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Today’s Rundown

• VCs are PE with AI

• Kingsway released its Q1 2025 results

• Structural setup for search funds

• 1 deal / launch announcement

• 7 new career opportunities

Database Overview

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Weekly Highlights

• Wendy Xiao, partner at Venture Capital firm Northzone, share her thoughts on why VCs are PE with AI:

  • AI is breaking down barriers to tech adoption in sectors traditionally dominated by PE - e.g., startups like Candid Health and Ironclad use AI to automate medical billing and legal document workflows, allowing them to scale rapidly in sectors where legacy systems made innovation difficult

  • The traditional PE model, built on leverage and manual operational improvements, is being disrupted as AI performs these tasks faster and at scale - e.g., instead of hiring dozens of consultants to improve back-office functions, AI tools can instantly streamline invoicing or compliance reviews in portfolio companies

  • Venture capitalists are now using rollup strategies by acquiring or consolidating SMBs into a single AI-enhanced platform - e.g., a VC fund might back a dental tech startup that automates practice operations, then use follow-on capital to acquire and integrate more dental offices under one AI-powered umbrella

  • PE firms are responding by hiring venture-backed tech talent and embedding automation across their portfolios - e.g., a PE firm buying regional law firms could install AI-based contract review systems to reduce paralegal costs and improve service delivery without hiring more staff

  • To succeed in this convergence, investors must treat technology as the core product, build scalable infrastructure with automation at the center, and raise long-duration capital - e.g., funds like a16z or Tiger Global raise multi-stage vehicles to support early product-market fit, then scale rollups or platform plays with the agility of tech and discipline of PE

• Kingsway Financials Services, the only publicly-traded US company employing the search fund model, released its Q1 2025 financial result:

  • On March 17, 2025, Kingsway announced the acquisition of M.L.C. Plumbing for $5.0 million

  • Consolidated revenue increased 8.4% to $28.3 million for the three months ended March 31, 2025 (primarily due to the Image Solutions and Bud’s Plumbing acquisitions)

  • Twelve month run-rate adjusted EBITDA for the operating companies is $18.0 million to $19.0 million

  • Adjusted consolidated EBITDA decreased $0.7 million to $1.4 million for the three months ended March 31, 2025

• Nestor Cruz Bonache and Luis Figueras Fernández, two corporate finance professionals, published an expert piece on how search funds can overcome structural challenges and close the first acquisition:

  • Establish a SPV that acquires 100% of the target company; this entity consolidates both investor equity and acquisition debt, enabling control over the target’s cash flow to service the debt

  • Avoid financial assistance violations by ensuring the target company does not guarantee or fund its own acquisition

  • Offer limited collateral, primarily a pledge of shares, since lenders cannot rely on target assets; therefore, a solid financial model with favorable leverage (NFD/EBITDA < 3.5x) and DSCR (>1.4x) is critical

  • Differentiate from Private Equity by emphasizing the searcher’s industry expertise and direct operational role, while also building credibility with lenders despite lacking a track record

  • Engage experienced financial advisors early to navigate legal, structural, and lender-specific expectations, and to ensure a bankable and compliant transaction structure from the beginning

Deal / Launch Announcements

• 🇮🇹 Eureka! Venture, an asset management firm, launches Italy’s first fund of search funds, led by Paolo Guida (link)

Career Opportunities

• [PE] Senior Investment Associate | PER | Munich (apply)*

• [PE] Investment Associate | Cathay Capital | Munich (apply)

• [PE] Investment Associate | AURELIUS | Munich (apply)

• [PE] Investment Associate | ACL Partners | Munich (apply)*

• [PE] Investment Associate | ACL Partners | Hamburg (apply)*

• [PE] Investment Associate | Options Group | Frankfurt (apply)*

• [PE] Investment Analyst | Tim Wagner Personalberatung | Hamburg (apply)*

_*Headhunter

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