Everyone knows that it's increasingly difficult to compete in the PE industry, especially for the best assets that are being chased by everyone.
Does anyone believe their firm has a truly differentiated approach or playbook?
I've heard people talk about industry specialization as an example but that doesn't seem like enough of an edge to really drive returns, and in some instances it might work against you because your firm's returns are tied to that sector, which will eventually go through a rough period.
Yes, I believe.
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all due respect but there's 1000 firms like that. those are all good qualities but don't necessarily drive differentiation
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Hahahahahahahaha you drank the fucking kool-aid
Edited by AI for language reasons. Figure I'd provide a more fullsome answer as the main focus.
Yes. We get into cap tables others are trying to get into but can't — I'm in later-stage growth equity, so a bit different. It is much harder to have a true edge in PE, especially as funds get larger and have to bid only on well-known companies.
Generalist MF shops (all the public names, the shops are pure asset accumulators): no real edge, IMO. They're all bidding on the same large-cap, well-known assets, so it's a price auction with a brand logo on top. Specialist tech funds (TB, Vista) have a genuine knowledge/workflow edge, but I don't think it survives a competitive process at that size — playbooks get copied and the assets are too visible to stay proprietary. Being more in the know still helps you underwrite, but it also boxes you into a space that may not have much opportunity at any given moment. CD&R has a similar minor edge from their carve-out history, but even narrower — smaller universe, and plenty of shops have credible divestiture track records now.
Mandate breadth is the more structural one. A Silver Lake can write equity, credit, minority, take-privates across a wider band of profiles, so the investable universe is just bigger — and it doesn't decay the way a workflow edge does. Operating partners are the other durable moat, even in an AI world, because their value is relationships and very specific workflow knowledge that doesn't get commoditized. There's also real reputational pull in having the right operating partners — matters most in smaller or proprietary processes, or where management is rolling significant equity. Small universe, but it's there.
TLDR: hard to have a true edge in large cap PE, much easier in MM and LMM where there is a larger investable universe as each of these advantages compound. For example, if Vista/TB/Silver Lake were MMs, I would say they have clear edges, but they don't to the same extent in large cap PE. There is some levels of differentiation in MF PE platforms that might drive returns bps in either direction depending on how sectors perform.
Do you not find similar issues around differentiation with growth equity? Especially as minority shareholder where your value is capital, which is commoditized, and network - which most growth equity / VC shops provide. And arguably it is harder to compete here because in VC / Growth, fund name > diligence process vs in PE
And given the competition in growth, when valuations get stretched this investment stage is squeezed the most - such as during COVID and arguably now with AI valuations
Edited by AI again for language.
Capital isn't the value-add in growth/VC, and network varies wildly shop to shop, so I'd agree those two collapse into commodities for the median fund. But the model itself is different in a way that changes how you should think about the business. The defining fact of modern late-stage GE/VC is that there's more capital chasing the top startups than the reverse, so the binding constraint is access, not underwriting. That's why "fund name > diligence process" isn't the weakness you're framing it as — in a power-law business, brand is the moat, because it's what gets you into the oversubscribed rounds that actually return the fund.
And it's not just access. Because the best founders can raise from anyone, they pick — so the top brand gets favorable selection, not just a seat. The deals flowing to a marquee fund are systematically better than what a second-tier shop sees, because the founder chose them; everyone else is underwriting what's already been passed over. This is largely not the case in PE, outside of the very limited instances as I noted above. Track record compounds the same way: every legendary outcome is permanent marketing to the next generation of founders, and you either were on that cap table or you weren't.
Is this satire?
Every single large manager now has multiple strategies.
Operating Advisors are a dime and dozen hired guns. I can hire your operating advisor away TOMORROW. You’re telling me someone you’re paying $1-10m is adding hundreds of millions of dollars of value and no one is bidding him away from you?
You forgot the third leg of your durable moat: you take a “One Firm” approach to deliver the full depth and breadth of resources available at your firm on every single investment. Not for the carry check, but because your LPs trusted YOU with their capital. I mean these are teachers and fire fighters livelihoods we’re talking about.
