What’s Next for VC and PE?

[Full piece on my substack]

We might be entering the era of the data science-literate business analyst being MVP.

… Private-equity AI roll-ups invert that; They look like mundane buy-and-build plays, but under the hood they’re building irreplicable data monopolies. Value accrues not from the steel you bolt together, but from the learning curves your algorithms climb.

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This is already happening at the top end of the market, at scale. XXXXX invested into XXXXX, a XXXXX that slashed textbook production costs XXXXX and cut bug rates by XXXXX. XXXXXX bought into XXXXXX, enabling TWO BILLION datapoints to feed into a rent forecasting model in order to better guide leasing strategies across 550MM sqft of warehouses.

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I think this is all good news for angel investors and VCs. After a prolonged period of depressed M&A activity, lower deal volume and a longer time-to-exit affecting recycling of liquidity and talent, a recent uptick in PE activity driven in part by such rollups offers a glimmer of exit hope.

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The challenge to earlier stage investors will come mainly from portfolio construction and company maturity, judging by data from XXXXXX [Link removed].

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All of these things privilege larger and more experienced operators and investors.

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To be clear, I don’t think this will kill venture capital (at least in the USA…)

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Please just stop saying “data is the new oil” though – this will be forever cringe.