AI Value Creation in Growth Equity: Bregal Milestone's Jan Bruennler and Visar Shabi

Speaker A: In this episode we speak with Jan Brunler, Managing Partner and Vasar Shabi, Portfolio CTO at Bregal Milestone, a UH leading European growth equity firm investing in fast growing mission critical software businesses across Europe. With approximately 1.7 billion euros of capital and more than 55 investments completed since inception, Bregall Milestone provides growth capital and operational support to help build market leading software companies. The firm is part of Bregal Investments, a leading global investment platform with over 19 billion euros in assets under management. As UH software companies navigate a rapidly evolving technology landscape, Jan and Fissar discuss Brigal Milestone's approach to value creation, including how the firm supports portfolio companies through technology, product and AI expertise. Prior to founding Bregal Milestone, Jan held investment roles at Makuria Investment Management, Sculpture Capital and Goldman Sachs. As Portfolio cto, Vassara works closely with portfolio companies on technology, product and AI strategy. Drawing on prior experience at Bain Co. And Brain Labs, Bergal Milestone was recognized as a top growth equity firm of 2025 and top private equity firm of 2025 by growth cap. I'm your host, RJ Lumbach.

Speaker B: We hope you enjoy the show.

Speaker A: If you like the episode, click to follow.

Speaker C: RJ Lemba is the Managing Partner of Growth Cap and the Executive Chairman of Market Insight Media. He is the host of Growth Investor, a podcast featuring today's best investors, executives and founders. In the minutes ahead, we'll uncover insights and strategies for accelerating growth and succeeding in business.

Speaker B: Jan and Visar, thank you so much for taking the time to join us today. It's a delight to be with you.

Speaker D: Hey Arjay, it's great to be with you.

Speaker E: Great to be here today.

Speaker B: Maybe what we could do to kick off is we'll do some introductions for each of you and then we'll talk more about Bergal Investments, Bergal Milestone in particular. Maybe Jan, you could kick us off with your intro.

Speaker D: Yeah, perfect rj, happy to. So I'm Jan. I'm the co founder Managing Partner of Bergal Milestone. It's a firm that I co founded, founded together with two partners just a bit less than a decade ago. And so we set ourselves up as a mid market PE firm with a focus on B2B software, AI and cybersecurity. And so we've got today just about under $3 billion in AUM. We invest across Western Europe. Our headquarters are in London and we've got a really international team uh, investing from here. And so when you think a little bit about how we set ourselves up and how we want to Invest in this market. We tried to do a couple of things our own way. So the first one is we really focused on finding deals bilaterally. So we have coverage of the whole European market which is obviously as you know, very fragmented and diverse. And so we go in that with a really thematic lens. We look at sub themes in those software, AI, uh, cyber sectors and then go really deep, find those best of breed assets and try to catalyze deals with them. And then the second one is, and that's where I'll hand over to Vasar who's on with me here today, is we try to bring a really operational lens to our investments. Right. About 40% of our people are operators by background and so we try to bring that into each of our investments, both pre and post deal.

Speaker B: Excellent.

Speaker E: Well, thanks Jan. Yeah, so I'm one of these aforementioned operating team members. So I'm an operating director here at Picard Milestone. Her name is Visal Shabi, one of a team of about 7 strong value creation professionals, um, looking after a range of kind of functional specialism. So from finance to go to market to data. I myself look after our technology and product capability which includes AI strategy both across the firm, helping the partners think through what we invest in, but also AI value creation initiatives.

Speaker B: Let's switch back over to uh, Jan, you know, things have changed probably since the macro environment in terms of the technology sector have evolved, you know, since you founded Bregol Milestone, you know, and, and so you've had to maybe shift how you think about maybe the investment opportunity set as well as how you create value with each Portco, maybe can you talk a little bit about that, how maybe in your mind you've adjusted over the last few years how you think about the market, the B2B software market, and how you think about what makes for a great investment opportunity for Milestone.

