Bain Capital’s Tech Venture Arm Is Steering Clear of AI Startups

Marguerite Gallorini, Bloomberg News

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(Bloomberg) -- A Bain Capital tech investment fund may be one of the few that isn’t looking to back the next cutting-edge generative AI startup.

“I think that’s earlier stage, more risky venture capital,” Bain Capital Tech Opportunities partner Darren Abrahamson said. “We were born to sit in between our venture effort and our large-cap private equity effort, and sort of fill that gap for later-stage companies.”

The fund focuses on four primary verticals: application software, infrastructure and cybersecurity, fintech and payments, and health-care IT. According to its website, the fund’s portfolio includes security firm Blackpoint Cyber, the health-care company Athenahealth and sports video analysis firm Hudl. The fund is just one of the strategies used by Bain Capital, some of which do center on more cutting-edge investments.

“What we’re looking for is established businesses, often founder-owned and -led who have reached some scale and are looking for not just capital, but support to help get them to the next level,” Abrahamson said in an interview with Caroline Hyde on Bloomberg TV.

The fund, which launched a dedicated team based in Europe, looks for founders worldwide, he said.

“Only one of our portfolio companies is actually from the Bay Area,” Abrahamson said. “Our job is to go find those founders, and often they’re not in places you might expect, but they’re building phenomenal businesses under the radar. And eventually we’ll get to a size and scale where they want a partner like us to help them sort of scale and grow.”

Part of getting their companies to the next level does entail leveraging generative AI tools, and nearly every business in Bain Capital Tech Opportunities’ portfolio has incorporated such tools across their engineering teams, prompting many to see productivity gains of 30% to 40%.

The fund isn’t looking — at least not for now — to back “the next model or pure AI company,” Abrahamson said.

“Over time, that will evolve,” he said. “But for now, that just feels to us a little bit early and a little more speculative than our focus.”

(Updates with more on Bain Capital investments in third paragraph. A previous version of the story corrected a reference to Athenahealth.)