Growth Buyout (GBO) vs. Alpha Cowboy
I'd like to posit the idea of a frameshift for young high agency and technically inclined founders. The ones who if they had been born 15 years ago would have joined YC in the early days and been backed by people like Orange Wall Capital and maybe experienced their own Collison installation. These same individuals freshly in or out of college still wish to found and move forward with the "AI wave" but find themselves stopped by distribution and the inertia of legacy businesses.
An interesting alternative to this head scratching is going all in. Cue Joshua Kushner et al.
The Growth Buyout in contrast is essentially a hybrid private equity/tech startup vehicle with promises of venture scale returns over a long enough time horizon typically financed with a combination of debt and equity. It is hiring bright forward deployed engineers and merging them with a high volume M&A pipeline. Now the most ideal industries to do this in are those with legacy processes still operating on software from decades ago because the speed of software iteration has increased exponentially with LLMs. The issue is simply the time axis of distribution. Examples include Aerospace Manufacturing, Hospitals, and Parking Lots to name a few.
The solution to the software distribution problem is literally buying the entire company and forcing them to evolve under your guidance. Bootstrapping is off the table, full send.
I sincerely believe the future of software alpha is in growth equity and will constitute a major shift in the flow of LP dollars in the next few years.
Alpha Cowboy (n.) - A software vagrant in search of alpha in industries with distribution channels typically saturated 5 years ago. Often characterized by startup ideas with half lives of 2 weeks.
Thank you to Sean and Shiva for introducing me to this topic.