Speaker D: So look, fundamentally you're right, I mean the pace of change is probably faster than it's been. That said, I think over the last 20, 25 years or so that we've been doing this our sectors, right. The software technology sector has always been one that's been driven by innovation disruption. And particularly if you invest in the mid market, you have to invest in companies that are set up to change even over one investment horizon, let alone multiple if you're looking to exit and drive growth, uh, across multiple uh, investment horizons. So that hasn't changed. And as much as we're investing in a product today, we're investing in capabilities and teams and structures within businesses that make us Confident that the business is going to be able to transform with what's happening in the market. Specifically, of course, over the last few years, I guess since 22, 23, with the acceleration in AI LLMs, the last couple of years with more agentic workflows, that's been a key topic for us and really a focus on how we've built out our operating capability. But in terms of our investment lens, I would say it's an evolution rather than a revolution. How we think about the space.

Speaker B: And so now honing in on your AI capabilities and how you impart those on portfolio companies. Is there kind of, uh, an example and maybe given that this is all happening in real time, or you could also give how you propose to work with new companies that come into the portfolio companies, what you do in particular related to AI to maybe help the company transform or evolve into more rapidly what's happening in AI?

Speaker D: Yeah, uh, definitely. So let me just frame what we usually find in our companies and then maybe Vasar can talk a little bit about what we're doing about it. So mid market can mean a lot of things to a lot of people, particularly on different sides of the Atlantic. So what we mean, typically when we first invest, a typical portfolio company might have between 100 and 400 people or so, maybe between 20 and 80 million of, uh, recurring revenues. So that's the order of magnitude where we play. And so usually what we find in those types of companies is they have really capable engineering teams. When you go and talk to them about AI, you find AI experts in various clusters dotted around the organization and really interesting experimentation going on. But when you then talk about changing their whole org design or changing their workflows to be really AI first in engineering or think about changing their product architecture, then suddenly you're competing with everything else you're doing. You're trying to change the wings while the plane is flying. And so that's where Vasar, my partners and I had a bit of a rethink over the last couple of years and felt like we have to step up our game and provide more support to these portfolio companies to really be able to transform quickly.

Speaker E: As Jan says, we recognize that this is a capability and a need that's consistent across the portfolio and for new companies coming in. So really the thinking was, well, we should to some degree centralize this and deploy at scale across the portfolio. So we built a capability. We're calling it Braga Milestone amplify with the idea that we can kind of do two main things. The first is the ability to launch AI products directly into the portfolio company's product offering. So really kind of evolve and drive the innovation in the product offering so that you know, we can target kind of new types of customers or evolving customer needs as the customers themselves kind of become more AI first. And the second is around AI automation within the businesses themselves. So I think there's a lot of thinking going on at the moment that within a SaaS company the shape of the business will start to change. We're going to start to see things like ARR per head increase as more can be done on an agenda level. So the idea is to automate as much as we can in the back end to create more efficient companies. Now the capability is something we've launched, is something that's live across the portfolio now. And it takes of course different shapes depending on kind of what it is that we're trying to do. But in essence it's a dedicated team of AI engineers, architects and very specifically product managers, product owners who kind of think with uh, that AI lens that we can deploy kind of at scale, at pace to support our portfolio companies.

Speaker B: So I guess to understand it or to clarify from my end, you would look at the company's current set of solutions that it offers its clients and then you say, well hey, let's maybe modify that to make it more AI advanced or do you create a whole separate product or a mix of the both?

Speaker E: Yeah, I think the question really gets to the heart of product strategy. And I think for each portfolio company you have to really think about what does the end customer need? And what we're trying to do is serve those customer needs. So it gives you a couple of examples.

Speaker B: Right?

Speaker E: So let's take one of our portfolio companies or project management business and we've taken this company on a couple of steps in the AI journey. And the first step was to say, well, you know, now that there are AI energetic tools available, what the customers need is actually these agents that can, you know, autonomous agents that they can deploy to actually do some of the tasks that would previously have been done by humans. And it makes sense to do this from the project management platform because that's where all the data on what the projects that need to be done, that's where the data lives.

Speaker D: Right.