Reread my comment, my whole point was that these edges are marginal at large-cap and only somewhat relevant in the MM/LMM (where there is simply a larger set of investable companies). I said MF differentiation drives returns "bps in either direction," not hundreds of millions. And what you're describing actually reinforces that: if every large-cap fund has multiple strategies, that's table stakes, not an edge. You're further describing an industry with no differentiation, which is my point.
On the operating advisor: you're right that any single one is a hired gun and poachable tomorrow, no individual is a moat, and anyone pricing one like he's worth nine figures a deal is selling something. But the thing that occasionally matters isn't the individual, it's an assembled bench plus the relationships and the muscle to deploy it, and you can't hire that away as a unit, or at least in an economically viable way.
The "One Firm / teachers and firefighters" bit, not sure what your point is there. My claim was mandate breadth, and there's a distinction worth drawing. At the fund level, being able to write equity, credit, minority, or a take-private on the same target genuinely widens your investable universe and gives you more ways to structure into a good return, that's a real edge. At the firm level, bolting on ten unrelated strategies is just asset accumulation; it inflates AUM and the GP's revenue but does nothing for any single fund's returns, especially given how territorial teams often are.
https://www.nytimes.com/2026/07/22/business/donald-trump-jr-1789-capital.html
I don’t work here but seems like 200%+ IRR not too shabby for a first time fund
July 22, 2026
As the Republican National Convention was wrapping up in July 2024, Republican heavyweights crowded into a rooftop bar with views of the Milwaukee skyline. In a sea of suits, Donald Trump Jr. made a beeline for a man in a black T-shirt: Shayne Coplan, the 26-year-old founder of Polymarket, the prediction market betting site.
The president’s son told Mr. Coplan he was impressed with Polymarket and how its results, not the polls, reflected what he was hearing from voters about his father’s prospects of returning to office. That rooftop meeting was the start of a lucrative relationship, showing how Donald Trump Jr. and his business partner Omeed Malik invested in a company whose fortunes would be affected by President Trump’s policies — a scenario that has played out repeatedly as their investment firm, 1789 Capital, has grown.
In the case of Polymarket, the government had banned it from taking monetary wagers from U.S. residents, but last year a federal regulator granted it an operating license in the United States. Worth $300 million when 1789 invested, the platform is now valued at $15 billion.
“He just took sort of the approach that we did, which is like, ‘Fuck all you guys,’” Donald Trump Jr. said of Mr. Coplan and of his own critics in an interview with The New York Times about investments he has worked on during his father’s second term.
Dating back to the first Trump administration, members of the Trump family have faced criticism for mixing business with politics. But what sets apart the latest moves by Donald Trump Jr. is how he and Mr. Malik, through 1789 Capital, are cashing in on the policies of the current administration openly and without apology.
Many of the companies that 1789 has invested in have large government contracts while others, like Polymarket, have benefited directly from new Trump policies or rollbacks of existing laws. The firm bought shares in some of the most coveted private companies before many went public, including SpaceX, Anduril, Cerebras and Reflection AI, often by leveraging their political and business connections to secure a stake or to help boost the companies’ sales.
Just two years ago, 1789 managed a few hundred million dollars. It now oversees more than $3 billion. Its main investment fund generated returns of roughly 200 percent as of June 30, according to a person familiar with the firm’s performance. While still early in its investment cycle, those returns eclipse the average returns of about 21 percent from venture capital firms started in 2023, according to PitchBook, a provider of financial data.
Angela Lee, a venture capital professor at Columbia Business School, said she had never seen a firm started by first-time fund managers raise so much money. “Any way you cut it, it’s unprecedented,” she said. One plausible explanation for the firm’s rapid success, she said: “People are paying for proximity to power.”
Mr. Trump and Mr. Malik, a former Democrat and banker, openly embrace their connections to President Trump’s broader circle of donors, influential supporters and high-ranking officials, but they scoff at questions of whether any of their success comes from direct access to the president.
As a private citizen, the president’s son said, he is free to invest however he wants and is doing nothing illegal. He said he talks to his father only “every few weeks,” never discusses business with him and holds “no policy position and no role within the administration whatsoever.” Mr. Malik frequently mentions that he has never even “set foot in the White House.”
