help increase comfort and access for larger rounds.

Good first meetings in France feel calm and specific.

If US expansion is on the roadmap, bringing two relevant customer prospects or a partner lead moves the conversation from abstract to practical.

If hiring is the bottleneck, a shortlist with references shows real commitment.

What tends to backfire is pushy outreach in English-only, appearing only during raises, or ignoring local co-invest dynamics.

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Outbound that earns replies (without sounding salesy)

Signal-based outreach is the common thread.

Hiring for enterprise roles, opening a US location on the careers page, announcing a major vertical logo, or changing the pricing page are simple, public indicators of new needs.

Based on these signals, referencing the specific change and offering help that fits that moment keeps notes short and welcome.

In Germany, warmth and usefulness matter more than hype (German-language notes help). 

In France, even a brief greeting and one or two lines in French are likely to signal respect and usually lift response rates.

Intermediaries that matter (and how to work with them)

Intermediaries play different roles by country.

→In the UK, tech boutiques and global banks run many processes; speed, preparation, and pre-wiring customers are the edge.

→In Germany, advisory coverage is more regional. And consultants or corporate development teams often surface opportunities that never become broad auctions.

→In France, boutiques are active for larger rounds. But a significant portion of Series B/C flow still comes through community channels and public co-invest pathways.

A narrow, deep approach tends to work best.

Selecting three to five teams per country and investing in those relationships usually beats a wide net.

Quarterly teach-ins “here is what we are buying this quarter, here is what we passed on and why, here is how fast we can move” are things that could help intermediaries route the right deals and make “no” decisions quick and friendly.

Process notes that remove surprises

Processes differ a little across the three markets.

The UK tends to move quickly with familiar documentation, which supports pre-emption.

Germany involves more formality and notarisation → planning that timeline early avoids last-minute stress. Germans hate that

France sort of has its own norms around governance and employee equity. Which means addressing those early, and in French when appropriate, increases comfort.

The three truths to keep front-of-mind

→Because the UK is fast and banker-led, arriving early with real customers and a clean process is the unfair advantage.

→Because Germany is decentralised and trust-first, showing up in the right cities and doing what is promised unlocks off-market conversations.

→Because France is community-driven, credibility inside the ecosystem: language, presence, and partnerships will open doors cold outreach will not.

NB: These are big generalisations and I am really basing myself on the things I have heard, read and experienced having lived in all three countries + there will always be exceptions.

As defaults for a new origination team, though, I think these insights can travel well and keep the sourcing machine pointed at the right opportunities.

Sources & further reading

• Direct sourcing trend: “97% of dealmakers engage in direct deal sourcing,” SourceScrub survey and analysis (2025). Sourcescrub

• UK intermediation / banker push into mid-market: Financial News London coverage of global banks expanding mid-market M&A in Europe (2025). F.N. London+1

• Germany as a multi-hub market: Deutsche Bank Research on regional distribution of new startups (Berlin 18%, Bavaria/Munich 19% in 2024). DB Research

• German process formalities / notarisation: Sifted on German founder bureaucracy and notary steps for foreign investors. Sifted

• France ecosystem institutions: Station F overview and stats on scale (1,000+ startups per year; 600+ investors). stationf.co+1

• Bpifrance’s role in French tech: Sifted explainer on Bpifrance and its influence on startup funding. Sifted

• La French Tech (ecosystem data hub): Official “Data on the start-up ecosystem.” La Mission French Tech

• Europe-wide activity context: Invest Europe Private Equity Activity reports (H1 2024 and 2024 full-year data). investeurope.eu+1

• France macro context in tech: State of European Tech “Fast-track insights – France.”

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

Thought this would be an interesting one to write about so here I am.

I think this deal is worth studying for three reasons.

First, TravelPerk raised $200M at a $2.7B valuation when most SaaS valuations have compressed - that signals exceptional fundamentals.

Second, they showed the rare combination of 50% growth at $200M+ revenue while reaching EBITDA positive.

Third, they executed a sophisticated buy-and-build strategy alongside the funding (e.g. by acquiring Yokoy to expand from travel into expenses).

Most importantly, TravelPerk proves European SaaS companies can compete at the highest levels without adopting Silicon Valley's "growth at any cost" approach.

So let’s get into it.

The core numbers

Here are the key metrics from TravelPerk's $200M Series E:

• $200M Series E led by Atomico & EQT Growth

• $2.7B valuation (up from €1.4B twelve months ago)

• $200M+ annualized revenue

• ~50% year-over-year growth for two years

• EBITDA breakeven reached by end of 2024

The interesting part to me is the combination of 50% growth at $200M+ revenue while reaching profitability. That’s quite rare to find.

Most SaaS companies at this scale have to choose between growth and profitability. TravelPerk managed both.

TravelPerk's $2.7B valuation at $200M+ revenue implies a 13.5x revenue multiple.

That's significantly above current market benchmarks:

• Public SaaS median: ~7x revenue (Software Equity Group SaaS Index)

• Private SaaS median: 4.8-5.3x revenue (SaaS Capital)

• TravelPerk multiple: 13.5x revenue

This premium pricing reflects their exceptional fundamentals.

How travelPerk achieved profitable growth at scale

The first question I asked myself was this:

Based on company disclosures and investor commentary, three operational changes drove this performance:

1. Geographic mix shift to higher-value markets

TravelPerk's US expansion via the AmTrav acquisition (more on this in a minute) doubled their US revenue and shifted their customer mix toward higher-value deals. US corporate travel typically involves larger transaction sizes and higher annual contract values compared to European SMB customers. And it is this geographic mix shift which improved overall unit economics without requiring fundamental changes to their cost structure.

2. AI and automation reducing service costs

Both TravelPerk and their investors specifically highlighted automation and AI as key drivers of margin improvement. By essentially automating travel booking workflows, customer service interactions, and backend processing, they reduced the human touch points required per transaction. This is particularly important in travel where 24/7 customer support has traditionally been expensive to deliver.

3. Attach rate improvements through localised features

TravelPerk's VAT reclaim functionality in Europe and pass-through payment features in the US increased both customer retention and revenue per account. VAT reclaim helps European customers recover significant costs. That makes TravelPerk more valuable and harder to replace. And the pass-through payments in the US improve customer experience by enabling faster refunds and points accrual, driving higher usage and stickiness.

As we can see these aren't really dramatic operational moves. What they are though is incremental improvements that compound over time.

The geographic expansion brought higher-value customers, automation reduced costs per transaction, and localised features improved retention metrics.

The Yokoy acquisition strategy

Along with the latest funding, TravelPerk acquired Yokoy, a Swiss AI-powered expense management company. The deal was all-equity and TechCrunch reported it was a "nine-figure" transaction.

The thing with this acquisition is it makes sense when you look at the timeline.

TravelPerk and Yokoy have been integration partners since 2020. Their customers were already using both products together.

The business logic was this:

• Combine travel booking + expense management into one platform

• Use Yokoy's AI to automate expense processing

• Increase revenue per customer by expanding product usage

• Make it harder for customers to switch to competitors

So when customers use your platform for both travel and expenses, switching becomes much more complex.

That's good for retention and it works.

Competitive positioning: a david vs. goliath strategy

TravelPerk competes in a market dominated by established players like SAP Concur (the legacy leader) and Navan (formerly TripActions → the fast-growing challenger).

According to PitchBook data, TravelPerk's direct competitors include BizAway, Lanes & Planes, Itilite, and TravelBank.

TravelPerk's competitive advantages in this tough market are these:

• Cross-border complexity: Native capabilities in both US and European markets create switching costs

• SMB/mid-market focus: Less competition than enterprise segment dominated by Concur

• Product integration: Travel + expenses in one platform vs. point solutions

• European regulatory expertise: VAT reclaim, e-invoicing compliance, local payment methods

And with 2,000+ customer base and 60% gross margins this suggests strong competitive positioning for TravelPerk. (ION Analytics)

It’s smart because by focusing on SMB/mid-market customers they avoid head-to-head competition with Concur in large enterprises but still manage to capture a growing segment that values ease-of-use over feature complexity.

How cross-border operations create advantages

TravelPerk operates in both the US and Europe, but these markets work very differently.

Interestingly, this complexity actually helps them.

US market characteristics:

• Pass-through card payments for faster refunds

• Simpler tax structure (no VAT)

• Larger average deal sizes

• Different procurement processes

European market characteristics:

• VAT reclaim across 27+ countries

• E-invoicing standards that vary by country

• Complex compliance rules (like Germany's GoBD requirements)

• Multiple languages and local preferences

The thing is most competitors will focus on one region. Partly because building native capabilities for both is expensive and complicated.

But the thing is once you have it, new competitors can't easily copy your setup.

Business travel market risk: less cyclical than expected

The business travel market experienced severe disruption during COVID-19, declining ~75% in 2020 - that’s worse than the 2008 financial crisis or September 11, 2001.(McKinsey)

However it was interesting to me to see that recovery data suggests the market is less cyclical than historically perceived:

Recovery trajectory:

• 2024 projections: $1.5 trillion globally (6% above 2019 levels) (McKinsey)

• US market: $472 billion expected (13.4% above 2019) (Morgan Stanley)

• Corporate adoption: Most companies reached/exceeded pre-pandemic travel levels by 2024

Structural changes have also come about and reduced cyclicality:

• Remote work increases need for periodic team meetings and company retreats

• Hybrid work models create new travel patterns (longer stays, "bleisure" travel)

• Digital transformation makes travel booking/management more efficient

• Sustainability focus drives more strategic travel planning

So the market has proven more resilient than expected and companies have been quick to recognise that in-person interaction remains valuable for relationship building, sales, and team collaboration.

The AmTrav deal: making sense of US expansion

Before Yokoy, TravelPerk bought AmTrav in June 2024.

This acquisition doubled their US revenue and gave them operations in Boston, Chicago, LA, and Miami.

And AmTrav brought more than just customers.

It brought knowledge of how to sell to US enterprises. Corporate travel purchasing in the US involves different stakeholders, longer sales cycles, and established relationships with legacy providers.

Acquiring this knowledge is often faster than building it internally.

Why this is a good model for growth equity investors

EQT Growth and Atomico led this round.

Here's what I think they were likely thinking:

1. Market timing

Travel and expense management are becoming single platforms. Companies like

Navan already did this. TravelPerk + Yokoy is the European version.

2. Unit economics improvement

Yokoy's AI reduces manual processing costs.

And as automation increases, TravelPerk's cost per transaction should decrease.

This improves margins over time.

3. European scaling model

TravelPerk shows that European SaaS companies can reach large scale without burning cash indefinitely. That’s a big plus for growth equity investors in a time where capital efficiency is so highly valued.

They prioritised profitability earlier than typical US companies.

4. Acquisition engine

TravelPerk has completed five acquisitions.

They've developed a process for buying and integrating related businesses.

This creates multiple paths to growth beyond organic expansion.

The M&A pattern

Looking at TravelPerk's acquisition history reveals a clear strategy:

• 2021: NexTravel (entry into US market)

• 2021: Click Travel (scale in UK market)

• 2021: Susterra (sustainability tracking features)

• 2024: AmTrav (US operations and sales capability)

• 2025: Yokoy (expense automation and AI)

So each deal either expands their geographic reach or adds product capabilities.

→Geographic deals bring new customers.

→Product deals increase revenue per existing customer.

TravelPerk also has a €135M credit facility from Blackstone and Blue Owl.

This debt gives them acquisition funding without diluting equity investors.

Using debt for acquisitions and equity for organic growth is common in growth equity. It maximises the equity investors' ownership while providing capital for deals.

What we can learn about European SaaS

TravelPerk's path shows some differences from typical Silicon Valley SaaS scaling:

Earlier profitability focus: They reached EBITDA positive at €200M revenue. Many US SaaS companies wait until much larger scale.

Regulatory complexity as moat: European compliance requirements make switching costs higher. This helps with retention.

Buy-and-build approach: Instead of building every capability internally, they acquire proven solutions and integrate them.

The risks to watch

This strategy isn't without risks though. Some of the first ones that come to mind are:

1. Travel market cyclicality: i.e business travel drops quickly during economic downturns (even if we just saw that travel shows less cyclicality than it used to)

2. Integration challenges: combining Yokoy's technology and team with TravelPerk's platform can be challenging sometimes

3. Competitive response: established players like SAP Concur could invest heavily to compete

4. Debt capacity: there are limits to how much more they can borrow for acquisitions

Things I want to remember

TravelPerk's €200M Series E is proof of several important principles I believe:

1. Growth and profitability can coexist at large scale with the right operational focus

2. Cross-border complexity can become a competitive advantage rather than just a cost

3. Strategic acquisitions can accelerate capabilities faster than internal development

4. Product expansion (travel → expenses) increases customer stickiness and revenue per account

For growth equity investors this represents the type of business they look for: → sustainable growth with clear paths to continued expansion and improving unit economics.

And for other European SaaS founders I think TravelPerk is a nice reminder that one can build a large, valuable business without sacrificing long-term financial health.

Sources

-TravelPerk PR (2025)
- Series E announcement EQT Group PR (2025)
- Investment announcement TechCrunch (2025)
- Series E and Yokoy acquisition coverage Software Equity Group (2024)
- SaaS Index valuation data SaaS Capital (2025)
- Private SaaS company valuations report ION Analytics (2024)
- CFO interview on financials TravelPerk PR (2024)
- AmTrav acquisition announcement TravelPerk blog (2024)
- Funding strategy post Yokoy compliance pages
- E-invoicing and regulatory information TravelPerk product pages
- VAT reclaim and pass-through payments features PitchBook (2025)
- Company profile and competitive data McKinsey (2020)
- Corporate travel recovery analysis McKinsey (2024)
- Business travel trends report Morgan Stanley (2023)
- Business travel outlook survey Deloitte (2024)
- Corporate travel survey TravelPerk PR (2021)
- NexTravel acquisition TravelPerk PR ( 2021)
- Click Travel acquisition TravelPerk PR (2021)
- Susterra acquisition TravelPerk Impact survey (2022)
- Business travel value research

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

Let's break it down.

Big deals & capital flows

AI absolutely dominated the headlines - AGAIN.

The biggest story was Anthropic's monster $13B Series F. That values the AI company at $183B → making it one of the world's most valuable private companies.

ICONIQ led, with co-leads Fidelity and Lightspeed. Qatar Investment Authority also threw serious weight behind this one too.

Meanwhile in Europe, Mistral AI (France) closed a €1.7B (~$2B) Series C led by Dutch chipmaker ASML, which committed €1.3B and grabbed a board seat.

The deal values the 2-year-old startup at €11.7B pre-money → so officially making Mistral Europe's most valuable AI company.

Geopolitical undertones? Absolutely.

This screams European tech sovereignty.

Other notable growth rounds:

Sierra (enterprise AI) raised $350M at a $10B valuation. Ex-Salesforce and Google execs know how to get investors excited.

Treeline Biosciences closed a $200M Series A extension → total funding now sits at $1.1B for cancer drug trials.