Speaker E: So that was the first step which we saw great success with. But over time of course this evolves, right, as the customers become more identified themselves and start to automate more of the workflows themselves that, you know, they build kind of best of breed, um, Agentic solutions rather than relying on maybe the more say, quote unquote generic ones coming from the project management platform. So again we then have to evolve and the thinking now is that, you know, we take this company going from a project management platform to kind of a system of intelligence journey. The idea being that the platform contains lots of the uh, information and data that kind of is at the heart of what the customer would do. And so the platform acts as kind of the nexus now for other agents across the customer deployed. So let's say customer X is using this project management platform and they have a, you know, an agent desk that agent platform, agent desk now interfaces directly with the project management platform. And this is transformation from system of record now to system of intelligence. So the project management platform becomes the center of all agentic activity. And part of the reason we're driving this both because we think it's useful, but a lot of other companies are starting to do this similar thing. You're starting to see SAP, for example, take themselves on this kind of system of intelligence journey as well. To kind of sum up for each portfolio company, we think very differently about what AI, uh, innovation means for them and how it serves their customers.

Speaker B: I can imagine, Jan, when you start talking to these prospective investment opportunities, that everyone's a little bit anxious about whether or not they're going fast enough or if they know everything they need to know to be competitive in the days, months, years ahead. Have you found that there is this kind of common question and so you milestone and your team are able to kind of fill that fear or anxiety, so to speak?

Speaker D: Yeah, it's a great point. I mean first of all, you see the whole spectrum and if they're anxious then that's a great starting point because it means that they understand the challenge and they understand the size of the prize that is really there. Right. So the effort and the transformation that is required to actually become an AI leader, these are the organizations where that's going to stick, where it's going to have top level support. And we love working with those founders and supporting them, I mean generally. Right. So I mentioned at the top we like to do bilateral deals with founder owned companies. Right. And so where that fundamentally works is, you know, you're always competing with the option of these are growing profitable businesses. You're always competing with the option of either doing nothing or running a sell side auction. And so you have to create that sense of excitement for the partnership that they could have with us. And one angle to get there is, as you say, to have a lot of operational conversations upfront pre deal. Right. And to create that shared vision. And it's not just that we can reduce their anxiety by telling them we have the resource, but we also create that enthusiasm. Uh, I'll give you another example rj. So there's a company that we were in conversation with and by now have invested in and they have a fairly complex enterprise grade software product and they found that they had inbound interest from smaller clients, but the product was structured in a way that onboarding them and serving these customers was cost prohibitive. You just couldn't take on a smaller 20, 30k annual contract value customer and they were losing all this revenue. And then once in a while they took one on and the unit economics weren't great. And so now with this additional outside capability, what they're doing now, and they're launching, I think a month from now is they're building a lighter weight AI first product. It's built on the same product strengths, but clients can self onboard, self serve and the goal is to drive real product led growth. Right. So on one hand you want to capture that additional ARR growth that was just falling away and on the other hand we want to reduce CAC by 20% or more. And when you get in those sorts of discussion, and not only as a suggestion but as ah, something that we can help implement, you know, you create that excitement that that's a foundation for a partnership.

Speaker B: Mhm. You know, one thing that I guess we don't typically talk about on the podcast is Europe as a geography or investing in Europe and you're pan European. It would be curious to hear about maybe the nuances of investing across different countries. Or are you focused on select countries in Europe?

Speaker D: Yeah, definitely. So we're focused on Western Europe. Right. North to south and we have a really, uh, international team. We cover all of them very proactively with native speakers. Right. We speak Finnish in Finland and Spanish in Spain and so on. And that's still important in Europe. Right. To have a real understanding of the local structures to be locally referenced. Right. If you're in Stockholm, nobody cares. If you have a great network in Berlin. You need to be relevant in the local market. But at the same time, each of these countries has local private equity growth equity firms. So what we really bring to the table is the international lens and the track record of having scaled these businesses internationally across Europe and across the Atlantic. And so the types of founders and entrepreneurs that we then end up partnering with are those who are generally strong in their own markets, but who have an ambition and the product there that wants to scale and can scale internationally. So in order to unlock these investments, you need to be relevant locally and understand how the market works. But then our ah, real value add is pulling the German business into the uk, the US into Scandinavia and vice versa.

