Welcome to this week's edition of The Private Capital Compass, a curated weekly analysis from Private Capital Global designed to cut through the noise and surface what matters most and what it means for investors and operators.

In this edition, we examine the tensions reshaping how PE deploys capital, manages hold periods, and creates value across portcos. From the growing mismatch between elevated entry multiples and unchanged return expectations, to Anthropic's reported $200 million push to embed AI directly inside PE-backed businesses, the forces redefining the private capital playbook are moving faster than most operating models have adapted.

We also cover Jeito Capital's record $1.2 billion fund close, the largest ever for an independent European biopharma fund, alongside William Blair's analysis of the expanding capital stack fueling frontier AI, and Alvarez & Marsal's practical case for how generative AI is restructuring software development inside PE-backed technology companies.

We also include a deeper look at GTCR's $400 million acquisition of youth sports streaming platform LiveBarn as this week's Deal Spotlight and what a cross-border platform bet on participation sports infrastructure signals about where sophisticated sponsors are finding growth.

Compass Points

PCG’s Recap and Take on the Stories of the Week

• The Expanding Capital Stack Powering Frontier AI: A recent analysis from William Blair's Co-Heads of Venture Capital, Anu Sharma and Jim O'Connor, examines how the sheer capital intensity of frontier AI development has expanded the investor universe participating in the sector. Venture capital remains the early innovation engine, AI deals now account for nearly two-thirds of total venture deal value, with 41% of all U.S. VC dollars in the past year flowing to just 10 companies but it is no longer the dominant force at scale. Corporate strategic investors, sovereign wealth funds, infrastructure investors, private credit funds, crossover public-market investors, and retail capital through SPVs are all active participants, each bringing different return horizons, incentive structures, and risk tolerances to the table. William Blair's central argument is that frontier AI companies must now treat capital architecture as a strategic function in itself, sequencing investor types deliberately and managing the competing incentives of a far more complex funding ecosystem than prior technology cycles required.

• PCG Take: The article raises a question that deserves more attention from private capital executives than it is currently getting: if sovereign funds, crossover investors, strategic corporates, and retail SPVs are all shareholders before an IPO, who is actually left to be the buyer at the offering? The concentration of venture dollars into a handful of companies, combined with the circular financing dynamics between corporate strategic investors and the AI platforms they are funding, introduces systemic interdependencies that are not fully priced into most private market underwriting.

• How GenAI Is Reshaping Software Development in PE-Backed Tech: A new case study series from Alvarez & Marsal examines how generative AI is changing the way PE-backed portfolio companies build and ship software. The core argument is practical rather than aspirational: traditional product and software development processes are increasingly misaligned with the speed, predictability, and capital efficiency that compressed PE hold periods demand. GenAI, applied deliberately across the software development lifecycle, offers a path to reduce delivery friction, improve execution quality, and create measurable value without simply throwing headcount at the problem. The series focuses on a PE-backed healthcare technology platform as its primary case study, illustrating how GenAI can improve knowledge sharing, accelerate implementation, reduce defect resolution time, and help development teams move from ideation to working product more efficiently. The emphasis is on how AI can restructure workflows across the entire development process, from product management through testing and deployment.

• PCG Take: The Alvarez & Marsal series is a useful counterweight to the more abstract AI value creation narratives that have dominated PE conference circuits. The question for most sponsors is not whether AI can improve software development but whether portco leadership teams have the operational discipline to implement it in ways that actually show up in the metrics that matter at exit. Time to market, defect rates, and engineering cost per feature are not typically the KPIs that get highlighted in board decks, but they are exactly where AI-driven improvements compound over a three-to-five year hold. 