Two companies tied at $150M: Enveda Biosciences (drug discovery, Series D) and Baseten (AI developer tools, Series D). Both hit unicorn status.

Even outside AI, the money kept flowing. Galvanize Therapeutics and You.com each secured $100M Series C rounds.

And cross-border capital was everywhere. Middle Eastern sovereign wealth funds, Japanese consortiums, European corporates → everyone wants a piece of the growth action.

Exits & liquidity

The IPO window is creaking open.

Ticketing platform StubHub filed for a U.S. listing targeting up to $9.2B valuation and aiming to raise ~$851M.

They postponed back in April due to market volatility. But now a solid equity markets and strong tech earnings have them ready to try again.

Swedish fintech Klarna and crypto exchange Gemini are also gearing up for New York IPOs in the coming days.

These will be the real test → most major VC-backed IPOs in Q2 priced below their last private valuations.

SPACs are making a comeback.

Chamath Palihapitiya (the "SPAC King") is launching a new $250M SPAC after taking a hiatus.

His American Exceptionalism Acquisition Corp will target AI, energy, DeFi, and defense → so all the hot sectors right now.

17 new SPACs filed in August (up from 12 in July). The alternative exit route is alive and well.

Major trade sales:

Atlassian agreed to acquire The Browser Company (they make the Arc browser) for $610M cash. Arc had only raised ~$128M before this exit.

OpenAI announced a $1.1B all-stock acquisition of feature-testing startup Statsig → notable since OpenAI itself is private. That’s a fast turnaround too → Statsig just raised $100M at a $1.1B valuation in April.

Amazon completed its $200M purchase of Indian lender Axio after regulatory approvals.

The M&A market is showing signs of life. We should be happy about that.

Fundraising & capital formation

Established players are still raising big.

Great Hill Partners closed its eighth fund at $7B → well above the $5B target and its prior $4.7B fund.

Total capital raised since inception? $19B. They're targeting tech-enabled businesses in software, fintech, digital health, and e-commerce.

And Detroit's Rockbridge Growth Equity closed its third fund at $360M (above target).

In the Middle East, Saudi Arabia's anb capital teamed with UK-based Lexham to launch a $200M MENA tech growth fund.

The secondary market is also exploding - as expected:

Carlyle's AlpInvest unit raised $20B for its latest secondary program → nearly doubling its prior fund.

With 29,000+ private companies worth ~$3.6 trillion stuck in PE/VC portfolios, secondaries are becoming the relief valve.

Goldman Sachs and T. Rowe Price unveiled a strategic partnership for public-private blended funds → crossover investing is back.

Macro & market signals

Public markets are recovering.

U.S. equity indexes rallied through the summer. Tech stocks posted strong earnings. Confidence is returning.

September alone is seeing multi-billion-dollar IPO attempts. EY noted global IPO proceeds in H1 2025 were up 17% YoY.

What about for growth investors? Rising public comparables and lower volatility are positive signals for both exits and valuation discussions.

Private valuations are still resetting.

Here's the reality check: 15.9% of 2025 venture deals have been down rounds → the highest rate in a decade.

Translation is this: companies are raising money at lower valuations than their previous round. It's painful for existing shareholders but often necessary when growth stalls or market conditions shift. Think of it as the private market's version of a stock price correction.

Even AI startups aren't immune → they account for ~29% of down rounds. Turns out not every AI company deserves a unicorn valuation.

Almost every major VC-backed IPO in Q2 debuted below its last private valuation. The 2021 peak is officially over.

Structured terms are back: ratchets, senior prefs, liquidation preferences. Investors want downside protection.

Interest rates and geopolitics

Fed rate cuts are looking more likely as inflation cools. Lower rates would be a tailwind for growth equity.

Europe's tech sovereignty push is real → the ASML-Mistral deal and EU defense-tech funding prove it.

U.S.-China tensions continue affecting deployment strategies.

Studies & reports of the week

Two must-reads in my opinion:

Crunchbase Global VC Report → link

• August 2025 startup funding hit just $17B → lowest monthly amount in 8 years

• Down 12% YoY and 44% from July → summer pullback was real

• Late-stage funding plunged >50% vs July

• But AI still dominated with $4.8B invested, and U.S. companies took 61% of global funding

PitchBook Down Round Analysis → link

• 15.9% of 2025 VC deals were down rounds (highest since 2013)

• AI/ML startups made up nearly 30% of these down rounds

• Almost every big Q2 IPO priced below peak private valuation

• The valuation reset is real, but could be healthy long-term

Recap of recap

AI mega-rounds are still happening (if you're Anthropic or Mistral), the IPO window is cautiously opening, and money is flowing through secondaries.

Beneath the headlines valuations are getting reset hard. Down rounds are at decade highs + investors want structured downside protection.

The message in my opinion is clear: only the highest-quality companies are getting funded on favourable terms.

The worst of the downturn might be over, but we're in a new paradigm → one where fundamentals actually matter again.

Have a great week - and see you next week.

Disclaimer: This note is for information only and isn't investment advice. Figures are from sources believed reliable, but accuracy isn't guaranteed. Opinions are the author's and may change.

$2.31 billion raised across 58 rounds in H1 2025 alone. (Tracxn)

That's a 462.99% increase from the prior year.

The global sporttech market is expanding from $29.74 billion in 2024 to a projected $68-91 billion by 2030. (Precedence Research, Market Research Future)

But it’s not only the market size that’s interesting to me - the quality of businesses being built and their revenue characteristics is something to make note of.

Let me walk you through what I found.

The market structure has fundamentally changed

Three structural shifts are creating sustainable tailwinds in this super sector:

1. Sports betting legalisation isn't just about gambling. It's created a massive B2B data infrastructure market. When the UK opened online betting, sports data companies saw revenues triple overnight. This is now happening across Europe and North America and is creating premium-priced recurring revenue streams for data providers.

2. Digital transformation accelerated by COVID has proven permanent, not temporary. What I mean here is that professional teams that adopted performance analytics during the pandemic expanded their technology budgets by an average of 40% and haven't cut back. (Straits Research) And youth sports organisations that went digital for scheduling and payments during lockdowns maintained those systems. In parts because they actually just work better than the old manual processes.

3. Private equity capital flowing into sports has changed the investment landscape. Recent regulatory changes that allow for more flexible ownership structures in major leagues have opened institutional capital flows. Take Arctos Partners alone which raised $4.1 billion across new sports-focused funds. (Sportico) This capital is looking beyond team ownership into the technology infrastructure supporting the industry.

The revenue quality is exceptional

I really believe what makes sporttech particularly attractive for growth equity is the revenue characteristics of mature companies in the space.

High switching costs: Once a professional team integrates performance analytics software, changing providers mid-season is operationally difficult and competitively risky. An example of this is Catapult Sports which serves 4,600+ elite teams globally with $117 million revenue and very much benefits from this dynamic. (PitchBook, Profluence, Catapult)

Subscription-based models: Most successful sporttech companies have moved to recurring revenue. TeamSnap serves 25 million users with estimated $58 million revenue growing 26% annually → all from subscription fees. (TeamSnap, Growjo)

Price inelasticity: Professional teams will spend whatever it takes for competitive advantage. If a $100,000 system prevents one injury to a $30 million player, the ROI calculation is straightforward. This creates pricing power that most B2B software companies don't enjoy.

Network effects: Youth sports platforms particularly benefit from this. Once a league adopts a management system, all teams in that league must use it. Stack Sports for example processes $1 billion+ annually across 50,000+ organisations due to these dynamics. (Capstone Partners)

The $5M-$200M revenue sweet spot

And within all this, I think the most attractive opportunities might just sit in companies doing $5M-$200M in annual revenue. Here's why:

These companies have proven product-market fit and demonstrated unit economics, but still have significant scaling runway. A $50 million revenue sporttech company can realistically reach $500 million by expanding geographically or adding adjacent products to existing customers.

I found a few nice examples in this range:

Teamworks leads with $100 million+ revenue serving 6,000+ teams including every NFL franchise. They provide the integrated software platform that teams use to manage everything - things like player schedules, medical records, performance data, communication. Before Teamworks, teams used whiteboards and Excel sheets. They just raised $235 million Series F at a $1.3 billion valuation. (Straits Research)

Hudl (estimated $750 million revenue) serves 315,000+ teams globally with video analysis software. They've proven the model works from American high schools to European football academies, and recently acquired StatsBomb and FastModel Sports to expand their analytics offering. The switching costs are high because coaches build their entire game planning process around the platform. (Tracxn, Hudl)

FloSports doubled revenue to exceed $100 million while achieving profitability, streaming 40,000 live events annually to 23 million viewers. They focus on niche sports that traditional broadcasters ignore like wrestling, track and field, martial arts. The content is exclusive, creating strong subscriber loyalty and pricing power. (StreamTV Insider)

Socios.com/Chiliz ($50M-$150M estimated revenue) created blockchain-based fan tokens for FC Barcelona, PSG, and Manchester City. The way it works is fans buy tokens to vote on team decisions like which song plays when they score. The concept initially seemed gimmicky but fans have been consistently spending real money on engagement across multiple sports and geographies. (Market.us)

WHOOP hit $750 million revenue with strong B2B enterprise growth. You probably know them for consumer fitness bands but their real expansion comes from professional teams buying devices for all players to monitor recovery and performance. The enterprise business has 93% renewal rates because teams become dependent on the data for training decisions. (LeadIQ)

Fan engagement: The stickiest revenue streams of them all

The fan engagement sector shows particularly attractive characteristics and is growing at 15.2% annually → toward $66.7 billion by 2034. (Market.us)

A few examples I found of this:

FanThreeSixty ($10M-50M revenue range) builds comprehensive engagement platforms for major venues. So instead of fans just watching passively, they participate in polls, games, and contests during events. And the thing is venues love this because engaged fans spend 40% more on concessions and merchandise. (Market.us)

LiveLike ($15M-60M) is another interesting find that powers the interactive features you see during broadcasts. When ESPN runs viewer polls during games, that's often LiveLike's technology. Broadcasters are also willing to pay premium rates because interactive content increases viewing time and ad engagement. (Market.us)

Rezzil secured strategic investment from the Premier League itself for their VR training platform. Players practice in virtual environments against recreations of real opponents. The technology works because it allows unlimited repetition of specific scenarios that might only occur once per game in real life. (Credence Research)

The interesting learning from all this is the following: once fans experience interactive features, they don't go back to passive consumption. Engagement rates remain permanently elevated.

Multiple expansion vectors

What's particularly compelling is also how many different ways these businesses can grow:

Geographic expansion: Because successful models in one region will usually translate well globally. American youth sports management platforms work equally well for European football clubs. And European sports betting infrastructure providers are expanding into newly regulated North American markets.

Vertical expansion: Companies often start in one sport and expand to others. Performance analytics companies that began with professional football now serve basketball, soccer, baseball, and Olympic sports.

Product expansion: Momentus Technologies started with venue management software and added ticketing, concessions, and merchandise systems. They now serve 50%+ of NFL/NBA/NHL venues processing $12 billion+ annually. So the cross-selling opportunities are significant once you're integrated into a venue's operations. (Gomomentus)

Market expansion: Professional tools get adapted for amateur use. Youth sports organisations now use the same video analysis software that NFL teams use → just at different price points.

The data infrastructure play

One other particularly interesting angle to me is the sports data infrastructure layer.

Sportradar is a Swiss company I found that makes +$950 million revenue and has a $2 billion market cap with a leading global market share in sports data. They provide the real-time feeds that power every major sportsbook globally. (Wikipedia, PitchBook, Sportico)

Genius Sports (UK-founded) has $118 million revenue with exclusive partnerships across major leagues including the NFL. So when you place a bet on an NFL game, there's a high probability Genius Sports provided the underlying data. (CanvasBusinessModel, FinanceCharts)

So as are starting to realise the sports betting legalisation leads to a phenomenon which creates premium demand for real-time, accurate data feeds. Every sportsbook needs millisecond-accurate scores, player stats, and injury updates. And the faster and more reliable the data, the better sportsbooks can manage risk and set odds.

Data providers also benefit from multiple revenue streams – they sell the same core data to sportsbooks, media companies, fantasy platforms, and teams themselves - each at different price points and packaging.

Youth sports is an overlooked $100B+ market

Most investors focus on professional sports.

But there's a massive opportunity in youth sports that's being systematically undervalued.

The global youth sports market is expanding from $50.62 billion in 2024 to $114.01 billion by 2032 (10.68% CAGR) and serves 30+ million young athletes generating $25+ billion in annual spending across Europe and North America. (Profluence)

TeamSnap is one of these companies capitalising on this. It serves 25 million users with estimated $58 million revenue growing 26% annually. They handle team communication, scheduling, and coordination for youth sports teams. The network effects are really powerful here – once a league adopts TeamSnap, parents across all teams in that league end up using it. (TeamSnap, Growjo)

Stack Sports is an interesting company that processes $1 billion+ annually across 50,000+ organisations as it provides registration, scheduling, and payment processing for youth sports leagues. The recurring revenue model is strong because leagues need the platform every season, and switching costs increase as historical data accumulates. (Capstone Partners)

Overall the market remains highly fragmented with thousands of local organisations using outdated manual processes. This creates both organic growth opportunities for platforms that can digitise these workflows and roll-up opportunities for PE-backed consolidators.

Sports Betting Infrastructure: The B2B Goldmine

Consumer-facing betting apps get most of the attention because they’re kinda cool.

But the real opportunities are in B2B infrastructure.

Kambi Group (Swedish) provides the odds-making technology that powers sportsbooks globally. When you see Manchester United favored by 1.5 goals, Kambi's algorithms likely calculated that number. They charge subscription fees plus revenue sharing which leads to nice recurring income that scales with betting volume. (Vetted Sports)

EveryMatrix (European) offers complete technology stacks with €30M-€80M estimated revenue. They're essentially the AWS of sports betting - so they provide the infrastructure so operators can focus on customer acquisition. (Vetted Sports)

IGT PlaySports is another one which serves 100+ locations across 30+ jurisdictions with their sportsbook management platform. What works well here is the regulatory complexity in sports betting creates high barriers to entry and switching costs for their software. (IGT)

Exit environment and valuation metrics

The exit environment has been strong and improving. $68 billion in disclosed M&A value across 486 deals in 2024 which represents a 1.7x increase over 2023. (Drakestar, Sportico)

Notable recent exits include:

• Two Circles (it’s a London-based sports marketing agency) selling for $315 million with 60%+ IRR for Bruin Capital (Capstone Partners)

• DAZN which reached $2.3 billion revenue with a $1 billion Saudi PIF investment in 2025 (DAZN)

• Riddell receiving a $400 million BC Partners investment (Capstone Partners)

Average M&A multiples appear to have reached 11.9x EV/EBITDA (2022-2025), with SaaS-based platforms commanding 4x-12x revenue multiples depending on growth and retention metrics. (Capstone Partners)

Another noteworthy point is the strategic acquirer base is expanding beyond traditional sports companies to now also include technology companies, media companies, and PE-backed platforms pursuing buy-and-build strategies.