In interviews, executives at companies that 1789 is invested in said they had never seen the firm seek special treatment from the administration, but said they viewed being involved with 1789 as a way to get close to the Trump orbit.
Mr. Malik said that both he and Mr. Trump knew the people involved in the administration “on a personal basis” and that this helped them position their investment strategies to benefit from White House policies.
Their approach is distinct from that of Mr. Trump’s brother-in-law Jared Kushner, who had been involved in early peace negotiations with Iran while his private investment firm was seeking to raise fundsfrom U.S. allies in the Middle East. (His firm later said it would not seek additional money from allies while Mr. Kushner was volunteering for the administration.)
Jessica Tillipman, the associate dean for government procurement law studies at George Washington University School of Law, said there are few actual rules for family members of the president, though many of them have gone to great length to avoid even the appearance of cashing in on the Oval Office. (Hunter Biden’s overseas business dealing were a recent exception.)
“A lot of this is based on norms,” she said. “The challenge we have is that when there’s no interest in kind of respecting the norms and from an optics perspective, that is troubling.”
A Former Democrat Goes for Trump
Mr. Trump and Mr. Malik first met at a barbecue in the Hamptons during the summer of 2018. They were introduced by Kimberly Guilfoyle, Mr. Trump’s former fiancée and the current U.S. ambassador to Greece.
Mr. Malik was in the middle of starting a new broker-dealer firm after a messy departure from his job at Bank of America.
A former corporate lawyer, Mr. Malik joined the bank in 2012 and within a year, at age 33, had become the bank’s youngest-ever managing director. He worked in the prime brokerage department and built a roster of hedge fund clients, including George Soros, Scott Bessent and Marc Lasry’s Avenue Capital.
In early 2018, the bank said in a regulatory filing that Mr. Malik had been “discharged” for “personal conduct in violation of firm standards.” Mr. Malik filed an arbitration claim against Bank of America alleging defamation and discrimination. Within a few months, Mr. Malik settled with the bank for more than $10 million, according to a person familiar with the undisclosed deal.
While on Wall Street, Mr. Malik had been an active fund-raiser for Democratic candidates, including Hillary Clinton and Joe Kennedy III.
During their first meeting in the Hamptons, Mr. Trump said, he found common ground with Mr. Malik politically. “I can play the radical on Twitter,” he said in an interview in Miami. “But I’m pretty reasonable. I grew up in New York City. I see all sides.”
By 2020, Mr. Malik started attending Trump re-election events and donated roughly $100,000 to the campaign. Together, the two men hashed out a set of shared ideals, they said, that would eventually form the basis for some of their investment strategies at 1789.
In their opinion, much of the infrastructure that makes America work, including banking and the mainstream media, was excluding conservative viewpoints. They also worried about China’s growing influence.
Ahead of the 2020 election, they co-wrote an opinion column in The Daily Caller, a conservative online publication, about the need for the United States to take back control of its manufacturing supply chain and prevent American firms from investing in Chinese-controlled companies like TikTok.
In early 2021, with the Biden administration in power and frustrated by Covid-19 restrictions, both men moved from New York to Palm Beach, Fla., with their families. Mr. Malik became a member of Mar-a-Lago.
A Firm in Overdrive
Within a year of his move, Mr. Malik pitched his deepening network of Republicans on starting a new investment firm called 1789 Capital, named after the year the Bill of Rights was written.
His two co-founders and investors were Rebekah Mercer, a top donor to Republican causes whose father once ran the hedge fund Renaissance Technologies, and Christopher Buskirk, a co-founder of the Rockbridge Group, a secretive network of wealthy Trump supporters. (Vice President JD Vance is also a Rockbridge co-founder.)
By late 2023, 1789 Capital had raised roughly $100 million from investors, including more than $15 million that Mr. Malik, Mr. Buskirk and Ms. Mercer had put in. Mr. Malik set up an office a few miles down the road from Mar-a-Lago.
Less than a week after his father’s re-election, Mr. Trump took the stage at a Rockbridge event in Las Vegas and told several hundred donors that he was joining 1789.
