Minds Capital: Lessons from Fund 1 & Strategy for Flagship 2
Minds Capital founders share investment lessons from Fund 1, their bullish outlook on US private equity, and strategy for upcoming Flagship 2 fund with larger commitments.
After 15 months, Minds Capital Fund 1 has invested in 13 deals, committed to 3 more, and have several investment opportunities currently in "Partner Review." More than 90% of the capital has been deployed in deals from independent sponsors (vs. searchers). A few early deals were lost at the commitment stage because decisions took too long, pushing us to improve our processes & operations. Building repeat relationships with sponsors is a core focus, creating a flywheel effect.
Once equipped with an Investment Memo, a QoE report, and a pro forma model, Minds Capital uses a checklist with 80-90 items to vet each investment opportunity across four sections (market, target company, sponsor, and deal terms). This uncovers red & yellow flags, and also highlights a deal's strongpoints. The best base cases are those that constitute a continuation of the company's history and the sponsor's track record, as opposed to a thesis that includes too many variables. Finally, the partners at Minds Capital ask: "Is this the best deal in our pipeline right now," force-ranking the opportunities to avoid the "good enough" fallacy.
The team sees multiple macro tailwinds for US private equity. Recent tax changes accelerate depreciation, spurring CAPEX investment, while AI and data center growth add structural demand. Tariffs, for all their controversy, will in the near-term repatriate investment and enhance competitiveness of US-based companies. Productivity gains from AI, especially pushed by US companies, further strengthen the outlook. So, Minds Capital is long on US (private) equity, backed by historical evidence from established lower middle market investors achieving more than 3x MOIC.
With Fund 1 expected to be fully deployed by late fall, Minds' robust deal flow will continue uninterrupted into Flagship 2. The new fund will target the same types of opportunities, but with larger commitments of $1 to $3 million per platform. While Minds remains committed to its strong base of retail investors, SEC regulations cap participation at 99 investors per vehicle, prompting a minimum investment of $200,000 for Flagship 2.
More recent episodes
Working Under an Independent Sponsor Who Suddenly Passed Away
Former Chicago teacher G.R. Kearney transformed tragedy into opportunity, rebuilding his firm as Stacker Holdings—an employee-focused, EOS-driven private equity platform after his partner's sudden death.
Skipping $2m EBITDA Deals ("The Messy Middle")
Dan Tamkin of Resurgent Capital Partners shares his barbell strategy for lower-middle market PE deals, avoiding the "messy middle" to maximize returns.
Financing Add-Ons Without New Equity
Sam Turner built Advantos Group into a leading UK facilities maintenance roll-up through disciplined capital management, technology integration, and conservative leverage below 2x EBITDA.