Regulatory tailwinds continue

Regulation when it comes to betting is of course a huge topic. And in many ways sports betting legalisation has been providing ongoing market expansion:

• 38 US states now offer online betting, with Missouri launching December 2025 (Deadspin)

• Germany fully regulated online betting in 2021

• Canada legalized single-event betting nationally

• Netherlands opened regulated markets in 2021

Each new jurisdiction creates demand for compliant technology infrastructure – geolocation verification, responsible gambling features, data integrity monitoring, payment processing.

And these regulatory requirements create barriers to entry that protect established technology providers while expanding the total addressable market.

Investment thesis summary

I think sports-tech is an amazing opportunity to invest in incredibly cool companies with strong growth prospects and large TAMs.

The signals and proof are there in my opinion:

→Revenue quality: Recurring subscription models with high switching costs and price inelasticity

→Market expansion:Multiple vectors for growth (geographic, vertical, product, market)

→Structural tailwinds: Sports betting legalisation, permanent digital adoption, PE capital flows

→Fragmented markets:Significant roll-up opportunities, particularly in youth sports

→Strong exit environment: Expanding strategic acquirer base with premium valuations

→Network effects: Particularly strong in youth sports and venue management platforms

→Cross-selling opportunities: Integrated platforms can expand within existing customer bases

The combination of passionate customer bases, defensible business models, and multiple expansion paths creates conditions that historically generate strong growth equity returns.

I would not want to miss out on this.

The sector deserves serious consideration from growth investors looking for high-quality businesses in expanding markets with clear paths to scale.

What makes this particularly interesting right now: We're still early in the adoption curve for many applications, but late enough that proven business models exist and unit economics are demonstrated.

The next five years will likely determine which companies capture the largest market shares as these trends continue to play out globally.

Sources:

1. Tracxn - Sports Tech 2025 Market & Investments Trends

2. Precedence Research - Sports Technology Market Size and Forecast 2025 to 2034

3. Market Research Future - Sports Technology Market Size, Share | Report Forecast 2032

4. Straits Research - Sports Analytics Market Size, Share & Growth Forecast by 2033

5. Sportico - Sports Tech M&A Seen as Strong Despite Trade War Worries (2025)

6. PitchBook - Catapult Sports 2025 Company Profile: Stock Performance & Earnings

7. Profluence - Catapult Sports-Tech Aiming for Revenue Over $100 Million

8. Catapult - Investor Center

9. TeamSnap - Success Fuels Sports Management Leader TeamSnap's Raise of $25 Million

10. Growjo - TeamSnap: Revenue, Competitors, Alternatives

11. Capstone Partners - Sports Technology M&A Update – August 2025

12. Tracxn - Hudl 2025 Company Profile, Team, Funding & Competitors

13. Hudl - Hudl Enhances Game Preparation and Scouting with FastModel Sports Acquisition

14. StreamTV Insider - Sports streamer FloSports scores new funding, plans content and distribution expansions

15. Market.us - Fan Engagement Market Size, Share | CAGR of 15.2%

16. LeadIQ - WHOOP Company Overview, Contact Details & Competitors

17. Credence Research - Sports AR and VR Market Size, Growth & Forecast to 2032

18. Gomomentus - Stadium & Arena Management Software | Momentus Technologies

19. Wikipedia - Sportradar

20. CanvasBusinessModel - What is Competitive Landscape of Genius Sports Company?

21. FinanceCharts - Genius Sports (GENI) Company Profile, History, Products & Services

22. Vetted Sports - 15 Sports Betting Startups To Watch Out For

23. IGT - #1 B2B Sports Betting Supplier

24. Drakestar - Global Sports Tech Report 2024: Record Year for Sports Tech M&A - $68B Deal Value Across 450+ M&A Deals

25. DAZN - Completion of Eleven acquisition establishes DAZN as the world's ultimate destination for sports fans

26. Deadspin - Where is Sports Betting Legal? Status of Every US State in 2025

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

Let’s break it down.

Big deals & capital flows

Fusion is back in the headlines.

Massachusetts-based Commonwealth Fusion Systems raised $863M.

Backers? None other than Google, NVIDIA, Stanley Druckenmiller, Dubai sovereign capital, and even a Japanese consortium led by Mitsui and Mitsubishi.

Nearly $3B were raised in total.

Meanwhile in Europe, Framer (Amsterdam) scored $100M at a $2B valuation. They’re profitable, growing fast, and pushing no-code websites + AI design tools.

Meritech (US) and Atomico (EU) led the charge.

Fintech had its moments too.

• Rain (NYC), making stablecoin payments boring (in the best way), raised $58M to expand with Visa into Europe.

• M0, building cross-chain stablecoins, banked $40M from Polychain, Ribbit, Pantera, and Bain Crypto.

And yes, AI was everywhere again.

Insight Partners led a $25M round into InstaLILY, which builds “AI teammates” that actually do the work inside CRMs and ERPs.

Think less ChatGPT suggestions, more “I finished that workflow for you.”

Investors love it.

Exits & liquidity

Some big exits to celebrate:

• Oxford’s OrganOx → a pioneer in organ preservation - is being scooped up by Japan’s Terumo for $1.5B. It’s the biggest Oxford startup exit ever.

• In Ohio, Irth Solutions is moving from Blackstone to TPG. A classic PE-to-PE handoff.

On the IPO front:

• Netskope (cloud security, $7.5B valuation) filed to go public on Nasdaq.

• Gemini (the Winklevoss crypto exchange) also filed.

• Klarna is dusting off its US IPO plans after pausing earlier this year.

Feels a bit like the public window is creaking open again.

Fundraising & capital formation

Despite the tough fundraising climate some firms are showing real momentum which is nice to see.

• India’s Elevation Capital launched a $400M late-stage fund to back IPO-bound startups.

• Two ex-TPG investors launched Vanara Capital with TPG’s blessing (via its seeding arm, TPG NEXT).

• And Summit Partners quietly raised €1.4B for its latest Europe Growth Equity Fund → one-and-done close at hard cap.

LPs are still active too.

Korea’s pension fund just stepped into venture for the first time with a dedicated secondary fund.

And U.S. pensions and endowments are tilting toward secondaries and late-stage deals → looking to buy in at discounts.

Macro & market signals

Public markets are smiling again.

The S&P 500 hit record highs after Nvidia’s monster earnings as per usual.

Rate cuts look more likely.

And SaaS multiples are stabilising around ~7x forward revenue.

All good signs for IPO hopefuls.

But in private markets? Valuation discipline is the word.

• 15.9% of 2025 deals so far are down rounds (the highest in a decade).

• Structured terms are back in vogue: liquidation prefs, sliding caps, the works.

• And it’s a bifurcated world: AI startups are hogging the capital (65% of U.S. venture dollars this year). Still, even in AI, nearly a third of recent rounds were down rounds. The hype cycle is maturing fast.

Studies & reports of the week

Two standout reads:

1. Rothschild & Co – Growth Equity Update → link

   • Defense tech is heating up. $28.4B invested in defence startups this year and 2.5x last year.

   • July saw 42 U.S. rounds >$100M, totalling $13.1B (up 120% YoY). Europe logged $4.2B in mega-rounds.

   • OpenAI’s rumoured $40B raise would push total funding into LLM companies to $116B since 2023.

2. PitchBook & Runway Growth – Venture Debt Review → link

   • Venture debt hit a record $53B in 2024 (even as the number of deals dropped).

   • Late-stage companies are leaning in: nearly 60% of venture debt financings last year were growth stage.

   • Founders no longer see it as “rescue money” but more as runway extension without dilution.

What I take from this is venture debt is now mainstream, not niche. Growth equity investors need to factor it into the playbook.

Recap of recap

Mega-rounds are back (if you’re in AI or climate tech), IPOs are peeking through the window, and LPs are finding creative ways to deploy.

And beneath the headlines, valuations are being reset and investors are demanding quality.

Only the best companies are getting funded on favourable terms.

Have a great week - and see you next week.

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

Deal count is up 57%. Deal value is up 63% (Ropes & Gray, Rothschild & Co).

And that’s happening while much of private equity is still fighting with high interest rates and complicated exit markets.

I don’t see this as just a short-term bounce. It feels structural.

Growth equity is showing its strength as the strategy that balances stability with upside.

Truth is: buyouts are still weighed down by leverage. Venture is still swinging for the fences on unproven models.

Growth equity sits in the middle. And right now, that “just right” positioning looks like an edge.

So what’s driving it?

Let’s take a closer look at the defining trends shaping the growth equity ecosystem in 2025.

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Surprise, Surprise → AI is pulling in the capital

As you might have guessed, nothing has dominated this year more than AI.

OpenAI’s $40bn round at a $300bn valuation set the tone (Rothschild & Co).

Then Scale AI pulled in $14.3bn at a $29bn valuation (Rothschild & Co).

And Elon Musk’s xAI raised another $10bn in combined equity and debt (Rothschild & Co).

Put it all together, and nearly 70% of US deal value in H1 2025 came from just 20 raises → most of them in AI (Rothschild & Co).

This has completely reshaped what “technology investment” means.

Investors aren’t just chasing SaaS anymore. They’re looking at businesses where AI is built into the product, the revenue model, or both. Which means healthcare, data platforms, and operational software are now front and centre.

Valuations have been recovering, but selectively

Valuations have started to bounce back from the lows of 2024.

Private software companies are back to around 2.5x revenue and 15x EBITDA (Aventis Advisors).

It’s still far from the crazy highs of 2021 but still enough to show that confidence seems to be returning.

Of course, it’s uneven.

AI companies are commanding multiples that break the traditional playbook. But for more traditional growth companies the math has gotten tougher.

With higher rates, hitting a 20% IRR now requires 4.2% annual earnings growth - and that's compared to just 1.7% in the low-rate era (PwC).

And geography matters. US companies enjoy a real premium as they average 4.2x revenue or 21.8x EBITDA, while French and German peers are closer to 2.0x, and UK firms around 3.1x (Aventis Advisors).

Cross-border deals are facing new difficulties

But it’s not all tailwinds.

Geopolitics is playing a much bigger role in capital flows.

It looks as if regulators like CFIUS in the US and the CMA in the UK have been stepping up scrutiny (McKinsey). Outbound investment rules are adding more complexity. And LPs are nervous about exposure to China.

One telling sign to me is this → Blackstone actually gave the Minnesota State Board of Investment the option to opt out of China allocations altogether (Funds Europe).

As a result, Asia fundraising has lagged. Meanwhile, India’s venture and growth investment is up ~40% (Bain & Co), and Mexico is attracting attention for near-shoring. Though trade policy uncertainty is apparently keeping some investors cautious (Funds Europe).

Europe continues to hold its ground.

The UK, France, and Germany still account for 46% of deal volume (Funds Europe).

The learning here is that capital is moving toward geographies where LPs feel “friend-shored” and safer.

Exits getting reinvented

If exits are the problem for much of private equity, growth equity has been quicker to adapt.

IPOs are tough at the moment and trade sales limited so firms are leaning on secondaries, continuation funds, and NAV loans to create liquidity.

Secondary market volume hit $162bn in 2024 and climbed another 45% YoY in Q1 2025 (Ropes & Gray, BlackRock).

Inflexion’s £2.3bn continuation vehicle delivered a 3.4x MOIC and 28% IRR while letting the GP keep its crown (Inflexion).

NAV loans are also on the rise → they’re expected to double from $150bn in 2024 to $300bn by 2027 (Ropes & Gray, Bain & Co).

So the big shift seems to be this: exits are no longer binary + liquidity is becoming flexible.

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LPs raise the bar

LP appetite is strong sure but they’re also raising expectations.

30% of LPs plan to increase private equity allocations (McKinsey).

But they want real distributions, not just paper gains. They want to see operational value creation, not just multiple expansion. And they’re concentrating more capital with the managers who can deliver both.

Infrastructure-style resilience is also a priority. 46% of LPs plan to increase infrastructure allocations in 2025 (McKinsey).

Many are thinking of growth equity as a way to back “growth infrastructure” in critical sectors like tech and healthcare.

Technology inside the firm

AI influences how firms invest but also very much how they operate. That’s important.

95% of PE firms say they plan to scale AI use internally over the next 18 months (McKinsey). AI tools can now identify 195 potential targets in the time it takes an analyst to review one (World Economic Forum). NLP is also flagging red-flag clauses across contracts in multiple languages (Dealroom).

Some GPs are even hiring “AI operating partners” to drive adoption across portfolios.

There is a bit of irony here as everyone seems to be chasing AI portfolio companies when some of the fastest adoption is happening inside the firms themselves.

Managers know if they don’t use these tools, they’ll lose their competitive edge in sourcing and diligence speed.

ESG becomes business-critical

ESG has moved well beyond box-ticking.

Funds with strong ESG integration are seeing up to 8% higher IRR potential (World Economic Forum). And 80% of investors now factor climate risk into their decisions (World Economic Forum).

I do think this applies more to larger PEs and GEs though.

On top of that, the EU’s Corporate Sustainability Reporting Directive (CSRD) came into effect in 2025 (Rothschild & Co). And ESMA’s new fund naming rules now require 80% of investments to meet ESG standards (Rothschild & Co).

That’s creating both obligations and opportunities.

Once again I think growth equity is particularly well positioned for this → financing companies that can scale climate and sustainability solutions into real commercial markets.

Consolidation at the top

And then there’s consolidation.

The top 100 GPs are expanding faster than the rest (often by buying rivals). Some examples of this are EQT’s $7.5bn deal for Baring PE Asia and TPG’s $2.7bn acquisition of Angelo Gordon (EY, Bain & Co).

The message is clear: scale now matters. In sourcing, in diligence, in portfolio support. And the gap between the very top tier and everyone else is widening.

General Atlantic’s $114bn AUM, Insight Partners’ 800+ portfolio companies, and Battery Ventures’ $13bn in new funds show us just how large the leaders have become (GrowthCap).

A look into the future and on what defines growth equity in 2025–2026

So where does all this leave us?

My view is that growth equity’s momentum doesn’t fade as 2025 closes. It strengthens.

Here’s why:

1. AI will keep concentrating capital. The top deals are only getting bigger, and LPs aren’t backing away. In fact, many are explicitly carving out AI-focused allocations. So I’d expect a few more “mega-rounds” before year-end. In 2026, I see this spilling into second-order effects so things like data centres, semiconductors, and “AI infrastructure” businesses that underpin the ecosystem.

2. Valuations stabilise & but the premium gap widens. Traditional growth companies will need real profitability to hold multiples. And AI businesses will continue to command outlier valuations. I think 2026 will be the year the market really bifurcates: proven AI adoption = premium multiple, everyone else = disciplined mid-single digit revenue multiples.

3. Exits stay creative. IPOs might improve if rates fall, but continuation funds, secondaries, and NAV loans are likely here to stay. By 2026, I expect every major growth equity GP will treat continuation funds as a standard part of their playbook. This could even become a differentiator in LP fundraising come to think of it.

