Kevin M. Weinman, CFA

I’ve spoken to over 2 dozen MDs at PE firms I can confidently say that the arb of figuring out how to implement Vertical AI at portfolio companies is very real right now It will fundamentally change underwriting for those who can do it predictably and unlock generational returns. Most are aware they need to act. Very few have.

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Silversmith Capital Partners closes $1.7B Fund V. The Boston-based growth equity firm wrapped its fifth fund in just three months, bringing total capital raised to over $5B since its founding in 2015. Fund V continues Silversmith’s strategy of backing bootstrapped founders in tech and healthcare, with over 70% of capital typically deployed as first institutional checks. Sign up for GrowthCap’s email newsletter https://lnkd.in/gXXniHP Nominate Top Software Investors of 2025 at https://lnkd.in/g9hfKiY #leadership #investing #venturecapital #growthequity #technology

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Most private equity firms hire operators post-acquisition and give them "equity." But it's usually not real equity. It's phantom equity, options with impossible vesting schedules, or profits interests that only pay out if the fund hits a certain IRR. The economic reality is that the operator is an employee with upside optionality, not an owner. That misalignment creates problems. When the operator doesn't have meaningful skin in the game, their incentives diverge from investors. They optimize for salary and bonus, not long-term value creation. And when the business hits challenges, they're more likely to leave than fight through it. Our model is different. The operator receives a percentage carry at close. Day one, before the business generates a dollar of profit. That's real ownership. If the business delivers a set net IRR, the operator earns an additional carry. At the top end, they own a healthy percentage of the total upside. This isn't a "nice job" bonus. It's generational wealth creation tied directly to investor returns. That alignment changes everything about how operators run the business. They're not thinking about their next job. They're thinking about how to drive EBITDA growth, improve margins, and position the company for a premium exit. When investors win, operators win in actual dollars that hit their bank account. Most PE firms talk about alignment. We've structured it into the cap table and waterfall mechanics in a way that makes it impossible to misalign. ✍️ If you are an accredited investor and actively investing in the lower-middle market... Every week, I breakdown what's actually happening in operator-led buyouts and lower-middle-market M&A. Subscribe to "Operator-Led" (link on my profile).

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Going Concern and Valuations: With literally trillions of $ being offered in executive compensation (you know who!) & in many "AI-focused" privately held firms, their stratospheric valuation being tied directly to their founders , is there a case to be made that absent these maverick leaders, these firms may have going concern issue (forget the literal accounting definition) at-least from a valuation perspective? In the case of the $1T package, the argument put forth by the Board (& approved by 75% of the shareholders!) is "that founder might leave the company if it was not approved - and that it could not afford to lose him". The vote was noteworthy for a few reasons - a) The maverick founder and his brother were both allowed to vote (interesting!) b) there are no restriction on the maverick's activities outside of the corporation, inspite of the drama from earlier this year c) no acknowledgement of the tremendous threat international competitors like BYD pose to the firm. The rationale posed by supporters in this case (& being put forth in the case of new age AI companies) is the founder is THE reason they invested in the company and they believe in him. The question I would like to ask - whatever happened to executive succession planning (which in "old days" used to be one of the primary focus of the BOD)? & if for whatever reason the individual is not round t'row, will the company even survive?

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Following on from Packy McCormick's post on the growth in VC-backed exit values over the last 20 years, we did our own deep dive into the Pitchbook data. We looked at US VC-backed exits from 2005-2024 (with an exit value of at least $10k) and broke things down into five year periods. Some key takeaways: * Nobody is getting rich from the median exit. For the whole 20-year period, the median exit size was just $85m. It has been steadily growing - from $50m in 2005-09 to $113m in 2020-24 - but nobody is investing in VC for these sort of outcomes. * The value of a top 10% exit grew from $400m in 2005-09 to $1.6bn in 2020-24. This is a 59% compound growth rate over each of the four periods. * The value of the 99th percentile exit, the mythical top 1%, grew even faster - from $1.4bn in 2005-09 to $10.2bn in the most recent five-year period. This represents a 93% compound growth rate over each period. If this trend continues, then we should expect to see the top 1% exit increase to nearly $20bn over the next five years and nearly $40bn in 2030-34. We have always said that you should compare fund sizes today to the expected exit sizes in 10 years' time. If we do think the top 1% exit will be $40bn+ when today's funds are maturing (which doesn't strike me as crazy), then how does that impact the debate on what an appropriate fund size should be for a 2025 vintage fund?