Speaker B: And do you facilitate some of that through the other firms within the Bergal investments family or is it pretty much contained within the Bergal milestone network?

Speaker D: Yeah, I mean each of the Bergal firms run their own investment process end to end from, you know, the sourcing to the execution to the value creation. So we're all full stack PE firms and run that all in house. That said, we have a great relationship with the other firms of course, and a firm like Sage Mount for example, obviously has a tremendous network and track record in North America and we can help each other out across the Atlantic in that way.

Speaker B: Visar, I'm curious, switching gears back to value creation and AI. Curious if there's kind of like something more recent that you've discovered because AI is always evolving and there's always new product solutions being launched and this could veer more to the general. But is there something that particularly has you excited within the AI space and how it's applied to companies?

Speaker E: Yeah, sure. I mean I'm a tech person by background through and through and I think the thing that's exciting me most is no one's really settled on a name for it yet. So kind of this AI driven development as a concept. So what was previously known as kind of software development or software development lifecycle I would say is a solved problem. If you want to know what good looks like, you can just check a blog post out and it'll just tell you like this is what you do, this is how you set up a uh, modern technology company anyway that's out the window. And fundamentally nobody knows what software engineering will look like in two or three years, but suffice to say it will look very different. And everybody is trying to figure it out at the moment. Some are more advanced than others, but it's this funny Armstrong where both the AI providers and the companies using it are kind of constantly evolving all the time. So there's no kind of equilibrium. Now we're in the business of investing in software companies which sell software. So kind of the main kind of factory line is the software engineering production line.

Speaker B: Right.

Speaker E: And for me, seeing how that evolves will be the fundamental thing in changing kind of how our portfolio, uh, companies evolve as well. I appreciate that's a very kind of deep kind of tech answer. But the faster we can all crack how to deliver software better using AI, the better the software that will be delivered will become. And you know, I think early, uh, estimates vary wildly right from 30% to 60%. But that range, you know, even 30% improvement in kind of delivery velocity, et cetera, is a huge win, particularly when most of the time companies are constrained by the level of tech delivery they can do.

Speaker B: We're, um, entering the tail end here. And you know, maybe what we could do is close with Jan, maybe describing to the founders and CEOs in the audience the difference with working with Bergal Milestone. And you know, we covered some of the value creation stuff. You know, one thing we try to hone in on at Growth Cap is really the culture and the ethos behind the firm. Because ultimately it's the experience of the people involved in this company growth and scale process that's most important to many people. It's not just the end result of a, okay, we got a, uh, 3x5x return, but it's like, well, what was the journey like over those several years? So maybe if you could just share with us how you think about working with companies and what the difference is with working with Milestone.

Speaker D: Yeah, happy to. As I said, we're a very outbound, outward facing firm and we look to enter into dialogues with amazing companies that are in attractive segments, that are profitable, that are growing, that don't need to raise money and that have no shortage of people wanting to give them money if they choose to raise some. So I think the feedback that we've sometimes received is that first of all, we come in to the discussion with a point of view. We don't want to come in. And we try to tell this to our younger team members as well, and they do a great job of implementing it. Don't go to a founder with the expectation that they owe you any information. From day one, from the first time they sit across the table from us, we want them to feel like we're adding value. We want to set the tone of the partnership in that way to see how can we contribute, how would we contribute our experience, our operating resources, our network in countries where they might not be that strong yet, channel partners and so on, and how can we bring that to bear? And I think that's how I want to set the tone in these conversations and then build from there from that notion of respect for what the founders have built. And, you know, from that we can then build the trust that uh, their business is going to be in good hands.

Speaker B: Wonderful. Well, Jan and Vasar, thank you so much for taking the time. Uh, it's been a great conversation.

Speaker D: Thank you, R.J. thank you, R.J. appreciate it.