4. LP selectivity hardens further. By 2026, I expect LP allocations to concentrate even more around the top 50–100 GPs. Smaller and mid-market firms will either consolidate or carve out sector specializations. LPs will keep rewarding operational excellence, consistent DPI, and differentiated sourcing.

5. ESG and climate scale-up. Regulation isn’t loosening, and LPs aren’t stepping back. Growth equity will increasingly own the “deployment stage” of climate technologies. 2026 could be the year we see multi-billion-dollar growth rounds in climate infrastructure businesses.

If 2024 was the trough, 2025 is the rebound, then 2026 will be the year growth equity defines itself as the asset class that can combine scale, innovation, and resilience.

Sources

1. U.S. Private Equity Market Recap - June 2025 | Ropes & Gray LLP

2. Growth Equity Update | Edition 40 | Rothschild & Co

3. Software Valuation Multiples: 2015-2025 | Aventis Advisors

4. Private equity: US Deals 2025 midyear outlook | PwC

5. Global Private Markets Report 2025 | McKinsey & Company

6. From Regulation to Rates: What's Shaping Cross-Border Private Equity Financing in 2025? | Funds Europe

7. India Private Equity Report 2025 | Bain & Company

8. FY2024 Secondary Market Recap and Outlook | BlackRock

9. Inflexion closes £2.3 billion Continuation Fund | Inflexion

10. How tech innovations are transforming private equity | World Economic Forum

11. AI Due Diligence: What it Is & Impact on M&A | Dealroom

12. ESG insights for 2025 and beyond | Rothschild & Co

13. Big gets bigger: How consolidation is reshaping Private Equity | EY Luxembourg

14. The Top Private Equity Firms of 2025 | GrowthCap

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

You paid per seat, per month, and companies loved the predictability.

Investors loved it even more: stable recurring revenue made valuations easy.

But that era is fading.

In 2025, pricing itself has become one of the biggest drivers of SaaS valuations.

Companies aren’t just competing on product anymore. They’re competing on how they charge for it.

I believe the companies that win the next decade will be the ones that align pricing with customer value.

And the data proves it.

Subscription: reliable but running out of steam

Subscription models are the old faithful.

They make revenue predictable, which is why SaaS was such a hit with investors in the first place. But growth has slowed.

• Pure subscription companies are growing slower than their usage-based peers—31% lower annual revenue growth (BoostUp).

• Private SaaS companies using subscription-only models trade at around 4.8x ARR if bootstrapped, 5.3x if equity-backed (SaaS Capital). Compare that to double-digit multiples for more innovative models.

• And customers increasingly see per-seat pricing as unfair. If half your team barely uses the product, why should you pay the same as if they used it every day?

Take Mailchimp.

It started out charging by subscriber count.

That worked for years, but when it shifted to pricing by total contacts (effectively usage-based), ARPU went up, and it created new revenue streams. That pricing flexibility was a major factor in Intuit’s $12 billion acquisition (GetMonetizely).

My view is this → subscription is still a good base. It provides stability. But as a stand-alone model, it no longer delivers valuation premiums.

Consumption as the growth engine

Usage-based pricing ties revenue to actual usage.

That’s things like API calls, tokens, compute time, gigabytes stored.

It’s fair, transparent, and scales naturally when customers grow.

And the numbers are undeniable:

• 67% of SaaS companies now use usage-based pricing (Maxio).

• Those companies grow 31% faster than subscription-only peers (BoostUp).

• Net Dollar Retention (NDR) is 125% for usage-based companies vs. 114% SaaS average (OpenView).

And the market is rewarding them. AI-native SaaS companies trade at 15–20x ARR vs. 6–8x for traditional vertical SaaS (YourStory).

Snowflake is the best-known example I can think of.

Customers pay for what they use → they compute power for queries, storage for data, transfer for movement across regions. The model is so aligned with customer behavior that Snowflake has sustained massive growth at scale.

New Relic also went all-in. They ditched traditional licensing for pure usage-based pricing. It was painful (retraining sales, migrating customers) but it paid off. A free tier plus pay-for-usage lowered adoption barriers, and in-product prompts drove expansion. Adoption of new features tripled (GetMonetizely).

I believe consumption pricing is the biggest growth driver in SaaS today.

The trade-off is volatility → revenue can spike or dip with usage.

But for companies that handle forecasting and customer onboarding well, the upside is huge.

Success-based → the next step?

If consumption pricing charges for inputs, success-based models charge for outcomes.

Customers only pay when the software delivers results.

It’s early, but the momentum is clear:

• 9% of SaaS companies fully use outcome pricing, 47% are exploring it (GetMonetizely).

• Companies that adopt it see 40% lower churn and 10–15% revenue premiums (Maxio, BCG).

• Net Revenue Retention improves significantly, because customers expand usage when they see results (Maxio).

There’s a few already existing examples of this:

• Intercom’s AI chatbot charges $0.99 per resolved ticket. If the bot fails and a human takes over, no charge (L.E.K. Consulting). Result: revenue quadrupled in a year.

• Zendesk followed with $1.50–$2.00 per successful resolution (L.E.K. Consulting). Over 10,000 AI customers have adopted this model.

• Riskified only charges for fraud-free transactions, while providing full chargeback protection (L.E.K. Consulting).

The strength of this model is obvious: when your customers succeed, you succeed. Retention skyrockets because no CFO wants to cut a vendor who literally ties cost to value delivered.

But it’s hard to pull off.

You need robust measurement systems, analytics infrastructure, and airtight contracts.

Not every SaaS product has outcomes that are easy to measure, which is why adoption lags behind consumption models.

So in conclusion, outcome pricing might be the “next frontier.”

It won’t replace consumption or subscription, but companies that pull it off will command the highest premiums.

Hybrids might be the real winners

Here’s the reality: pure models aren’t where the market is heading.

The highest growth rates come from hybrid modelsthat balance predictability with upside.

• Companies with hybrid models report the highest median growth rates at 21% (Maxio).

• They combine the safety net of subscription with the scalability of usage or outcomes.

Some examples I found:

• Salesforce uses “Flex Credits” → base subscriptions plus outcome-based credits for queries or workflows (Medium).

• Mailchimp blended subscription with contacts-based usage pricing, which helped justify its $12B exit.

• Snowflake blends storage subscriptions with compute usage, giving both predictability and scalability.

My view is that hybrids are the sweet spot for most SaaS.

They reduce volatility while capturing upside.

For investors, this usually means better risk-adjusted returns.

What actually drives valuations

At the end of the day, it isn’t the label on the pricing model (subscription, usage, or outcome) that investors reward.

What matters is whether the pricing is truly aligned with the value the customer receives.

Think about it this way: when customers feel they’re paying fairly, they stay longer, expand their usage, and become stickier. That dynamic flows straight into the SaaS metrics investors care about most: growth, retention, and predictability.

There are a few key signals that tell investors a company has figured this out:

1. Clear usage metrics tied to real outcomes.
If pricing is based on something directly connected to customer value, like Snowflake charging for compute, or Intercom charging per ticket resolved, investors are more confident that growth will continue.

Customers don’t mind paying more when they’re getting more.

2. Strong Net Dollar Retention (NDR).
NDR above 120% is the gold standard.

It means existing customers are expanding spend without the company needing to constantly acquire new ones.

Usage-based and outcome-based models naturally drive this, because when customers grow, revenue grows with them.

3. Infrastructure and billing sophistication.
The ability to accurately measure, track, and bill for usage or outcomes isn’t trivial either.

Companies that build strong systems here (think Snowflake or Riskified) have a competitive moat.

It’s not just harder for competitors to copy → it also gives investors confidence that revenue reporting is accurate and scalable.

4. Execution on transitions.
Shifting pricing models isn’t easy.

New Relic completely reinvented its go-to-market when moving from licenses to usage pricing.

Mailchimp changed its core subscription model to better reflect contacts, unlocking new revenue.

Zendesk layered in outcome-based AI pricing.

Companies that execute these transitions well prove management sophistication, which investors will pay a premium for.

That’s why the oft-cited “average SaaS multiple” of ~5x ARR (SaaS Capital) doesn’t tell the full story. Companies stuck on outdated subscription models tend to trade at those levels. Companies with sophisticated, value-aligned pricing consistently trade at 2–3 times higher multiples → 10x, 12x, sometimes even 15x+.

Remember this: Pricing sophistication is becoming as important as product quality in driving valuations. A great product with a bad pricing model leaves money on the table. A great product with a value-aligned pricing model creates the kind of retention, expansion, and predictability that investors will pay up for.

The model of the future

Here’s my call:

• Infrastructure SaaS (APIs, data, compute) → Primarily consumption-based. Customers already expect pay-as-you-go.

• Application SaaS (CRM, HR, marketing) → Hybrids combining subscription bases with usage or outcome elements.

• AI-native SaaS → Blended consumption + outcome models. Pay for compute, plus premiums tied to business results.

If the 2010s were the decade of subscription, the 2020s are the decade of value alignment.

The winners will be the companies that charge in proportion to the value they create.

Sources

• BoostUp - "Consumption-Based Pricing: Driving Growth in SaaS & IaaS"

• Orb - "14 high-revenue usage-based pricing examples in 2025"

• SaaS Capital - "2025 Private SaaS Company Valuations"

• Kalungi - "SaaS Valuations: How to Value a Software Company in 2025"

• BCG on Tech - "The Evolution of Pricing Models for SaaS Companies"

• Aventis Advisors - "SaaS Valuation Multiples: 2015-2025"

• LinkedIn - "Valuations for Usage-Based SaaS (SaaS+)"

• Arrows - "Net Dollar Retention (NDR): Everything You Need To Know [2025]"

• Software Equity Group - "Net Dollar Retention: Formula, Benchmarks, and Areas to Improve"

• SaaS Rise - "The SaaS M&A Report 2025"

• Aventis Advisors - "SaaS M&A Transactions: Insights & Trends in 2024"

• Maxio - "Hybrid Pricing Models: Why SaaS Companies Are Making the Switch in 2025"

• Software Equity Group - "More Than a Number: SaaS Pricing Models and Strategies"

• Hyperline - "Hybrid pricing models for SaaS solutions: your complete guide"

• The SaaS Barometer - "SaaS M&A Volumes and Valuations"

• GetMonetizely - "SaaS Pricing Benchmark Study 2025: Insights from 100+ Companies"

• Maxio - "2025 SaaS Pricing Report: Usage-Based Models and More"

• GetMonetizely - "Outcome-Based Pricing: The Next Frontier in SaaS?"

• L.E.K. Consulting - "The Rise of Outcome-Based Pricing in SaaS: Aligning Value With Cost"

• SaaStr - "GTM in The Age of AI: The Top 10 Learnings from ICONIQ's 2025 B2B SaaS Report"

• SaaStr - "What 300 of The Highest Growth B2B Startups Are Actually Doing With AI"

• L.E.K. Consulting - "The Future Role of Generative AI in SaaS Pricing"

• DealHub - "What is Outcome-Based Pricing?"

• Aquant - "Are Outcome-Based Pricing Models The Future of SAAS?"

• Medium/EQT Ventures - "Monetising the Agentic Workforce — is Outcome-Based Pricing the Answer?"

• EY - "SaaS transformation with GenAI: outcome-based pricing"

• GetMonetizely - "Performance-Based SaaS Pricing: Tying Revenue to Customer Outcomes"

• Medium - "Why Outcome-Based Pricing Will Dominate SaaS by 2030"

• GetMonetizely - "How Is Outcome-Based Pricing Revolutionizing Enterprise Software?"

• Bessemer Venture Partners - "Ten lessons from a decade of vertical software investing"

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change

Through July, companies in the category raised $11.8B, a 14.3% bump over last year (Tracxn).

It’s clear investors are willing to pay a premium: vertical SaaS trades at 7.0× revenue multiples versus 4.8× for horizontal platforms (Aventis Advisors).

And EBITDA multiples show a similar gap (SaaS Capital).

On paper, it looks real good: go vertical, go deep, build moats.

The real story might however be less about "vertical or horizontal” but more about sequencing.

Go too vertical, too soon, and the TAM walls show up faster than you think.

Wait too long to expand, and you risk being outflanked by peers who broaden earlier.

Let’s explore this a bit.

Why depth is still getting rewarded

Depth is winning the current market cycle.

Vertical specialists are consistently outgrowing horizontals (25%+ growth versus single digits (Webapper)).

And so naturally, investors are chasing that consistency: Q2 2025 saw 637 SaaS deals, the highest on record, with vertical SaaS making up 46% of them (PitchBook; Software Equity Group).

And AI is a huge part of this. AI-native vertical SaaS companies are getting 15–20× ARR valuations (YourStory) because they can finally standardise messy, unstructured workflows that used to defy automation.

Healthcare is the ultimate case study in all this.

Epic EMR has built its moat not by going broad, but by going very deep. 37% U.S. market share, 250M+ patient records (Aloa), and specialty modules for oncology, labs, nephrology (uPerform). The switching costs are enormous.

What’s to remember here is defensibility doesn't come from being the cheapest or broadest. It comes from embedding so deeply that replacing you feels impossible.

But what happens when you go too vertical?

The problem with specialisation is that it can shorten the runway.

It’s a well-observed pattern across vertical SaaS: once a company captures 30–50% of its core addressable market, growth slows and CAC spikes as the pool of new prospects shrinks (Blume Ventures).

In other words, your defensibility is strong, but your expansion options are limited.

You see this most clearly in niches like super niche healthcare IT. Specialty-specific EMRs (say, ophthalmology-only or podiatry-only) often scale quickly in their first few years but then struggle to fund ongoing regulatory compliance and R&D once new-customer growth flattens. 

The fixed costs of staying certified and interoperable don’t shrink just because the TAM is capped -> which means margins get squeezed as revenue growth slows.

Dental SaaS offers another structural example.

The U.S. has ~130k–136k dental practices (depending on the source/year). Even if you “win the category,” your upside is bounded by that finite market unless you build adjacencies like patient engagement, imaging, or fintech services.

The learning here I guess is that going “too vertical” creates a defensible moat but a shorter growth runway.

Without a clear adjacency strategy, even successful category leaders can find themselves boxed into sub-scale outcomes.

Not because the product failed, but because the market was never big enough.

What the exits are telling us

Some of the most interesting signals come from the exit market.

→ Cvent went deep into event-tech - registration, ticketing, venue sourcing. After years as a public company, it was taken private by Blackstone in 2023 in a $4.6B deal. That’s depth rewarded: owning the workflow so completely that it became a must-have platform for strategic buyers.

→ Duck Creek in insurance SaaS followed a similar path. It never tried to go broad outside of insurance but built enough stickiness to attract a $2.6B take-private by Vista Equity Partners in 2023. Again, depth alone was enough to drive a strong outcome.

