Q&A with Orlando Bravo on private equity's big challenges

• Our discussion included the new funds, PE's challenges, AI, and the buzzy deal he passed on.

What follows is an edited transcript of our conversation:

Axios: You raised the same amount for your flagship fund as you did in 2022 ($24.3b), but upsized your midmarket fund (to $8.1b from $6.2b). What does that tell us?

Bravo: "Each fund is sized appropriately for its opportunity. And what's going on is that the midmarket's getting a little bigger, or the definition of a midmarket company keeps rising.

• "In terms of the flagship, it gives us all the capital we need to be the number one player in software for the categories we like."

What are you going to talk about in Berlin?

"The big challenges facing private equity. To put it very simply, private equity has a problem putting money to work and returning money.

• "I think one of the causes for both is there are too many worries about the macro — all of these factors that are not meant for our industry ... These are things our industry cannot control and certainly cannot predict."

Are you saying PE should ignore the macro?

"Just worry about the business."

Aren't PE-backed businesses impacted by the macro?

"If they're being impacted you're paying attention to the business. But I don't know how private equity buys a business that is heavily impacted by tariffs, yet I'm going to pursue it because I'm going to flip a coin on where public policy is going to go. I wouldn't touch that. It's not feasible, unless you want to gamble.

• "Same thing if you buy a business where, if interest rates go up another 200 basis points you're in trouble. Good luck. You're gambling with people's money."

A big PE narrative was that Biden's antitrust regime was chilling sales of tech companies to strategics. Why haven't we seen more exits so far in Trump 2.0?

"The new antitrust regime hasn't been tested ... There are still some. Sometimes in policy you see a continuation of the past, particularly if you have deals that are still under review from the past administration. And there are a few of those overlapping deals."

What is Thoma Bravo's best internal use case for AI?

"Summarizing data. But right now there is not a compelling use case we see that will dramatically affect how we add value."

Do you think that's just a matter of time?

"It could be. Of course we have lots of data from a private equity standpoint, about $30 billion of revenue coming from our software companies — by geography, by deal, by customer — but you don't need an enormous model for all that stuff and a lot of models in the past could predict that information.

• "Technology is evolutionary in the corporate world, not revolutionary, so it's going to take time."

Last year we discussed Thoma Bravo's decision to pass on helping Elon Musk buy Twitter. You felt good about your decision. Now that he's merged X with xAI, do you still feel good about it?

"Absolutely. It's not a deal for us."