25 Years of KKR, $758B AUM: Philipp Freise's Lessons from 50 Years of Private Equity

Philipp Freise has spent 25 years at KKR, one of the largest investment firms in the world with over $750 billion in assets under management. As Partner and Co-Head of European Private Equity, he's experienced the industry's transformation firsthand over two decades — from the dotcom era through the financial crisis to today's AI revolution. In this episode of Unicorn Bakery, he talks about how artificial intelligence is fundamentally reshaping private equity, why German pension funds are massively behind their international peers, and why building substance is harder for founders today than simply riding momentum.

How AI Is Compressing the Private Equity Value Chain

AI isn't just changing individual portfolio companies — it's changing how private equity firms operate entirely. Due diligence, once a weeks-long process requiring large teams, now moves significantly faster. That shift changes where value creation happens: what used to consume huge amounts of time in administrative and analytical work is increasingly replaced by a sharper focus on organic growth.

At the same time, roll-up strategies are entering a new dimension thanks to AI. Service businesses can be merged faster because many of the operational integration steps that used to take months can now be handled in a fraction of the time. As a result, organic and inorganic growth are merging more than ever before.

Another effect: AI enables smaller teams. But that also means founder due diligence becomes more important than ever. When a team is smaller and more responsibility sits with fewer people, the person at the top decides almost everything. Investors have to look more closely at who's actually running a company — not just what the company does.

German Pension Funds: 100x Behind the US

A central theme of the episode is the capital market itself. Philipp Freise cites a striking number: German pension funds invest only 0.1% of their capital in venture capital, compared to roughly 10% in the US — a 100x difference.

There is some movement, though: the recent increase among German pension funds has been over 50%, even if it's growing from a very low base. The structural problem remains, however, and it limits how much capital domestic institutional investors can channel into future technologies.

At the same time, private equity is opening up increasingly to retail investors. Through co-investment vehicles, practically anyone can now invest in PE strategies that used to be reserved exclusively for institutional investors. This is changing the capital base of the entire industry.

Another interesting point concerns IPO windows. Companies like SpaceX and Anthropic are currently testing whether large, capital-intensive firms can successfully go public. A successful IPO from either could unlock the liquidity backlog that has built up across the market for years — capital currently tied up in private companies could be freed up again.

Europe's Opportunity: Geopolitics, Industrial AI and Robotics

Geopolitical diversification is making Europe more attractive from an investor's perspective. International investors are increasingly shifting allocations in favor of Europe, as pure concentration on the US or Asia is no longer considered sufficiently diversified.

For Germany specifically, Philipp Freise sees a major opportunity in Industrial AI and Robotics. He names companies like Helsing and Neuro Robotics as lighthouse projects, showing that Germany can keep pace technologically and entrepreneurially in these fields.

A decisive factor for the long-term success of these companies is defensibility — how truly defensible a business model actually is. In Freise's view, this increasingly comes down to proprietary data. Software without a real data moat can be replaced quickly, no matter how good the product looks today.

Substance Over Momentum: What Founders Really Need Today

One key takeaway from the episode: reaching €10 million ARR is easier today than it used to be. But scaling beyond that point is brutal — more brutal than ever before. The market forgives fewer mistakes once a company moves past the early growth phase.

When it comes to choosing investors, the best ones are a small handful. Signaling effects shape the entire funding path — having the wrong or right names on your cap table in an early round can still be felt years later in follow-on rounds.

Perhaps the most important lesson from 25 years in private equity and watching countless founding teams comes down to something simple, as Philipp Freise puts it: don't complain, keep going. Setbacks are part of the journey — what matters is how founders deal with them. In the end, it's the people who take action who actually move things forward.

The episode offers a rare glimpse into the mindset of a private equity veteran who doesn't just think in numbers and strategy, but has a genuine feel for what makes founders and companies successful in the long run.