But then look at SimpleNexus. It started as a mortgage POS, a narrow slice of fintech SaaS. By layering borrower engagement, loan officer workflows, and payments, it broadened its footprint within the vertical. That adjacency story mattered: nCino acquired SimpleNexus for roughly $1.2B in 2022 which is a great outcome for a mid-market vertical player that expanded within its vertical at exactly the right time.

Or take Litify in legal SaaS. In 2023, Bessemer acquired a majority stake, betting on its ability to move from case management into billing, workflow, and analytics.

That’s a textbook Stage 1 → Stage 2 transition: dominate the first workflow, then build adjacencies before the TAM ceiling closes in.

And at the smaller end, Credgenics, a debt resolution SaaS, acquired field-services firm Arrise in 2025. It’s not a billion-dollar headline, but it shows the same instinct: bolt-on adjacencies that extend revenue without abandoning the core.

The lesson here is that you don’t need to be Toast or ServiceTitan to make this work. Even mid-market vertical players are finding real exits whether through strategic consolidation, private equity take-privates, or adjacency-driven M&A.

Where I think this goes next

Here's the part I keep coming back to:

Depth is table stakes. You need to dominate workflows and build moats just to earn investor attention.

Adjacency is the new growth currency.

Whether it's fintech layers (Toast flipped its mix to 82% payments (Fractal Software)) or bolt-ons (Credgenics + Arrise), the winners are those who broaden within their vertical.

Timing will separate the winners from the stalled.

The companies that start layering adjacencies at ~30–50% penetration avoid hitting TAM walls (Bain Capital Ventures). The ones that wait often find their market saturated before they've built a next act.

Looking ahead, I suspect we'll see more vertical-to-adjacent rollups like Credgenics/Arrise.

PE firms should love these plays: defendable niches, predictable growth, and bolt-on adjacencies to extend runway.

At the same time, AI is going to blur the lines. What I mean here is as vertical SaaS players amass proprietary datasets, they'll find ways to reapply them outward (like Marchex which started in auto dealer call analytics but is now deploying AI-driven tools across healthcare and home services).

That's depth evolving into breadth.

The future isn't vertical or horizontal. It's vertical → adjacent → platform.

What this means for your next deal

Here's how I'm thinking about this operationally:

Risk profile shifts dramatically based on stage.

Early-stage pure vertical plays carry higher execution risk as you're betting they can eventually navigate the adjacency transition successfully.

Companies that have already proven vertical dominance and are expanding into adjacencies offer clearer visibility into their expansion playbook. That should make them worth paying up for despite higher entry multiples.

There’s value in looking for embedded adjacency optionality early.

What I mean here is some of the best deals will be companies where management has already identified the adjacent revenue streams but hasn't fully monetised them yet.

So when customers are already asking for payments, lending, or complementary workflows, that's demand validation you can underwrite.

Due diligence questions one can ask might look like this:

• What's your current market penetration in your core vertical? (Red flag if high penetration and no adjacency plan)

• Which adjacent workflows do your customers currently buy from other vendors?

• How many of your existing customers would pay for payments/lending/payroll services?

• What's your win rate in competitive situations + who are you losing to? (Horizontal players winning could signal adjacency urgency)

• Show me your product roadmap for the next 18 months → how much is core versus adjacent?

Oh and it might be interesting to watch for timing signals.

So companies approaching dominant market positions but still growing efficiently are in the sweet spot here: they have pricing power in their core vertical but haven't yet hit the CAC inflation that comes with market saturation.

That's when the adjacency expansion becomes most valuable and defensible.

The main way to think about this is that one is not just buying the current business anymore. One buys the option to expand within the vertical, and one needs to evaluate whether management understands the sequencing and has the product instincts to execute it successfully.

Quick conclusion

The depth vs. breadth dilemma isn't binary but probably much more sequential.

Go deep first, then go broad enough to sustain growth.

If exits are any guide (Cvent, Duck Creek, SimpleNexus, Litify, Credgenics) then the market is perfectly willing to reward companies that stay mostly vertical, so long as they either own the category or bolt on adjacencies at the right time.

The open question is this: in five years, how many of today's vertical “darlings” will still be compounding at 25%+… and how many will be "too vertical," waiting for an exit that never comes?

Time will tell.

Sources

• Tracxn – Vertical SaaS - 2025 Market & Investments Trends (2025)

• Aventis Advisors – SaaS Valuation Multiples: 2015–2025 (2025)

• SaaS Capital – 2025 Private SaaS Company Valuations (2025)

• Webapper – Vertical SaaS Victory (2025)

• PitchBook – Q2 2025 Enterprise SaaS VC Trends (2025)

• Software Equity Group – SEG 2025 Annual SaaS Report (2025)

• YourStory – The Billion-Dollar AI Opportunity in Vertical SaaS (Jan 2025)

• Aloa – Epic EMR vs. Other Top EMR Systems: In-Depth Comparison (2025)

• uPerform – The Ultimate Guide to Epic Training (2025)

• Blume Ventures – The Vertical SaaS Secret Playsheet (2025)

• Koombea – The Differences Between Vertical and Horizontal SaaS (2025)

• Rocket Digital Health – Health Tech Companies: 2025 Guide to Innovation, Leaders & Market Trends (2025)

• Bain Capital Ventures – The Current State of Vertical SaaS (2025)

• Fractal Software – Lessons from Toast on Multiproduct Vertical SaaS (2025)

• NEA – Vertical AI Explained: The Next Generation of Tech Titans (2025)

• Accion – Metrics That Matter for a Successful Verticalized SaaS Business (2025)

• Euclid Ventures – Market Sizing in Vertical AI (Part I) (2025)

• Euclid Ventures – The Buyout Frenzy in Vertical SaaS (2025)

• Cvent – Blackstone take-private, $4.6B valuation (2023) [Reuters / WSJ coverage]

• Duck Creek Technologies – Vista Equity Partners take-private, $2.6B valuation (2023) [Reuters / BusinessWire]

• SimpleNexus – acquired by nCino for ~$1.2B (announced 2021, closed 2022) [TechCrunch / Inman / BusinessWire]

• Litify – Bessemer Venture Partners majority stake (Feb 2023) [Venture Capital Journal / Litify press release]

• Credgenics – acquired majority stake in Arrise (Aug 2025) [Economic Times of India]

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

Roughly $3.6 trillion of unrealised value is locked up in 29,000 unsold companies (Bain & Company Private Equity Outlook 2025).

That’s a bottleneck so big it’s reshaping how the industry works.

Most commentators call this a crisis. I don’t.

For growth equity investors, this is the market reset that creates the next decade’s winners.

Because the firms that know how to play the unwind won’t just survive. They’ll grab premium assets, gain market share, and compound returns in ways that traditional buyout funds simply can’t.

And let’s be clear: this isn’t only a mega-fund problem.

If you’re running a $300M growth equity fund backing $5–30M revenue companies, I think these dynamics shape your deal flow, your LP conversations, and the competitive environment you’re investing in just as much.

Let’s break it down.

Why the overhang matters now

Because it isn’t just about delayed exits.

The overhang is showing signs of restructuring private equity.

For the first time since 2005, private equity AUM declined in 2024 (down 2% year-over-year) (CEPR Private Equity’s $3 Trillion Payout Problem, March 2025). Fundraising also fell for the third straight year, down 24% YoY (McKinsey Global Private Markets Report 2025). And distributions as a percentage of NAV sank to just 11% = the lowest in a decade (Institutional Investor PE Glut Report).

In other words: capital was scarce, exits slowed, and LPs got impatient.

Now in 2025, deal activity and distributions have started to rebound and H1 exits hit their highest levels in three years (EY Private Equity Pulse Q2 2025).

But the structural pressure hasn’t gone away. 35% of the 29,000 PE-backed companies have been held for more than six years (EY Private Equity Pulse Q2 2025). Many were acquired at peak ZIRP valuations.

And the math is still brutal: to deliver a 20% IRR with 7% interest rates and seven-year holds, sponsors now need 4.2% annual earnings growth, more than double the 1.7% requirement under 3% rates (PwC Private Equity US Deals 2025 Midyear Outlook).

That reality forces action - at least it should.

But not just at the top end of the market.

Throughout the lower mid-market, where smaller funds can capture opportunities as sellers accept discounted valuations to generate liquidity.

Where growth equity wins

Traditional buyout firms are boxed in.

Their scale requirements keep them focused on multi-billion-dollar exits that simply aren’t clearing.

Growth equity, by contrast, should really thrive in this environment:

• Smaller checks. It can target high-quality assets too small for mega-funds. If you’re writing $10–100M equity tickets, you’re exactly where motivated sellers will start moving companies.

• Operational value creation. With financial engineering less effective, revenue acceleration is the new alpha. Mid-market businesses at $5–50M in revenue are the perfect scale for this.

• Liquidity alignment. LPs are pushing for shorter holding periods and realizable value creation which is exactly what growth equity provides. For smaller funds, this alignment with LP needs is a fundraising advantage.

So the overhang has turned into a target-rich environment where disciplined growth equity investors can buy quality businesses at compressed valuations.

Secondary markets: growth equity’s new playground

Here’s where things get really interesting.

The secondary market has exploded into growth equity’s hunting ground. Transaction volumes reached a record $156 billion in 2024 and are expected to grow further to around $175 billion in 2025 (William Blair 2025 Secondary Market Report).

Now, that sounds like big institutional money only. But here’s the nuance: GP-led secondaries and single-asset continuation vehicles are increasingly landing in the $100–300M enterprise value zone.

That’s where mid-market growth equity players can participate, either directly or as co-investors.

Key dynamics:

• GP-led deals are booming. $84 billion in 2024, up from $45 billion in 2023 (Greenhill Global Secondary Market Review FY 2024). These aren’t fire sales but really more curated continuation vehicles with proven assets. Mid-market GPs can often come in as buyers of minority stakes.

• Single-asset CVs dominate. 11 of 23 continuation vehicles in Q1 2025 were single-asset (CIO Investment Club Private Equity Secondary Market 2025). Perfect fit for growth equity’s high-conviction, concentrated style.

• IRR arbitrage through deferrals. Over half of CV transactions in 2023 used delayed payment structures (Chronograph GP-Led Secondaries Deep Dive January 2025). That’s not just a mega-deal trick as smaller buyers can use it too to stretch capital and juice returns.

So yes, the headlines are big numbers.

But the mechanics are now filtering into the lower mid-market. And that gives your $300M funds real opportunities.

Valuation compression: an entry point we’ve been waiting for?

Let’s talk pricing.

Average PE buyout entry multiples have already compressed from 11.9x to 11.0x EBITDA (McKinsey Global Private Markets Report 2025).

And surveys show 40% of GPs are willing to accept 5–10% haircuts just to unlock liquidity, while another 24% would accept 10–20% (EY Private Equity Pulse Q2 2025).

That repricing plays directly into growth equity’s sweet spot.

• Tech. Despite tech being one-third of deal value (Bain & Company Private Equity Outlook 2025), valuations have reset. For smaller funds, this means they can now buy $10–30M revenue SaaS or AI-enabled businesses at sane multiples instead of chasing frothy rounds.

• Healthcare. Deal value rose 17.7% YoY in 2024 after years of declines (Cherry Bekaert PE Report 2025 Outlook). Healthcare IT businesses at $10–50M EV are particularly ripe for growth equity.

• Japan & Europe. Sure, US mid-market may feel crowded, but global arbitrage pulls capital offshore. That leaves less competition at home for mid-sized deals.

I feel like these are the kind of valuation resets growth equity funds were built for.

Sector sweet spots

Not all companies will clear at the same pace that’s for sure.

Growth equity might want to focus on the profiles most likely to transact first:

• Industrial carve-outs. Half of all industrial deals involved strategics or carve-outs (Cherry Bekaert PE Report 2025 Outlook). Smaller corporate carve-outs often land right in the $25–150M EV band.

• Field services. HVAC, plumbing, electrical, pest control → fragmented markets with steady demand. These are classic roll-up plays where a $300M fund can lead consolidation.

• Professional services. The $2B Citrin Cooperman deal (Cherry Bekaert PE Report 2025 Outlook) shows what’s possible at scale, but there are dozens of $20–100M revenue professional services firms ripe for the same playbook.

• Energy infrastructure. Data center demand is lifting everything from power providers to specialized services.

The big picture: why this favours growth equity

The unwind is the biggest private equity dislocation since 2008.

Here’s why growth equity is structurally advantaged:

• Flexible capital. They can play where $10B mega-funds can’t.

• Operational edge. Value creation now matters more than financial engineering. Mid-sized businesses are where this plays out best.

• LP alignment. Shorter holds, faster distributions, realisable DPI: all vital for raising your next $300–500M fund.

• Global arbitrage. Large funds are pulled abroad. That leaves more room in the US mid-market.

• Patient timelines. Continuation vehicles and secondaries give liquidity while allowing for proper value creation.

Nearly three-quarters of PE firms now say their risk tolerance is above average (EY Private Equity Pulse Q2 2025).

That means deal activity is coming.

For smaller funds, the ability to move fast, write right-sized checks, and partner with management is a competitive superpower.

Final word

The $3.6 trillion overhang is not a disaster. It’s a big opportunity growth equity

Firms with the capital to act decisively, the operational expertise to create value, and the patience to play through the unwind will come out with premium assets at compressed valuations.

Sources

1. Bain & Company, "Private Equity Outlook 2025: Is a Recovery Starting to Take Shape?"

2. BlackRock, "2025 Private Markets Outlook"

3. Cambridge Associates, "2025 Outlook: Private Equity & Venture Capital," January 2025

4. Center for Economic and Policy Research (CEPR), "Private Equity's $3 Trillion Payout Problem," March 2025

5. Cherry Bekaert, "Private Equity Report: 2024 Trends & 2025 Outlook"

6. Chronograph, "GP-Led Secondaries: A Deep Dive," January 2025

7. CIO Investment Club, "Private Equity Secondary Market in 2025: Trends, Opportunities, and the Road Ahead"

8. Copia Wealth Studios, "GP vs LP Led Secondaries: Taking Control in 2025," June 2025

9. Crowdfund Insider, "Structural Growth in GP-Led Secondaries to Reshape PE Buyout Market," August 2025

10. EY, "Private Equity Pulse: Key Takeaways from Q2 2025"

11. Greenhill, "Global Secondary Market Review FY 2024," February 2025

12. Institutional Investor, "The PE Glut: A 'Towering' $3.6TR of Value Is Locked in 29,000 Unsold Companies"

13. Jefferies, "A Dramatic Shift in The Credit Secondaries Market – Continuation Vehicles Become Mainstream," July 2025

14. McKinsey & Company, "Global Private Markets Report 2025: Braced for Shifting Weather," May 2025

15. PwC, "Private Equity: US Deals 2025 Midyear Outlook"

16. PwC, "Private Equity Industry Issues 2025"

17. Rothschild & Co, "Growth Equity Update | Edition 35," February 2025

18. Secondaries Investor, "Continuation Vehicles Will Account for 20% of GP Exits in Coming Years," February 2025

19. State Street Global Advisors, "A Closer Look at Continuation Vehicles in Private Markets"

20. William Blair, "2025 Secondary Market Report," March 2025

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

The battleground? Memory.

