It’s no secret that the asset management industry has been challenged over the last several years forcing a re-think of business models. One of the big themes that has emerged is the role of “strategic capital”.
Strategic capital is is being used as a catch all phrase but can generally be seen as a long-term, value-added investment that provides more than just funding—it aligns with a firm’s long-term vision, supports operational and growth objectives with varying level of governance and control requirements.
In a bygone era, GP’s used to be ashamed to allow investors to buy a stake of their GP/Op co. In fact it was taboo and discussions around “strategic capital” took place in board rooms and off the record conversations with bankers. Fast forward to today, strategic capital is not only accepted, it’s very quickly becoming the norm and seen as a way to reduce risk, accelerate growth and create alignment through shared economic interest and partnership.
While the number of strategic capital providers has grown there is still a lot of ambiguity when it comes to matching sources and uses of capital.
While there may be strategic capital available to buy a stake in your business, you need to be certain it’s the right partner.
“If all they're trying to do is get the highest price for that particular part of their company that they're selling and that's the relationship, that's the check, that's not the deal we're going to do” - Charlie Ruffel, Managing Partner - Kudu Investment Management
In the latest episode of The Distribution by Juniper Square podcast I sit down with Charlie Ruffel, Managing Partner of Kudu Investment Management to discuss strategic capital and how it’s changing the private markets landscape.
Here are my top 10 takeaways from our discussion:
Seek a Capital Partner, Not Just Capital
GPs looking to sell a minority stake should prioritize alignment over price. The right partner brings strategic insights, not just liquidity.
Use Minority Capital to Solve Key Business Challenges
Smart GPs use minority capital for succession planning, GP commitments, or acquisitions rather than just de-risking.
Understand the Value of Permanent Capital
Investors prefer stable partners who won’t force an exit. GPs should consider how a capital provider’s structure impacts long-term control and strategy.
Distribution is Changing – Adapt or Get Left Behind
Private markets distribution is moving beyond institutional capital. GPs should explore interval funds, retail platforms, and innovative structures to expand their investor base.
Know Where Institutional Capital is Flowing
GPs must align strategies with capital trends—private credit, secondaries, and niche alternatives (e.g., agriculture, infrastructure) are attracting strong institutional demand.
The Boutique Model is Thriving—If You Get It Right
Institutional investors are backing specialists who execute exceptionally well in a niche. GPs should lean into their differentiated expertise rather than trying to be everything to everyone.
Valuation is a Science—But Alignment is an Art
Enterprise value is driven by profitability, fee structure, and client concentration. But alignment between GPs and capital partners is what makes deals work.
Don’t Chase Every Distribution Channel—Focus is Key
The best-performing managers aren’t everywhere—they double down on what works. GPs should refine their distribution strategy instead of chasing scattered opportunities.
Leverage the Power of Networks
GPs should seek out communities of like-minded firms to share best practices in compliance, fundraising, and growth strategies. Learning from others can accelerate success.
Private Markets are Still Inefficient – Take Advantage
The private markets ecosystem remains relationship-driven and fragmented. GPs who master branding, investor communication, and fund structuring will gain a competitive edge.
You can listen to /watch the full episode here:
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