• European Biopharma Capital Is Scaling Up: Jeito's $1.2B Fund II Signals Growing Conviction Across the Atlantic Jeito Capital, the Paris-based private equity fund focused exclusively on biopharma, announced the close of its second fund at $1.2 billio, a figure the firm is calling the largest raise ever achieved by a fully independent European biopharma-focused fund, according to reporting from Fierce Biotech. The close surpassed Jeito's original target and nearly doubles the €534 million raised for its debut fund in 2021. Jeito II will back between 15 and 20 clinical-stage European biopharma companies developing therapies for severe diseases with high unmet medical needs, with average investment capacity per company increasing to up to €150 million. The firm's track record includes three exits to date, among them the $1.3 billion Merck acquisition of Eyebiotech and Biogen's $1.15 billion buyout of Hi-Bio, both in 2024. Founder Rafaèle Tordjman described the close as a strong signal for the European biopharma ecosystem and evidence that European companies can drive major therapeutic innovation with the right access to capital and strategic resources.

• PCG Take: Jeito's fund close is a meaningful data point in an ongoing debate about whether Europe can build the capital infrastructure to match its scientific output. The firm's results to date,  two nine-figure exits in a single calendar year suggest the answer is yes, at least for disciplined, thesis-driven investors willing to take clinical-stage risk in underserved disease areas. For the dealmakers and investors joining PCG in Boston next week for the Medtech Capital Connect Dealmaker Summit, the Jeito story offers a useful frame: capital concentration around high-conviction therapeutic platforms, paired with a patient investment approach, is generating real exits. 

• Adapting to a World of Higher Valuations and Unchanged Return Expectations: A recent piece in Middle Market Growth by Andrew Greenberg examines a structural tension that has quietly defined private equity for the better part of a decade. Using GF Data's database of nearly 6,000 PE-backed transactions, Greenberg illustrates the core problem: private company valuations have stayed above seven times EBITDA since 2017, return expectations remain anchored around 20% IRR and 3x MOIC, and fund structures still dictate hold periods in the five-year range. Satisfying all three simultaneously has become increasingly difficult. The industry's response has taken several forms — longer hold periods, continuation vehicles, longer-duration funds, and a notable rise in fundless sponsors and family office-backed vehicles operating outside the constraints of traditional LP structures. Greenberg also highlights a widening valuation gap between service and industrial businesses, with service-oriented companies commanding nearly a full turn premium over industrial peers in 2025, driven by superior scalability and exposure to long-term demographic trends.

• PCG Take: Greenberg's framing is one of the more honest assessments of the PE model's current stress points to appear in the middle market press. The continuation vehicle data alone tells you something important about how sponsors are managing the gap between what assets are worth and what the fund clock demands. The rise of fundless sponsors and family office vehicles is equally telling. When experienced deal professionals start voting with their feet away from committed capital structures, it signals that the traditional model's constraints are becoming harder to work around rather than through.

• Anthropic's Push Into PE Portfolio Companies: Anthropic is planning to invest $200 million into a new venture aimed at selling AI tools directly to private equity portfolio companies, according to reporting from the Wall Street Journal. General Atlantic, Blackstone, and Hellman & Friedman are among the PE firms in discussions to back the project, which is targeting $1 billion in total capital. The new entity would function as a consulting arm for Anthropic, helping portfolio businesses incorporate its AI tools into day-to-day operations. The move mirrors a parallel effort underway at OpenAI, which is developing its own joint venture,  internally called DeployCo, with a similar PE-backed structure and a mandate to embed engineers directly inside companies to accelerate adoption.

• PCG Take: This is one of the more consequential developments in private capital this year, and it deserves more attention than it has received. Anthropic and OpenAI are now competing to own the implementation layer inside PE-backed businesses, and they are using the sponsors themselves as the distribution channel. For GPs, the implications cut both ways. On one hand, a structured pathway to AI adoption across the portfolio addresses one of the most persistent value creation bottlenecks in the market today. On the other hand, ceding the AI implementation relationship to an outside consulting arm introduces questions about data governance, vendor dependency, and whether the value created accrues to the portco or to the platform provider. 