For decades, most software was basically stateless.

Every time you logged in, you essentially started from scratch.

Now, AI systems are developing persistent memory. The ability to remember context across sessions, workflows, and even entire organisations.

And for the growth equity world this can be a real opportunity.

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Why memory is the new moat

We can just think back to the early days of SaaS.

The big winners (Salesforce, ServiceNow) didn’t just sell software.

They owned the workflow.

Once they became the system of record, it was nearly impossible to rip them out.

Now, memory-aware AI systems are building something even stronger: cognitive lock-in.

Every interaction makes the system smarter for that specific company. And over time, this creates a store of organisational intelligence that no competitor can easily replicate.

That’s why memory-native AI companies are starting to show retention rates north of 90%. That’s significantly higher than many infrastructure plays which often sit closer to 80–85% (SEG, Bessemer).

And investors are noticing.

In Bessemer’s State of AI 2025 report, they highlight “AI Supernovas” that scaled to $40M ARR in Year 1 and $125M in Year 2, trading at 20–50× fundraising multiples (though often with thin 25% gross margins) (Bessemer).

By comparison, average SaaS M&A multiples sat around 4–6× revenue in 2025 [SEG].

Visual of the functioning of a context-aware AI agent

The $100B validation

In 2024, AI startups raised $100.4B in funding. That’s a 58% increase over the prior year (CB Insights). And 2025 looks the same in terms of growth.

That’s not just hype.

It’s validation that enterprises see AI not as an experiment, but as core infrastructure.

The funding mix tells the story: 69% of dollars went into $100M+ mega-rounds, largely in capital-intensive infrastructure (CB Insights). But the most compelling growth equity opportunities may be at the application layer. Especially companies that use memory to embed themselves deeply in workflows.

Enterprises are also shifting their AI budgets too. Surveys suggest $13.8B in enterprise GenAI spend in 2024, with steeper growth happening now in 2025 (Menlo Ventures).

It was also interesting to find out that spending is moving from “innovation” budgets to central IT. And I think that’s a signal every investor looks for: when something goes from “nice to have” to “mission-critical.”

The technical edge

So what makes memory-aware systems special?

It comes down to architecture.

• Multi-layered memory (working, episodic, semantic, procedural) lets systems improve over time with every interaction.

• Model Context Protocol (MCP), now adopted by OpenAI, Anthropic, Google, and Microsoft, standardizes how context is preserved across tools (Reuters).

• RAG 2.0 (retrieval-augmented generation) allows AI to pull in only the most relevant context, cutting token usage dramatically. So vendors like Contextual AI report 10× faster answers with fewer resources compared to naïve full-context methods (NVIDIA, Contextual AI).

• And benchmarks like LOCOMO show that optimized memory systems can answer with ~67% accuracy at ~2 second latency, far better than full-context baselines (vendor-reported).

It’s also interesting to see that even the cloud giants are taking note.

Amazon Bedrock’s AgentCore Memory now offers configurable short- and long-term memory for enterprise agents (AWS).

The competitive landscape

The memory wars are splitting the market into two camps:

• Memory as plumbing: Infrastructure players like Vast Data are attracting crazy high valuations. In 2025, a funding round led by Alphabet’s CapitalG and Nvidia valued the company at up to $30 billion based on ~$200M ARR with projections to triple the following year (Reuters). These horizontal storage and retrieval platforms trade at high multiples but they do face commoditisation pressure as hyperscalers bundle vector databases and memory services directly into their cloud stacks.

• Memory as product: Application players like Hippocratic AI (valued at $1.65B) and Together AI ($3.3B) embed memory into industry-specific workflows like healthcare or inference optimisation (Healthcare Brew; PR Newswire). These achieve 95%+ logo retention, not because of integration costs, but because memory becomes irreplaceable context.

Switching costs come in layers:

1. Integration costs (infrastructure).

2. Workflow dependency (applications).

3. Cognitive entanglement (memory-native). That’s where losing the AI’s memory means losing part of your company’s brain.

Regulation and adoption tailwinds

Regulation will accelerate adoption, not slow it.

The EU AI Act comes into force in phases: bans on “unacceptable risk” systems began Feb 2025, GPAI model rules by Aug 2025, and most other provisions by Aug 2026 (EU Commission).

Within this ecosystem, memory-aware systems with audit trails and explainability will be best positioned.

And meanwhile, adoption of AI agents is accelerating.

Surveys suggest ~25% of enterprises will pilot AI agents in 2025, growing toward 50% by 2027. Gartner warns, however, that 40% of agentic AI projects may be canceled by 2027 due to weak evaluation frameworks (Gartner).

What to take from this

The cloud era created winners by owning workflows.

The AI era will create winners by owning memory.

This isn’t just incremental improvement. Memory turns AI from “useful tool” into “indispensable platform.”

Once your organisational intelligence lives inside a system, switching becomes unthinkable.

That’s why I call this the Memory Wars.

And for growth equity investors who spot the winners early, this could be the most significant value creation opportunity since the rise of the cloud.

Sources

• CB Insights, State of AI 2024 (AI startup funding: $100.4B, +58% YoY; mega-rounds 69%)

• Software Equity Group, Q2 2025 SaaS M&A Report (M&A multiples ~6.1× avg, ~4.2× median; vertical SaaS share 46%)

• Bessemer Venture Partners, State of AI 2025 (AI Supernovas: $40M ARR Y1, $125M Y2; 20–50× multiples; ~25% gross margins)

• Menlo Ventures, Enterprise GenAI Spending Survey 2024 ($13.8B spend, steep 2025 growth)

• Reuters (MCP adoption by OpenAI, Anthropic, Google, Microsoft)

• NVIDIA & Contextual AI (RAG 2.0 efficiency claims, vendor-reported)

• Mem0 (LOCOMO benchmark, vendor-reported results)

• AWS (Amazon Bedrock AgentCore Memory announcement)

• Healthcare Brew (Hippocratic AI $1.65B valuation, June 2025)

• PR Newswire (Together AI $3.3B valuation, 2025)

• EU Commission (AI Act timeline: Feb 2025, Aug 2025, Aug 2026)

• Gartner (40% of AI agent projects canceled by 2027 forecast; $644B GenAI spend in 2025)

• SEG SaaS Report 2025 (NRR correlation: 11.7× multiples >120% NRR; ~1.2× multiples <90%)

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

The home services platform's success wasn't driven by superior technology.

It was driven by superior consumer trend analysis.

I find this to be really quite interesting.

While most investors focus on software metrics and competitive landscapes, the most successful growth equity firms are analyzing something fundamentally different.

And the data I've analysed supports this framework conclusively.

The numbers don't lie

Vertical SaaS funding reached $11.8 billion across 675 deals through July 2025 (Tracxn). That represents a 14.33% increase from the same period in 2024 (Tracxn).

But here's the really interesting part: private SaaS companies are commanding median revenue multiples of 4.1x compared to 2.6x for all software deals (Software Equity Group).

That’s a 57% premium that reflects superior market positioning.

Why does this premium exist?

Well these companies understand something crucial: consumer trends create service industry expansion, which in turn generates specialised software demand.

It's a predictable chain reaction that smart investors have learned to spot early.

The pattern behind every vertical SaaS winner

The pattern is systematic across successful vertical SaaS investments.

Let me show you what I mean:

Toast achieved $1.6 billion in annual recurring revenue (Toast Inc. filings) by riding food culture digitisation.

Because they didn't just build restaurant software. They caught the wave of consumers demanding better dining experiences.

Procore captured construction modernisation driven by labor shortages, reaching $982 million in revenue (Tracxn).

And as skilled workers became scarce, construction companies desperately needed software to maximise efficiency.

ServiceTitan caught millennial homeownership expectations for digital experiences. This basically led to its December 2024 IPO at $71 per share when it opened at $101 for an $8.9 billion market cap (CNBC, Bloomberg).

When millennials started buying homes they expected the same digital convenience they got everywhere else.

Notice the pattern?

Each company identified consumer behaviour shifts 2-3 years before software demand became obvious to everyone else.

This timing advantage proves critical for market dominance.

How the consumer-to-B2B cycle works

The consumer-to-B2B framework operates on predictable cycles.

It works like this:

1. Consumer behaviour changes first.

2. Service industries expand in response.

3. Then specialised software demand follows.

Understanding this sequence gives you a massive competitive advantage.

Current consumer trends indicate significant opportunities ahead if you know how to read the signals.

Reading the signals: Current consumer trends creating software opportunities

→EV adoption is driving ADAS calibration software demand.

Here's why this matters: 99 million ADAS-equipped vehicles are projected to grow to 210 million by 2030 (Northzone). And nearly every single windshield replacement requires software-managed recalibration.

That's a massive, recurring revenue opportunity most investors haven't recognized yet.

→Aesthetic procedures represent part of >$1.8 trillion in global wellness spending (McKinsey).

As consumers normalise cosmetic treatments, new practices proliferate monthly.

And each one needs specialised management platforms as consumer preferences shift toward personalised beauty and wellness solutions.

→The self-reliance revolution is also equally compelling.

Recent surveys by companies like Beyond Finance (via Talker Research) show that a majority (74%) of Americans currently manage their own finances, and 76% say they aim to improve their financial self‑management.

This reflects a growing shift toward individual control over personal well‑being.

Which in turn drives expansion in personal service businesses, things like nutrition coaches, financial advisors, wellness practitioners.

And all require specialised software platforms.

Each of these represents a consumer behavior shift creating B2B software demand.

How the smartest firms deploy this framework

I feel like Vista Equity Partners exemplifies institutional adoption of this framework.

They’ve got over $100 billion in assets under management and 85+ enterprise software companies (Vista Equity Partners).

And their strategy is to prioritize "mission-critical software" that owns workflow control points in expanding industries.

Their portfolio demonstrates this consumer trend thesis perfectly.

Companies that control point-of-sale systems, practice management platforms, and industry-specific CRMs achieve superior retention and expansion metrics.

This position is so powerful because once vertical SaaS companies own workflow control points, switching costs become prohibitive for customers.

You literally can't run your business without their software.

The numbers prove this defensibility. Vertical SaaS accounted for 46% of all SaaS M&A activity in Q2 2025, up from 40% the year prior (Software Equity Group), as buyers prioritised sector-specific solutions with embedded workflows and strong retention dynamics.

This evolution from software to workflow ownership creates sustainable competitive advantages that horizontal software can't replicate.

AI multiplies the opportunity

AI acceleration expands the opportunity set dramatically.

Here's the scale we're talking about: Vertical AI is targeting $11 trillion in US labor spend versus $450 billion in traditional enterprise software markets (Medium/Included VC).

That represents a fundamental expansion in addressable market size.

What does this mean practically?

Well previously "too small" industry categories become viable for growth equity investment. The technology enables expansion into 600+ new vertical opportunities (Andreessen Horowitz) where AI-enabled labor replacement increases addressable markets by 10x.

Applied correctly, AI allows vertical SaaS companies to capture 25-50% of employee value rather than traditional 1-5% software penetration.

Market sizing methodology must account for this technology-driven expansion.

The embedded fintech accelerant

There's another multiplier effect happening simultaneously.

The embedded fintech opportunity reached $36.87 billion in North America in 2024, growing at 31% CAGR through 2034 (Open Ledger).

This enables vertical SaaS companies to increase revenue per customer 2-5x through integrated financial services (Open Ledger).

Think about what this means.

Instead of just selling software, these companies become the financial backbone of entire industries. They process payments, provide lending, manage accounting - becoming impossible to remove.

Timing investments

Investment timing follows consumer trend development phases.

Here's the optimal sequence:

Years 1-2: Early consumer adoption, limited service industry response.

Years 2-5: Service business proliferation, optimal software investment window.

Years 5+: Market maturation, consolidation opportunities.

ServiceTitan's 2013 founding to 2024 IPO timeline exemplifies this pattern (TechCrunch, Bessemer Venture Partners).

Early investment captured the entire home services digitisation wave before horizontal software giants recognised the opportunity.

The framework provides systematic deal sourcing methodology.

Rather than reactive market analysis, consumer trend monitoring enables proactive opportunity identification.

Current market dynamics validate the approach

The M&A market also reflects this strategy's success.

SaaS M&A volume set a new high with 637 transactions in Q2 2025, marking the most active period on record (Software Equity Group), while the average revenue multiple climbed to 6.1x. That’s the highest since early 2023 (Software Equity Group).

These aren't random market movements.

They reflect much more a systematic adoption of consumer-driven investment strategies.

Emerging opportunities to watch

Current data indicates several emerging opportunities developing right now.

→The aging workforce creates disability services software demand as 10,000 baby boomers retire daily (McKinsey). That's creating massive demand for specialised care coordination software.

→On another front, climate consciousness is driving sustainability consulting platforms as 72% of consumers participate in circular economy activities (McKinsey).

Businesses need software to manage and report on their sustainability initiatives.

→One more opportunity can be found in the mental health normalisation which is expanding therapy practice management needs.

As therapy becomes as normal as going to the dentist, the practice management software market explodes.

Each likely represent multi-billion dollar software categories in development.

Performance metrics that matter

The investment thesis extends beyond individual opportunities.

Consumer trend analysis provides portfolio construction methodology for vertical SaaS allocation.

Here's what the performance data shows:

Companies achieving over 120% net revenue retention command median multiples of 11.7x, while those below 90% trade at just 1.2x (Tidemark Capital).

That performance differential drives premium valuations.

So it's not only growth but also very much about the quality of that growth.

The founder advantage

Execution requires authentic industry expertise.

The most successful vertical SaaS companies will demonstrate "earned insights" through founder background or team composition.

Toast's founders pivoted from mobile payments to restaurant platforms after recognising food culture digitisation trends, growing from $10 million revenue in 2014 to current billion-dollar scale (CNBC).

Authentic expertise combined with consumer trend awareness creates the optimal investment profile.

You can't fake deep industry knowledge, and horizontal software giants can't replicate founder-market fit.

What this means for growth equity strategy

The implications for growth equity strategy are significant.

Traditional software market analysis misses consumer-driven opportunities until competitive positioning becomes established.

Global venture funding reached $371 billion in 2024, with 33% directed to AI companies (Sapphire Ventures).

But some of the highest returns come from identifying consumer-driven vertical opportunities before they become obvious.

Firms that develop sophisticated consumer behavior analysis capabilities will capture disproportionate returns.

ServiceTitan's IPO success validates the thesis at scale.

Consumer trends predict B2B winners.

The methodology is proven, scalable, and systematically deployable.

The question is implementation speed relative to market recognition.

The firms that master this framework first will dominate vertical SaaS investing for the next decade.