With the president-elect’s son on board, the firm went into overdrive.
The two men met potential investors in South Korea and the Middle East. They became regular speakers at major investor conferences in Qatar and Saudi Arabia.
Flush with new investments, 1789 quickly deployed money into a wide range of companies, including many that are now benefiting from Trump administration policies aimed at ensuring that military weapons, raw materials and critical technologies are developed in the United States and not in China.
Among them are the defense contractors Anduril and Hadrian, and Axiom Space, a company that’s looking to build a commercial successor to the International Space Station.
Last fall, 1789 invested in Vulcan Elements, a rare-earths magnet manufacturer, then valued at about $200 million. A few months later, the company landed a $620 million loan commitment from the Defense Department. The company is now worth roughly $2 billion.
The timing of 1789’s investment prompted an inquiry by Democrats in Congress about whether the firm exerted any influence in the decision to extend the federal loan. A spokeswoman for the Democratic members on the House Natural Resources Committee, which is scrutinizing the deal, said the inquiry was ongoing.
But Mr. Malik said he had learned about Vulcan Elements’ federal loan from a company news release issued after 1789 made its investment; Mr. Trump said he had never met or spoken to anyone at the company.
The two men say they made the reasonable assumption that Vulcan Elements, one of the few private American producers of rare-earth magnets used for cellphones, cars and planes, would be a winning investment during an administration focused on promoting U.S.-based companies in critical sectors. (Their firm invests only in private U.S. companies and doesn’t take controlling stakes.)
“It’s not like it takes a genius to figure this out,” Mr. Trump said. “I don’t have inside information.”
‘Good for America’
For companies looking to leverage their ties to the Trump administration, an investment from 1789 is seen as a stamp of approval.
On a recent investor call, the chief executive of the 3-D printing company VulcanForms repeatedly invoked 1789 Capital’s investment, implying that the financial firm’s political proximity could help bring about opportunities for the start-up, according to one person on the call.
Mr. Malik was unaware of that investor call and said he couldn’t police what companies he invested in said about the firm.
The reality is that 1789’s connections can transform a company’s fortunes dramatically — as it did for a small artificial intelligence developer called Reflection AI.
Last year, 1789 invested in the little-known company, which builds so-called open source systems. These systems allow Reflection’s clients to create their own A.I. models rather than rely on ones created by the likes of OpenAI and Anthropic.
Building a successful and enduring open source A.I. system is a priority for Silicon Valley. Reflection AI, 1789 believed, had the potential to become an American-made alternative to DeepSeek, an open source system developed by China.
The company made its first investment in Reflection AI in the summer of 2025, when it was valued at $3.5 billion.
Mr. Malik then tapped his network to find Reflection AI one of its first customers: the large South Korean conglomerate Shinsegae Group.
When the Rockbridge Group opened an international outpost in South Korea last year, it named Shinsegae’s chairman, Chung Yong-jin, one of the founding board members. A few months later, he attended a Christmas party at Vice President Vance’s house in Washington. Shinsegae is also an investor in 1789.
In March, Reflection AI and Shinsegae jointly announced a plan to build a multibillion-dollar data center in South Korea that will house the tech company’s open source models.
The data center, which would be used by Shinsegae and also the South Korean government, was described in a joint news release by the two companies as pivotal moment in U.S.-South Korean relations. The Commerce Department designated the data center as the first flagship project under its new “American AI Exports Program.”
This spring, 1789 hosted an online webinar for Reflection AI’s executive team and dozens of potential investors. Participants were told they had a week to write checks, which had to be larger than $5 million. As is common in private investments, investors would pay a fee to 1789 for access to the deal.
With a current $25 billion valuation, Reflection AI is worth seven times as much as it was when 1789 made its original investment last summer.
In a video recorded for that webinar, Donald Trump Jr. described Reflection AI as “good for America.”
Aight nobody reading that… regardless of party affiliation
If you can’t read an article length, not sure how you expect to be differentiated
nobody is reading that teller, take the failing NYTimes elsewhere
Congratulations/sorry that happened
Why do people keep saying the same shit about MF being commoditized and MM not being so? Is it just cope?It doesn't make any sense. Feel like the best place for alpha is at the higher end of the MF check size where only a few firms can play and the businesses are significantly more sophisticated (Hilton, Jersey Mikes).
