How Karmel chooses sectors to play

Note: The securities mentioned in this podcast are not considered a recommendation to buy or sell and once should not presume they will be profitable.

In this episode of The Private Equity Podcast, Alex Rawlings welcomes Scott Neuberger, Co-Founder and Managing Partner of Karmel Capital, a private equity firm investing in late-stage software and AI companies. Scott shares deep insights into how Karmel Capital leverages AI within its investment process, how they identify and evaluate late-stage tech businesses, and why they’re placing strategic bets in the infrastructure layer of AI.

Scott explains the firm's capital efficiency-focused strategy, how they rank companies, and what metrics truly distinguish iconic businesses from the rest. He also discusses how AI is transforming internal operations and why firms must go beyond the hype to truly implement impactful AI solutions.

Later in the conversation, Scott offers practical advice to portfolio company leaders on how to begin leveraging AI meaningfully—starting with labor-intensive areas like customer support. He finishes by outlining Karmel’s top-down investment approach to sectors like cybersecurity and why infrastructure plays offer value and growth.

Whether you're investing in tech, operating a portfolio company, or just curious about how AI intersects with private equity, this episode is packed with real-world insight.

⌛ Episode Highlights & Time Stamps:

00:03 – Introduction to Scott Neuberger and Karmel Capital
 01:00 – Scott’s journey: entrepreneur turned investor
 02:19 – The mistake of investing too early in venture capital
 03:47 – Why Karmel focuses on measurable, repeatable metrics
 04:45 – How they assess capital efficiency in tech companies
 06:41 – Key metrics and importance of experienced management teams
 08:38 – Evaluating human capital and talent within portfolio companies
 10:05 – Zooming out: The “mosaic theory” of identifying strong investments
 10:33 – How Karmel Capital uses AI internally for data collection & analysis
 13:22 – AI investing: why infrastructure is Karmel’s focus
 15:49 – Pick-and-shovel strategy: betting on infrastructure vs. applications
 17:44 – Advice for portfolio execs on where to begin with AI
 18:43 – Customer support as a high-impact AI use case
 21:09 – Navigating noise in AI investing: how Karmel decides where to play
 22:34 – Case study: AI in cybersecurity and the top-down analysis approach
 24:59 – The arms race in cybersecurity: AI on both offense and defense
 25:29 – Scott’s reading and listening habits (inc. 20VC podcast)
 26:56 – How to contact Scott

Connect with Scott Neuberger:
📧 Email: scott@karmelcap.com

🌐 Website: www.karmelcapital.com

Raw Selection partners with Private Equity firms and their portfolio companies to secure exceptional executive talent. We focus on de-risking executive recruitment through meticulous search and selection processes, ensuring top-tier performance and long-term success.

🔗 Connect with Alex Rawlings on LinkedIn: https://www.linkedin.com/in/alexrawlings/

🌐 Visit Raw Selection: www.raw-selection.com

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