Deal Spotlight: GTCR Bets $400M on Youth Sports Streaming With LiveBarn Acquisition

Transaction: GTCR, the Chicago-based private equity firm, agreed to acquire LiveBarn, a youth and amateur sports streaming platform, in a transaction valued at approximately $400 million. The deal, which was agreed upon in late January and officially closed this week, was financed in part by Ares Management, which was also a prior investor in the company alongside Susquehanna Growth Equity. Raymond James advised LiveBarn on the sale process, which had been on and off for several months before reaching a final close.

Founded in 2015, LiveBarn provides live streaming and on-demand video broadcasting for youth and amateur sports events across more than 1,900 facilities in 49 U.S. states and 10 Canadian provinces. The platform is particularly dominant in hockey and serves players, coaches, and family members seeking access to competitions they cannot attend in person. The acquisition is part of GTCR's broader push into the youth and amateur sports ecosystem through its newly formed Ascent Sports Group, a platform built in partnership with Gary Swidler to consolidate assets across this fragmented market.

Why It Matters: PE interest in professional sports has been well documented. Valuations have soared, regulatory barriers have fallen, and marquee franchises have become legitimate alternative assets for major fund managers. But the rush into professional sports has also compressed returns and inflated entry multiples to levels that are difficult to underwrite on fundamentals alone. Increasingly, sophisticated sponsors are looking one level down, at the infrastructure, technology, and services that power participation sports at scale.

Youth sports is that next frontier. Total annual parental spending in the U.S. youth sports market is estimated at $40 billion, a figure driven by sustained participation growth through and since the pandemic. That spending is fragmented across facilities, travel clubs, equipment, coaching, and increasingly, digital services. LiveBarn sits squarely in the digital layer: recurring, subscription-driven revenue tied to a captive audience of parents, coaches, and athletes who have demonstrated a clear willingness to pay for access and replay capabilities.

The Canadian dimension of this deal also deserves attention. LiveBarn's network spans 10 Canadian provinces, making this one of the more significant cross-border youth sports infrastructure plays in recent memory from a U.S.-based sponsor. Hockey's cultural centrality in Canada gives LiveBarn a natural density of facilities and an engaged user base that extends well beyond what a U.S.-only platform could offer. 

The formation of Ascent Sports Group signals that GTCR views LiveBarn as a platform asset, not a standalone bet. The youth and amateur sports ecosystem remains highly fragmented, and the roll-up logic is compelling: acquire digital infrastructure, layer in adjacent services, and build toward a unified network that captures multiple revenue streams across the participation sports value chain. The reported Goldman Sachs-advised sale process at 3Step Sports, the largest youth sports club operator in the U.S., suggests other assets are moving as well.

The Deep Dive: When GTM Breaks Down, the Problem Is Never Just One Function

Growth problems in PE-backed businesses rarely look like growth problems at first. They look like a marketing issue. A sales issue. A churn issue. So sponsors respond accordingly with a new agency here, a training program there, a customer success platform somewhere else. The actions are logical. The results are consistently disappointing.

That pattern is the subject of this week's PCG blog contribution from Brian Gustason, part of his ongoing series on go-to-market strategy in lower middle market PE. His argument is direct: GTM is not a collection of independent functions. It is a system. And systems do not improve through isolated fixes.

Why Isolated Fixes Feel Right And Fall Short

The pressure to act quickly in PE-backed environments is real. Compressed timelines and elevated growth expectations demand visible responses. Silo-based interventions satisfy that pressure. They are tangible, easy to approve, and produce measurable outputs that fit neatly into operating plans and board updates. But they treat symptoms without addressing the underlying condition — the interaction between functions.

Gustason uses a medical analogy that lands cleanly: lower the fever, treat the cough, address the fatigue, but never identify what is tying those symptoms together. The patient gets temporary relief. The illness persists.

The same dynamic plays out across GTM when functions are optimized in isolation. Marketing generates more pipeline, but Sales struggles to convert because targeting is too broad. Sales training improves close rates, but poor upstream lead quality limits the impact — and the deals that do close may be a poor fit, accelerating churn downstream. Customer Success investments reduce churn in the short term, but renewal messaging out of sync with current marketing positioning erodes customer trust and limits expansion. In each case, a single metric improves. The system does not.