There is just no way there are more bidders in those processes than in a sponsor-suitable $50m TEV HVAC asset that Harris Williams will shop to everyone and their mother.
There is zero alpha in large cap PE. It's just asset accumulation. There is possible alpha in the MM and LMM space because there remains a bunch of unprofessionalized businesses. For a company to be large enough for any large cap sponsor to look at, they inherently have to be fairly professional and have had all the easy wins already done. There are also fewer companies that are large cap, and there is more money chasing large cap investments than mid-cap. There are basically no proprietary processes once you get to a check size above a billion or so, and anyone telling you otherwise is giving you propaganda. I am at a large cap PE fund, and I can tell you for a fact that it's significantly harder than MM PE. Also nobody is talking about the variety of generalist PE shops in the MM being undifferentiated, it's more so those with strong operating benches, strong relationships, deep niche industry knowledge, sourcing edge, etc. I would argue all those are not edges to the same extent in large cap PE as I talked about in my comment.
Edit: Important to remember what alpha generation actually is. Alpha is a capability or information edge relative to the seller and the field. In a large-cap process the few bidders, and I'd push back that it's only a few, given how many large funds exist now, but let's grant your assertion, who can write the check are all elite, the asset's been professionalized and audited to death, and Morgan Stanley has run it to a price that already reflects every knowable synergy. Few bidders, but no asymmetry: everyone's underwriting the same clean data room to roughly the same number.
So where is differentiated? How do people at your PE fund view the future of the fund and their careers?
Why would businesses being significantly more sophisticated mean there's alpha in a segment? Honest question, because typically it's the opposite.
Intern posting did not not understand what alpha is clearly.
We are, but we can't deploy much against our edge so it doesn't matter I guess.
We are launching something new with a twist that I feel good deploying a lot more money against.
Yes but I would say maybe 30-40% of the aum is deployed in that area and the returns are excellent. Rest is dogshit
Whats the differentiation?
There’s several emerging markets where this is basically the only game in town. Most scaled deals are founder owned in these markets too so they generally mistrust most global sponsors. So you have a unique combo of less competition and assets where you’re the first sponsor. As the firm has tried to expand to larger markets this has evaporated and returns are barely 1.5-2x there
TBH funds love marketing their "competitive edge" to raise capital...but at the end of the day, it's really a lot of luck, their talent bench of investors / operators and how well they retain their top talent (sounds cheesy but PE is a services firm at the end of the day)
There are some megafunds that have great investments, there are some LMM PE shops that fail that we don't know much of cause they go under the radar...each has their own risk / return profile
Vista used to really emphasize its secret playbook of value creation for its software companies, but their returns have fallen and there have been tons of other Vista-like firms out there now. Also, what prevents a senior Vista investor taking that playbook and joining a competitor / spinning out? HIG markets its special edge, but there are a ton of HIG spin outs that have sprung up and deploy the same strategy
Only "edge" I have ever actually seen translate to alpha/dollars was personal relationships partners had in a specific industry that allowed them to get ahead of things on the sourcing side
the royal bank of canada simply relies on providing debt financing to corporations in-order to secure deal positions in capital market transactions
#need2loan2advise
#RBceeeeeit
#numberbankinbaystreet
#top12bank
Yes - I AM the competitive edge.
There’s no competitive edge on PE. It’s all the same.
There’s no difference between Blackstone and H&F talent. Every single firm has some kool-aid they pump through the air ducts, but it’s all marketing slop to give LPs some talking points to feed their committees.
The true special sauce in PE is marketing and fundraising. That’s largely driven by the brand. The brand was built 20-40 years ago when it was a cottage industry that wasn’t over saturated.
Unless you’re consistently putting up 2.5x+ MOICs it’s all smoke and mirrors. You can’t even figure out a propper IRR on PE capital. You have to be liquid to fund commitments, are LPs factor in that return in their life of commitment IRR? Are they looking through shenanigans with sub-lines etc?
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