Sources:

• Tracxn, "Vertical SaaS - 2025 Market & Investments Trends"

• Software Equity Group, "SaaS M&A and Public Market Report," Q2 2025

• Toast, Inc. financial filings and Crunchbase data

• Procore company reports and Tracxn analysis

• CNBC, "ServiceTitan starts trading on Nasdaq after IPO," December 2024; Bloomberg IPO coverage

• Northzone, "Perspectives: The Future of Vertical SaaS Comes from Consumer Trends,"

• McKinsey & Company, "The Future of Wellness trends survey 2025"

• McKinsey & Company, "State of the Consumer 2025: When disruption becomes permanent"

• Vista Equity Partners company information and portfolio data

• Software Equity Group, "SaaS M&A and Public Market Report," Q2 2025

• Medium/Included VC, "The Next Trillion-Dollar Opportunity: Why Vertical AI is the Future of SaaS"

• Andreessen Horowitz, "AI Inside Opens New Markets for Vertical SaaS"

• Open Ledger, "North-American Embedded Fintech Market in 2025"

• TechCrunch ServiceTitan funding history and Bessemer Venture Partners IPO analysis

• Software Equity Group, "SaaS M&A and Public Market Report," Q2 2025

• McKinsey consumer behavior research and Global Banking and Finance trend analysis

• Tidemark Capital, "2024 Vertical & SMB SaaS Benchmarking Report"

• CNBC, "Toast built a $30 billion business by defying Silicon Valley," 2021; company growth data

• Sapphire Ventures, "The State of the SaaS Capital Markets: 2024 in Review, 2025 in Focus"

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

We're talking about minority stakes in proven, scaling companies with real revenue.

While headlines focused on mega-acquisitions and AI infrastructure plays, the real growth equity action happened in the $100M-$1B range.

And these deals offer lessons we can actually use.

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General Atlantic's $500M double-down strategy

General Atlantic had the half of the decade and led two massive Series rounds.

1. Nerdio: $500M Series C at $1.2B valuation (Bloomberg)

This Microsoft Azure automation play hit all the growth equity sweet spots:

• $100M+ ARR (General Atlantic)

• 6,000+ managed service provider customers (General Atlantic)

• Clear network effects in the Microsoft ecosystem

Lead Edge Capital and StepStone Group joined the round. More examples of how top-tier firms increasingly syndicate mega-deals.

Nerdio dominates a technical niche (Azure Virtual Desktop management) that's incredibly sticky.

Once MSPs deploy Nerdio, switching costs are massive.

Plus, every new customer they onboard creates more value for existing customers through network effects.

2. Insider: $500M Series E at $12B valuation (General Atlantic)

This Turkish marketing platform proves European SaaS can command Silicon Valley valuations:

• $200M+ ARR serving 1,200+ enterprise customers (General Atlantic)

• AI-powered personalization platform

• Clear path to US market expansion

The bigger lesson we can take from this is General Atlantic is betting that vertical SaaS leaders with proven unit economics can scale internationally faster than ever. The pandemic proved remote sales work, and European companies can now access global markets without physical presence.

Grammarly's $1B growth round signals AI premium

Grammarly closed a $1B growth financing after acquiring AI email platform Superhuman. (SaaStock)

The combined platform serves 30M+ daily active users with AI-powered writing and email tools. (SaaStock)

This wasn't a traditional Series round but growth capital to fund M&A and product expansion.

Grammarly is consolidating the AI productivity stack.

Instead of competing with adjacent tools, they're buying them and creating a suite.

This deal is proof that the AI premium is very much real. Grammarly's user base has grown as AI writing tools moved from nice-to-have to essential for many professionals.

The SaaS infrastructure winners

ClickHouse: $350M Series C at $6B valuation for real-time analytics infrastructure. (SaaStock)

The company serves data-intensive companies like Uber and eBay and commanded a premium valuation.

In part because ClickHouse has consumption-based pricing that scales perfectly with customer success.

So when clients process more data, ClickHouse makes more money - it's the holy grail of SaaS economics.

Glean: $150M Series F at $7.2B valuation for AI-powered enterprise search. (SaaStock)

The insight from this deal is Enterprise AI applications with clear productivity metrics and fast payback periods are justifying premium multiples.

Glean customers can measure exactly how much time they save searching for information - that's tangible ROI.

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European growth equity's breakout moment

B2B SaaS in Europe raised €5.2B in H1 2025, matching deeptech as the top-funded sector. (Sifted)

Key deals included:

• Tines: $125M Series C for AI-powered security workflow automation

• Parloa: $120M Series C for AI agent management platforms

Europe is suddenly gaining in competitiveness.

One of the reasons is that GDPR compliance creates natural moats for European companies, while strong engineering talent provides cost advantages compared to Silicon Valley.

American investors also seem to be waking up to European opportunities. US growth equity firms participated in 20.4% of European deals (up from 19.1% in 2024). (Tech.eu) American investors are waking up to European opportunities.

The IPO exits that proved the model

Hinge Health: $437M offering in May (CNBC)

The numbers that mattered:

• Priced at $32, opened at $39.25 (CNBC)

• $3B market cap (CNBC)

• Profitable operations with strong unit economics

Growth equity winners were Andreessen Horowitz and General Catalyst which delivered strong returns despite the company pricing below its $6.2B private peak.

I guess the reality check here is that Public markets are demanding discounts from private peak valuations, even for profitable companies.

But growth equity investors who entered early are still generating solid returns.

Omada Health followed with a $150M NASDAQ debut in June. (CNBC)

Both digital health IPOs proved that growth equity's focus on unit economics translates to public market success.

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The vertical SaaS consolidation play

Vista Equity Partners acquired Acumatica for $2B from EQT Partners. (Bloomberg)

This shows the growth equity evolution:

• EQT invested as minority growth capital

• Built the company to significant scale with 8,000+ customers (Bloomberg)

• Vista paid $2 billion for the cloud ERP platform (Bloomberg)

It matters because it shows there seems to be a winning formula in vertical software platforms with high retention.

EQT turned a minority growth investment into a massive buyout exit by focusing on operational excellence.

The minority growth capital that actually moved needles

Several growth equity deals also delivered meaningful scale:

Linear hit $1.25B valuation for software development workflow tools with product-led growth and viral adoption among engineering teams. (SaaStock)

Owner reached $1B valuation for restaurant marketing software serving restaurant locations with AI-powered customer engagement.

Ramp closed $200M Series E at $16B valuation for AI-powered financial operations.

The pattern here is this: These companies found narrow, defensible niches and dominated them. Linear owns developer workflows.

Owner owns restaurant marketing. Ramp owns CFO workflows.

Narrows niches win because in a crowded market, being the best at something specific beats being okay at everything.

What made these deals work

Looking across H1's biggest growth equity successes, three patterns emerge:

1. Proven Unit Economics at Scale Every major deal had clear path to profitability with $50M+ ARR and improving margins. Growth equity investors learned from the 2021-2022 correction - growth without economics doesn't work.

2. AI Integration That Drives Value Companies using AI to improve customer outcomes commanded higher multiples than traditional software. The key is demonstrable customer value, not just AI features.

3. Vertical Market Leadership Platforms dominating specific workflows justified higher multiples than horizontal plays. Why? Because it's easier to defend a narrow market you dominate than compete in a broad market with many players.

The sector winners and losers

Traditional growth equity sectors performed very differently:

Winners:

• Enterprise software infrastructure (data, security, workflow)

• Vertical SaaS with regulatory moats (healthcare, financial services)

• AI-enhanced productivity tools with proven ROI

Laggards:

• Consumer fintech without clear differentiation

• Horizontal collaboration tools facing saturation

• Pure-play AI without proven monetization

Growth equity is rotating toward B2B software with defensible positions and clear customer value. Consumer plays and horizontal software are struggling.

The Bottom Line

H1 2025 proved growth equity's core thesis: minority capital in scaling, profitable software businesses generates superior returns.

The winners weren't chasing AI infrastructure or consumer viral growth.

They backed proven B2B platforms with:

• Defensible market positions

• Strong unit economics

• Clear paths to $1B+ revenue scale

That's the growth equity playbook that actually worked in H1 2025.

And it will probably be the one that will continue to work in H2 and 2026.

Sources: Bloomberg, General Atlantic, SaaStock, CNBC, Sifted, Tech.eu

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

Same ARR. Same growth rate. Same gross margins.

One trades at 6x revenue, the other at 4x.

The difference? One's in San Francisco, the other in Stockholm.

If you think this is just market inefficiency waiting to be arbitraged, think again.

European SaaS companies have traded at a persistent discount to US peers for over a decade. And in 2025, that gap is widening again.

Let’s look into why that is and what it means for growth equity investors, managers and founders alike.

Let's start with the hard numbers

Here's what caught my attention:

The CEE SaaS Index closed Q1 2025 at 3.65x revenue multiple, while US SaaS companies ended at 6.26x. Meaning US SaaS companies are trading 1.7x higher than CEE peers [CEE SaaS Index, Vestbee].

And this isn't some weird quarterly blip.

When you look at the historical data, US SaaS companies have consistently commanded higher multiples, with the ten-year median sitting at 5.5x for US companies versus 4.8x globally [SaaS M&A Report 2025, Software Equity Group].

What's particularly interesting I think is how the gap has evolved. While US multiples experienced dramatic volatility from 2020-2022 (spiking near 19x before crashing back down), CEE multiples remained relatively stable in the 3-4x range throughout the entire cycle.

Another interesting point is this: while the ten year (2015-2024) median revenue multiple for SaaS firms was 4.8x globally, in the United States sample set, it was 5.5x.

And while the ten year (2015-2025) median EBITDA multiple for SaaS firms was 22.4x globally, in the USA it was 32.1x [SaaS M&A Report 2025, Software Equity Group].

Even when you factor in recent convergence trends, the gap remains structurally significant.

Don't buy into the convergence hype just yet

You've probably heard the narrative about US-Europe valuation convergence, and yes, there are some interesting examples.

SAP recently overtook Salesforce in revenue multiples after years of trading at a 100% discount [2025 SaaS Valuations Outlook, Aventis Advisors].

But before we get excited about convergence, here's the reality check: Following a recent period of convergence between public US and European SaaS valuations, listed US SaaS companies are now valued at a 20%-40% premium over their European counterparts [European SaaS Report 2024, GP Bullhound].

What does this mean for you as a growth equity investor?

You're looking at fundamentally different pricing realities for European targets versus US comparables.

This isn't a temporary discount you can arbitrage away → it's structural.

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Five reasons why this discount isn't going away

Let’s look into the structural forces creating this persistent gap.

Truth is these aren’t temporary headwinds.

They're really built into the fabric of how European SaaS companies have to operate.

1. Market fragmentation is a real pain

I find this to be a particularly interesting point.

Unlike the US (a unified market, a single set of regulations, and a common language), Europe is anything but consolidated.

It has varying SaaS penetration rates, a wide variety of payment method preferences, 24 different language barriers, and a ton of compliance regulations, invoicing regulations, and security norms [Essential SaaS Market Insights for European Market, BrainDonors].

Think about what European SaaS companies actually face:

• Localisation costs that never end: Every market requires different compliance (Italy's e-invoicing, Germany's upcoming requirements), payment methods, and cultural adaptation. In the mosaic of cultures that is Europe, localisation isn't just nice-to-have - it's a must and it goes beyond just translation to adapting software to meet local regulations, using local payment methods, and meeting local user experience expectations [Essential SaaS Market Insights for European Market, BrainDonors]

• Higher customer acquisition costs: While the B2B SaaS industry maintains the lowest average CAC among industries monitored at $239 combined average, European companies often exceed this due to market fragmentation [Average Customer Acquisition Cost by Industry, Vena]

• Smaller addressable markets per country: Many smaller software businesses are local and difficult to scale (e.g. cloud accounting software in European countries) [SaaS Valuation Multiples: 2015-2025, Aventis Advisors]

The operational leverage that drives those SaaS premiums simply don’t exist at the same scale in fragmented European markets.

2. The capital access story is brutal

Let's be honest about the funding environment.

Pre-seed and seed funding in Europe is on track for an 18% year-over-year decline in 2025, while Europe's VC market remained flat at $12.6 billion, capturing just 11% of global capital, down from 16% in 2024 [Europe's AI SaaS Startups in 2025, Development Corporate].

This creates a compound problem:

• Growth rates that lag behind: CEE SaaS companies recorded a 9.93% median revenue growth rate, compared to 17% in the US [CEE SaaS Index, Vestbee]

• Extended private market cycles: European companies bootstrap longer and scale more conservatively

• Different risk appetite: The European VC landscape has become more cautious, with average fund sizes decreasing and larger funds gaining prominence [12 Most Active Venture Capital Firms in Europe in 2025, Visible.vc]

For GE investors, this means companies reach your stage with different risk-return profiles: lower growth rates and longer payback periods.

3. Exit markets are structurally tough

I recently learnt that the median age of European firms going public has surged to 29 years in H1 2025. From just 13 years in 2021. That's the "private for longer" trend hitting Europe way harder than the US [EY Global IPO Trends Q2 2025].

And when we dig into the exit reality, it gets worse:

• All roads lead to the US: Software companies are predominantly listing in the US and Japan, with the US's volumes more than doubling compared to H1 2024 [EY Global IPO Trends Q2 2025]

• The great flip phenomenon: Point Nine Capital found that 30% of SaaS companies flip to the US for better exit opportunities [The State of Vertical SaaS in Europe, Point Nine Capital]

• European IPO markets are struggling: European IPO activity declined in both measures, with deal volumes down 15% YOY and proceeds falling 58% YOY to US$5.9b [EY Global IPO Trends Q2 2025]

This exit discount gets priced in from day one and affects private market valuations throughout the entire growth cycle.

So it’s not a bug, it really is a feature of the European market structure.

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4. The talent crunch is real

This one might surprise you: European VC landscape has become more cautious, with increased caution and selectivity, and investors emphasizing differentiation, strategic alignment, and transparency. European startups face challenges with access to capital remaining limited, with fewer local investors available in many markets [12 Most Active Venture Capital Firms in Europe in 2025, Visible.vc].

Here's what European companies are dealing with:

• Geography still matters: Time zones remain a big issue, with talent concentration being a structural barrier. Remote working helps but doesn't eliminate geographic constraints [European SaaS Report 2024, GP Bullhound]

• Competition is fierce: European tech companies are facing significant talent acquisition challenges, with specialised roles becoming increasingly competitive [European SaaS Report 2024, GP Bullhound]

• Scaling gets expensive fast: European SaaS companies need to demonstrate superior unit economics to compensate for growth rate disadvantages - with operational efficiency becoming critical [European SaaS Report 2024, GP Bullhound]

This creates operational drag that shows up directly in unit economics and scaling efficiency. The exact metrics that drive GE-stage valuations.

5. Regulatory complexity never stops

And then there's the regulatory maze.