GTM Is a Closed-Loop System

This is the structural reality Operating Partners need to internalize: the GTM system is always operating, whether it has been intentionally designed or not. Marketing defines how a company shows up in the market, but its effectiveness depends on feedback from Sales and Customer Success to refine targeting and messaging. Sales converts demand into revenue, but only as effectively as lead quality and positioning allow. Customer Success retains and expands revenue, but its outcomes are heavily shaped by expectations set during the sales process. Revenue Operations ties it together, providing the visibility to understand what is actually working and where breakdowns are occurring.

When that loop is aligned, performance compounds. When it is not, inefficiencies multiply — and the result is a pattern many PE sponsors know well: activity increases, costs rise, and growth does not accelerate in any meaningful or sustainable way.

What Misalignment Looks Like Post-Close

The problem is particularly acute in founder-led acquisitions, where GTM infrastructure evolved organically rather than by design. Founder-led businesses often have a revenue engine that works under the specific conditions that produced early growth — a tight network, a concentrated customer base, and opportunistic acquisitions. Post-close, when those conditions change, misalignment becomes visible. Pipeline quality fluctuates without explanation. Sales cycles stretch. Churn varies widely by segment. The Ideal Customer Profile means something different to Marketing than it does to Sales. Data is too fragmented to support root cause analysis.

Individually, any one of those issues can look manageable. Collectively, they signal a system that is not aligned — and one that will not scale efficiently until that alignment is addressed.

The Operating Partner's Leverage Point

Gustason's framework calls for a fundamental shift in orientation: from asking how to improve a single function to asking how all parts of the revenue engine work together to drive profitable growth. That shift changes the accountability structure across the organization. Marketing becomes responsible not just for lead volume, but for generating demand within ICP segments that convert and retain. Sales focuses not just on closing, but on qualifying in ways that support long-term customer value. Customer Success moves from reactive support to a strategic source of feedback that informs targeting and messaging upstream. RevOps ensures data flows across the entire customer lifecycle, making system performance visible.

The compounding effects — improved pipeline quality, higher win rates, shorter sales cycles, stronger retention, accelerating expansion — are not the result of any single function performing better. They are the result of the system working as designed. For Operating Partners managing growth mandates across a portfolio, that distinction is the difference between running harder on a broken engine and actually fixing it.

Most Operating Partners know when growth is underperforming. Fewer can pinpoint why. The instinct is to isolate the problem, flag the underperforming function, apply a fix, and move on. But in lower middle market PE, that instinct is often what keeps the growth engine stuck.

Before reaching for the next tactical lever, ask whether your GTM functions are operating as a connected system or as parallel efforts that happen to share a P&L. A few questions worth sitting with:

• Can your Marketing, Sales, and Customer Success leaders articulate a shared Ideal Customer Profile without looking at a slide deck?

• When pipeline quality drops, do you have the data infrastructure to trace the breakdown to its source — or are you working from gut and anecdote?

• Is Customer Success informing upstream decisions around targeting and messaging, or operating in isolation at the end of the revenue cycle?

Where activity is increasing but growth is not accelerating, the system is telling you something. The answer is rarely more effort inside a single function. It is almost always better alignment across all of them.

Closing Remarks

Thank you for reading this week's edition of The Private Capital Compass. As Q2 begins, the themes defining private capital in 2026 are coming into sharper focus — tighter exit windows, rising operational expectations, and a growing premium on commercial fundamentals over financial engineering alone.

PCG continues to convene the practitioners navigating these dynamics through curated events in Austin, Boston, Chicago, London, New York, and San Francisco, built for peer exchange and real-world application rather than passive programming.

We remain committed to delivering the analysis and perspective that helps you make better decisions across deals, portfolios, and platforms. Thank you for being part of the community.

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