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You won't be successful as GP if your not listening intently right now. Large institutional LP's are quickly changing course but many may miss this shift. Based on dozens on LP conversations in the last few weeks it’s clear that private markets are at an inflection point. I'm paraphrasing the themes of what I am hearing: LP's on BIG GP's: - LP’s are thinking: ‘When they (GP’s) get too big they stop caring about me and I will not get what I need from them, I am just a number' LP's SMALL GP's: - ‘When they (GP’s) are too small, I’m too important (aka too big relative to their fund size) to them and thus I can’t invest’ LP's on MEDIUM SIZED GP's: - ‘They (GP’s that are allocators not operators) are generalist and don't have the scale advantage of the big GP's nor the flexibility and local knowledge of the small ones' If your like me, this makes your head explode. 🤯 It would seem we are stuck. Institutional LP's are searching for new ways to invest. - Seek alpha through go direct with 'institutional quality' GP's that are vertically integrated and have local market knowledge - Push into adjacent asset classes, some feel more like PE than CRE where operational excellence is the driver of returns, not just the real estate value - Tap new channels for capital where the requirements are more in line with current products (i.e. private wealth and core/opportunistic products) If your a GP: It's hard to not feel stuck If your a LP: It's hard to not feel unimportant - Inst LP's will seek new GP relationships. Maybe just a few but better than none. - GP's will seek new capital sources We will see a reversion to diversification: - New investment structures - New relationships and capital sources - New products, structures and terms This dynamic will force GP's & LP's to work together to innovate. Underpinning all of this is the need to keep an open mind and stay curious. Solving for these problems will be a great unlock. This is the most exciting time to be in private markets. It's messy but the changes underway are transformational.

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Capital formation isn’t just about fundraising; it’s about building trust through transparency and clarity. I just wrapped moderating a panel at SVB’s Venture Connect conference, joined by Erlina Yeo Terwelp, Geoff Taylor, Brian Chen, and Stephen Bluestein. The goal: an interactive discussion on how GPs can build enduring partnerships with LPs in today’s fundraising environment. Key themes and takeaways from the conversation: • Relationships are paramount: Provide access to multiple investment team members across levels. Authentic, consistent engagement is foundational to long-term partnerships.  • Show your fund math: LPs want to see how ownership stakes and exit expectations map to net returns—at the actual fund size. Scaling isn’t a strategy unless supported by fundamentals. Help LPs draw clear conclusions. • Transparency builds trust: Be transparent on valuation methods, revenue multiple assumptions, even succession planning. Consistency and openness go a long way. • Investing in venture: LPs are active, but the bar is higher. Two deliverables I’ll be focusing on in our next cycle: 1. Elevating the operations DDQ. Now the second most-viewed item in any data room, right behind the investor deck. 2. Ensuring our deck clearly communicates fund math. From ownership to exit to net DPI—at the fund size we’re marketing. This experience reaffirmed that transparency and trust-building are critical, especially when the fundraising environment is as bifurcated as the markets we’re investing in. Thanks to Silicon Valley Bank, Bobby Donnelly, and Mark Lau for the opportunity, and to everyone who joined the discussion! 

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Today is another monumental moment in consumer fintech. The long-awaited IPO of Klarna pricing its initial public offering at $40 per share, exceeding the marketed range of $35–$37 (an implied valuation of approximately $15.1 billion). Given this plus the recent filings of Figure and Gemini, we’re seeing clear signal that the fintech IPO window has re-opened, but it’s a very different market than 2021. After a funding trough, the next leg is execution and sound unit economics versus hype and growth at all costs. The market is rewarding fintech embedded into software/workflows (distribution advantage) and into the financial stack (settlement, custody, tokenization), which is exactly what’s required to succeed in a more regulated and AI-accelerated world. Here’s what it means for fintech founders building today: 1) Infra & real-world finance are back: Rails that move real assets (HELOCs, private credit) with better liquidity and transparency are in demand; tokenization wins when it shortens settlement and broadens buyers. Build for institutional interoperability and regulatory clarity from day one. 2) Profit > growth for consumer fintech: Deposit funding, improved delinquency, and operating profitability matter more than headline GMV growth. If you can’t show leverage in CAC/credit performance, public investors won’t stretch. 3) Crypto needs durable economics: Exchanges must demonstrate stable take rates, diversified revenue beyond trading, and cost discipline; otherwise they’ll trade with the cycle.

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This week's headlines were punctuated by continued interest in the RIA world, with Warburg Pincus LLC leading a $1B financing round of Cerity Partners at an $8.5B valuation, a continued focus on 401(k) and retirement assets by the industry's largest asset managers - with Blue Owl Capital and Sixth Street Growth leading a $385M Series E into Vestwell and Blackstone reportedly looking to grow the headcount in its wealth business, and a spotlight on the private credit market with Blue Owl Capital's BDCs. Other big news includes a number of oversubscribed fundraises, including Veritas Capital closing on a $15.3B private equity fund, HGGC raising a $3.2B private equity fund, and Thrive Capital doubling its fund size to $10B in its most recent fundraise. And much more in the latest Alt Goes Mainstream Weekly News Roundup ... Stay up to speed on the latest industry news across: 🏦 Wealth Management 🌲 Evergreen Funds 💸 Private Equity 💳 Private Credit 🛠️ Private Markets Infrastructure 🏠 Real Estate 🥈 Secondaries 🛠️ Infrastructure 🥩 GP Stakes 🔬 Private Markets Research https://lnkd.in/eFCQ4SRY

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