4Why RIAs Signal a New Era

In the last few years, several marquee venture firms have quietly rewritten their charters by registering as investment advisers. Lightspeed, which now oversees about $31 billion, completed the switch in May 2025, following Andreessen Horowitz, General Catalyst, and others. The change looks technical, but its effect is anything but. An RIA designation liberates firms from the classic venture mandate of "Series A or bust," letting them buy public shares, participate in secondaries, and structure full buyouts. Andrew Medjuck, head of the alternative investment division at the Medjuck Family Office, calls it "a reset on what venture capital can actually do," replacing the wait-and-see posture with an ability to shape outcomes directly.

The timing is no accident. AI is outpacing the decade-long venture clock. Product cycles are collapsing, incumbents are vulnerable, and the best returns now sit where software and operating control meet. By adopting the RIA playbook, top firms can chase value wherever it emerges—whether that is a minority position in a fast-growing SaaS platform or outright ownership of a 50-year-old services business calling for an AI retrofit.

From Passive Bets to Active Builders

Traditional VC portfolios live or die by a few outliers. In 2024, investors closed roughly 15,260 deals, yet only a small fraction delivered consequential exit. The hybrid model flips that risk curve. Instead of scattering seed checks, investors hunt for profitable companies with sticky customers, durable cash flow, and rich data exhaust—elements private equity has prized for decades. Medjuck argues that buying control and injecting AI into workflows "isn't just faster adoption, it's expanding the total addressable market from software spend to labor spend."

Evidence is already visible. General Catalyst's proposed acquisition of a regional hospital network is designed to rebuild back-office functions with AI triage and revenue-cycle automation. Thrive Capital, meanwhile, raised a vehicle aimed exclusively at roll-ups where language models can compress compliance or claims-processing headcount by double digits. These moves mirror a broader trend: global secondary transaction volume hit a record $162 billion in 2024, a 45 percent jump year over year, as investors sought larger, more complex slices of mature assets.

Operationally, the hybrid strategy borrows private equity's rigor—90-day integration plans, KPI dashboards, and incentive structures—but keeps the venture taste for asymmetry. By owning the whole stack, firms can refactor pricing, swap fixed labor for elastic compute, and capture margin expansion that a minority stake could never access.

AI, Data, and the New Economics of Value

Why is this model surfacing now? First, labor is the single largest line item in knowledge industries. Legal services alone represent an estimated $890 billion global market, most of it tied to billable hours. Replace even 15 percent of that work with AI drafting and review, and the savings dwarf the entire annual spend on legal software. Second, proprietary datasets inside legacy firms create moats that generic AI tools cannot match. A compliance shop with decades of transaction logs can fine-tune models its rivals cannot replicate.

The prize is huge. PwC pegs private equity's current overhang of unsold assets at around $1 trillion. Much of that capital is sitting in companies where revenues are solid but margins are thin. Overlaying AI to remove manual reconciliation, underwriting, or intake work can double or triple free cash flow without a single new customer. That uplift is why Medjuck sees AI "resetting the economics" in labor-heavy fields like healthcare, insurance, and accounting.

Crucially, defensibility in a commoditizing tech stack now relies less on code complexity and more on distribution rights, regulatory licenses, and exclusive data rights. Owning the corporate entity secures all three simultaneously. Where software-only startups struggle to unseat entrenched vendors, a buy-and-transform approach lets investors control pricing, embed AI deeply, and pocket the full delta between pre- and post-transformation margins.

Benchmark partner Sarah Tavel sums up the shift in her essay "AI Startups Sell Work, Not Software," arguing that language models are already selling finished tasks and progressively climbing the value chain of knowledge work. LLM-powered startups begin at the low end—simple transcription, basic copyediting—but every new model release lets them automate more complex tasks, eating into the higher end of professional services. Investors that own operating assets instead of mere software licenses can capture that compounding efficiency directly, rather than ceding it to customers or vendors.

What Leaders Should Watch

For executives running incumbent businesses, the message is clear. The capital knocking on your door is no longer just looking to buy a minority stake; it wants to reinvent your operating model. That can feel threatening, yet it also offers a path to leapfrog slower rivals. Leaders should ask three questions:

Where can AI substitute knowledge work within 12 to 24 months? Early wins in claims triage, document review, or patient scheduling can fund broader change.

What proprietary data or regulatory positions make our company uniquely valuable? These assets grow in importance as AI commoditizes surface-level capabilities.

Are we prepared for an owner who will measure success in margin points, not just revenue multiples? PE-style governance brings weekly dashboards and a bias for decisive action.

For investors, the opportunity is still in its early innings. The secondary market's rapid growth signals mounting appetite for liquidity inside long-held private assets, providing elegant entry points without auction-level pricing. At the same time, the number of SEC-registered advisers climbed to nearly 15,900 in 2024, underscoring how quickly capital allocators are embracing a multistrategy posture.

Medjuck predicts the biggest economic shift will be a realignment of labor and capital. "Capital will flow more actively into operational assets, not just ideas. Labor will shift from human-executed to AI-orchestrated." In practice, that means fewer nine-figure funding rounds for pre-revenue apps and more eight-figure buyouts of profitable service providers ripe for automation. The winners will be the firms—and the management teams—willing to own infrastructure and rebuild it from within.

The hybrid PE-VC model is not a fad. It is the logical answer to shorter innovation cycles, surging secondary liquidity, and AI's insatiable appetite for data and control. For leaders deciding whether to partner, sell, or compete, the clock is already ticking. The smartest money has raised the stakes, and the next decade's most compelling returns will come from those who take the entire table, not merely a seat.