The European regulatory environment creates ongoing operational complexity that US companies simply don't face:

• GDPR isn't going away: Mandatory data protection measures that increase operational overhead [12 Most Active Venture Capital Firms in Europe in 2025, Visible.vc]

• New regulations keep coming: The EU AI Act, which came into effect in 2024, imposes strict compliance demands on startups developing AI systems [Europe's AI SaaS Startups in 2025, Development Corporate]

• Every country is different: Each country maintains different invoicing, tax, and business practice requirements. Expanding SaaS businesses therefore need to pay close attention to localisation of every aspect including pricing, app interface, landing pages, invoices, and compliance with varying payment preferences and security regulations [Essential SaaS Market Insights for European Market, BrainDonors]

This regulatory burden shows up as margin compression and slower scaling. Those are two factors that directly depress multiples at the growth equity stage.

So what does this mean for a growth equity Strategy?

If you're an investor:

Get your pricing discipline right: European targets should trade at a structural discount to US comparables. Unfortunately that 20-40% discount isn't a buying opportunity you can arbitrage. It's actually fair pricing for the structural constraints we just discussed.

Focus on the operational story: Look for European companies that have already cracked the localisation and regulatory code. These create genuine competitive moats that can justify premium pricing within European benchmarks.

The exit strategy matters more than you think: Companies with clear US expansion plans or flip strategies deserve premium consideration. The path to those premium exit valuations almost always runs through US market access.

If you're working with portfolio companies:

Think US expansion early: European SaaS companies face brutal hiring costs in the United States. That actually makes offshore teams in Latin America an effective strategy for bridging to US market access [Cost-Effective Expansion: European SaaS in the US, Interfell].

Operational efficiency isn't optional: European companies need to demonstrate superior unit economics to compensate for growth rate disadvantages. ARR per FTE is approaching €150k for growth-stage companies. That’s a metric that directly impacts valuations [European SaaS Report 2024, GP Bullhound].

Turn regulatory pain into competitive advantage: Companies that transform compliance complexity into moats (healthcare IT, fintech) will be able to command premium multiples within European benchmarks.

Here's why European GE might actually be interesting right now

Here's something that caught my attention: GP Bullhound conducted a survey and noticed that half of companies surveyed are now EBITDA positive which is proof of the continued emphasis on capital efficient growth. Public market SaaS valuations are now also above the three-year average with a renewed focus on profitable growth [European SaaS Report 2024, GP Bullhound].

European SaaS is actually perfectly positioned for this efficiency-focused environment.

Companies that have survived the regulatory complexity, market fragmentation, and capital constraints often emerge with stronger unit economics and more sustainable business models.

The multiple discount isn't disappearing but it's creating genuine opportunity for investors who understand how to underwrite European operational excellence against US growth premiums.

Sources: CEE SaaS Index (Vestbee), Software Equity Group 2025 Annual SaaS Report, Aventis Advisors Software Valuation Multiples 2015-2025, GP Bullhound European SaaS Report 2024, EY Global IPO Trends Q2 2025, PitchBook Q1 2025 European Venture Report, Point Nine Capital research, Development Corporate AI SaaS report, BrainDonors European SaaS Market Insights 2025, Visible.vc VC analysis

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

One framing stat is this: US venture capital fundraising rose 2.6× YoY to $121B in H1 2025, already above all of 2024’s $111B.

That’s capital formation (not deployment) but it suggests dry powder isn’t the constraint.

The more interesting story is where capital actually showed up.

And in H1 it seemed to concentrate squarely in growth equity’s strike zone.

Where capital actually landed in H1 (and why that seems helpful)

After AI (~$75B invested), the largest US growth-stage flows I saw were Software (~$6.7B), Biotech (~$5.7B), and Fintech (~$4.7B).

These are revenue-generating categories with clear buying centres and measurable ROI.

Very aligned with typical GE mandates.

A representative datapoint: Nerdio raised a $500M Series C led by General Atlantic, reportedly at $1B+ valuation with $100M+ ARR. That pattern of proven model, real scale, minority growth capital popped up a lot in H1.

This matters because late-stage VC still crowds into AI infra with uncertain monetisation, and buyouts can struggle to make control pricing work without leverage.

GE seems to win the middle: durable software/tech with clear payback and room for operating lift.

Exits: the cleanest window in a while

H1 tallied ~215 significant exits totalling ~$308B, the best since H1 2022.

Corporate buyers looked active, and some sponsors showed pricing flexibility to move long-held assets.

Year-to-date global M&A approached ~$2.6T, roughly 28% above a year ago.

All this despite the macro noise.

What this suggests is a 3–5 year GE horizon aligns neatly with strategics’ return.

Where some control sellers reportedly accepted 5–10% haircuts for speed, GE can potentially lean on operational compounding + multiple normalisation into a healthier buyer universe.

Pricing reality: what felt useful for underwriting

• Broad market context: global EV/EBITDA ~9.6×; EV/Revenue ~1.6×

  Thats off post-COVID peaks, roughly in line with 2017–2019.

• Private software: entry bands looked stable; the more actionable point (to me) isn’t the headline multiple as much as how quickly the operating plan earns it. With conversion, retention, and unit-economics moves inside 12–18 months.

A simple guardrail I found helpful: look for convincing payback math (CFO-level).

If the bridge from today’s unit economics to exit-ready metrics in 24–36 months isn’t clear, the price, whatever it is, may be optimistic.

Price matters less than the plan that earns it in 12–18 months.

IC checklist:
-Payback ≤12m
-Burn multiple ≤0.4
-NRR path +15–25%
-Diligence-ready in 12–24m.

The ops levers I kept hearing about in H1 (target ranges)

These are operator targets I saw cited repeatedly in successful plans (directional ranges, not market medians):

• Revenue Operations: pipeline conversion +20–30% via stage hygiene, SLAs, enablement

• Customer Success: NRR +15–25% with proactive health scoring and expansion plays

• Go-to-Market efficiency: $500K+ ARR per productive rep; CAC payback ≤12 months on core segments

• Product-Led Growth: trial-to-paid +40–60% with activation gating, in-product nudges, pricing/packaging tests

• Burn multiple: ≤~0.4 at $20–100M ARR as a “GE-ready” efficiency bar

These levers tend to be faster than new product bets and less market-sensitive than across-the-board price increases.

Which may be why they showed up so often in H1.

Minority structures: more tool than talking point

Minority deals seemed to continue outperforming because they avoid auction dynamics and control premiums, preserve founder energy, and keep leverage modest.

What stood out in H1 wasn’t the structure by itself, but what the structure enabled:

• Quicker close with focused value-creation plans

• Follow-on flexibility (structured rights) without over-capitalising

• Board cadence that favours an operating rhythm over heavy governance

A useful self-check I heard from a few teams:

Software still the engine and what is being favoured now

• Vertical SaaS with regulatory/workflow moats (pricing power + expansion vectors)

• Enterprise infrastructure tied to unavoidable budgets (security, governance, cost observability)

• Healthcare IT where compliance + productivity keeps spend durable

• AI-enhanced applications (not infra) with measurable lift and fast paybacks inside existing workflows

If a buyer can’t point to a P&L line item improving within two quarters, it’s probably not a GE fit at today’s prices.

Questions to ask over the next 90 days

• Exit-readiness: are there businesses that can be diligence-ready within 12–24 months, so a 3–5 year hold lines up with a strategic buyer’s playbook?

• Ops cadence: are monthly pipeline councils, quarterly pricing tests, CS expansion motions, and BI cleanliness embedded, not episodic?

The bottom line for the rest of 2025 and 2026

H1 points to a constructive set-up: ample capital, re-opened exits, rational pricing, and a market that seems to reward operational value creation over financial engineering.

The teams that seem to be doing well are combining sector focus with operator-grade execution plans.

And resisting the urge to “win” by price alone.

The window looks open. The data suggests it.

Whether it stays that way into 2026 is the part I’m watching.

Sources (selection): Rothschild & Co Growth Equity Update (Edition 40); EY Private Equity Pulse Q2 2025; General Atlantic (Liftoff) release; Morgan Stanley Private Equity Outlook 2025; Valuation Research Corp 2025 Mid-Year Market Trends; SaaS Capital 2025 Private Company Valuations; Capstone Partners Equity Capital Markets Update; McKinsey Global Private Markets Report 2025.

Disclaimer: This note is for information only and isn’t investment advice. Figures are from sources believed reliable, but accuracy isn’t guaranteed. Opinions are the author’s and may change.

While early-stage venture capital retrenches and traditional buyout multiples compress, growth equity is quietly stepping into its best environment in years.

Q1 2025 late-stage funding surged 147% YoY to $81B, while Series B deals grew 9.1% and Series C rounds 17.2% in 2024.

But here’s one of the real shifts: growth equity firms aren’t just competing with late-stage VC anymore.

They’re redefining the late-stage category itself and writing $25–75M minority checks into companies that VC can’t fund and buyouts can’t afford.

The result?

I think of it as a renaissance built on minority stake strategies, operational depth, and perfect timing.

Here’s what investors should pay attention to heading into the last quarter of 2025.

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Late-stage surge creates growth equity's golden moment

Q1 2025 late-stage investment hit $81B. It’s up 30% QoQ and 147% YoY (Crunchbase).

Meanwhile, early-stage fell to $24B, its lowest in five quarters. Seed dropped 14% to $7.2B.

Valuations have also reset to rational levels. SaaS Series B medians rebounded to ~$168M (+20% YoY), Series C stabilised at ~$225M → still well below the 2021 peak of $320M. SaaS multiples now sit at 6–7× ARR, down ~60% from bubble highs (SaaS Capital Index).

That matters because round sizes now line up perfectly with GE checkbooks. A $168M Series B raising 15–25% dilution = $25–40M round sizes. And that’s right in the $25–75M GE sweet spot (PitchBook 2024 SaaS Benchmarks).

At the same time, the so-called “Series A crunch” is widening the funnel. Median Series A companies now need $2.5M in ARR - a 75% jump from 2021 - which leaves a funding gap that growth equity is uniquely positioned to fill (GoElastic).

Capital is concentrating exactly where growth equity operates: proven companies that need fuel to scale.

Minority stake investments become the new playbook

2025 has proven what many GPs already suspected: minority deals aren’t just a side strategy.

They’re the growth equity playbook.

• General Atlantic took a $4.3B minority stake in Liftoff (May 2025) alongside Blackstone.

• Partners Group backed Akur8 ($120M Series C, France) and Neara ($31M Series C, Australia) → both minority investments.

Minority deals now make up 18% of total PE value, the highest on record. And growth equity as a segment has doubled since 2016 to nearly $920B (Financier Worldwide).

LPs are reinforcing the model. McKinsey’s 2025 LP survey shows 30% of institutions plan to increase PE allocations. Secondaries and private credit are pacing tools, but LPs are explicitly keeping (and even growing) exposure to growth equity (McKinsey, Coller Capital).

Why it works now:

• Avoids auction premiums of buyouts

• Requires little debt in a high-rate environment

• Keeps founders aligned and engaged

• Offers lower risk than early-stage VC bets

Median growth equity IRRs sit at 13–15%, ahead of VC (11–12%) and rivaling buyout. But with lower volatility.

Minority GE is gaining even more traction as it perfectly balances founder alignment, capital efficiency, and LP return expectations.

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Growth equity vs late-stage VC: the lines are blurring

Both GE firms and late-stage VC are chasing companies at $10–100M revenue.

But growth equity is winning on differentiation:

• Operational expertise vs. VC’s pure capital

• Patient hold periods vs. VC’s fund timeline pressures

• Minority flexibility vs. VC’s ownership push

• Proven business models vs. VC’s earlier-stage bets

Level Equity exemplifies this duality.

They move between minority and majority investments in lower-middle-market software while leaning heavily on operating playbooks.

The translation is this: GE thrives where execution matters more than hype.

AI and vertical software drive growth equity returns

AI dominated funding in Q1 2025, reaching $60B (53% of global venture) (CB Insights).

But growth equity firms aren’t chasing foundation models.

They’re doubling down on verticalized, applied AI.

• Vertical SaaS > horizontal: In 2024, vertical SaaS grew 31% YoY vs 28% for horizontal. At scale ($50M+ ARR), 25% growth now marks top quartile, but vertical SaaS + AI companies consistently outperform (SaaS Capital 2025, High Alpha/OpenView).

• Sector breadth widens: fintech infrastructure, climate/energy SaaS, and healthcare automation are all seeing GE capital flow.

Recent deals illustrate this:

• PSG in Studycast (healthcare AI)

• Susquehanna in Realync (real estate SaaS)

• Partners Group in Akur8 (insurance pricing AI)

The most durable GE returns sit at the intersection of AI + vertical SaaS.

Because that’s where adoption is faster and multiples more defensible.

Exit environment favours growth equity holdings

For GE-backed companies, liquidity is finally back.

• Q1 2025 M&A exits hit $71B, the strongest since 2021 (+26% YoY). Q2 added $50B, with 18 billion-dollar-plus acquisitions (Crunchbase).

• IPOs are reopening → 2025 is shaping up as the return of the public markets (Allvue).

In this environment, GE portfolios sit right at the revenue scale ($50–200M) that strategics and IPO markets are targeting first.

Geographic arbitrage in growth equity

• Europe: $12.6B in Q1 2025 venture (flat YoY), only 11% of global vs. 16% last year. Late-stage lagging the US, leaving valuations lower and competition lighter (Crunchbase).

• US: Capital is surging, but competition is fierce.

• Asia: Mixed. Overall down ~33% YoY, but India is a bright spot with $14.8B PE-VC in H1 2025, $3.6B of which went to growth stage (Crunchbase).

US is crowded, Europe is undervalued, India is selectively booming.

Smart GE firms are tilting toward both.

What this means for managers, founders and growth equity professionals

The winners in 2025 are the firms that:

• Specialise in verticals (healthcare AI, fintech infra, climate SaaS)

• Offer operating depth, not just capital

• Target $10–100M revenue companies beyond VC’s reach but below buyout scale

• Provide founder-friendly minority options

At the same time:

• Repricing = opportunity: 30% of firms renegotiated deals in Q2 (EY) - disciplined GE funds are buying quality at discounts.

• Rates favor GE: With interest rates stable but elevated, GE’s low-leverage model beats debt-heavy buyouts.

• LP flows confirm it: 26% of global institutions plan to increase GE allocations in 2025. That’s the sharpest rise among private market strategies.

The conclusion

Growth equity is redefining late-stage investing.

• Late-stage funding up 147% YoY to $81B

• Series B/C deal sizes growing 9–17%

• Minority stakes now 18% of PE value

• Exit activity at highest levels since 2021

• Europe undervalued, India accelerating

Winners in this space are your specialized, operationally-driven GE firms writing minority checks into vertical AI-SaaS and global arbitrage plays.
Losers are the early-stage funds starving for capital, buyout shops stuck on leverage, and generalist late-stage VC without operating edge.

Analysis based on Q1-Q2 2025 data from Crunchbase, CB Insights, Bain & Company, EY Private Equity Pulse, General Atlantic, Partners Group, Level Equity, and 15+ additional sources covering current growth equity markets, late-stage venture trends, and minority investment activity.

This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to buy or sell any security. All data points and market figures are drawn from publicly available sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Opinions expressed are the author’s own and subject to change. Investors should conduct their own due diligence before making any investment decisions.