For all of us, reaching a 25th birthday is something of a watershed moment. Gone are the teen years of self-discovery. Past are the college years of exuberance. Still young enough to learn fast and grow, but now it’s all getting a bit more grown up and serious.

And twenty-five years is a lifetime in technology. In 2000, 6% of the world used the internet. Today, AI has the potential to rewrite the value of application software. At our Software Leadership Gathering this year, I found myself reflecting on what got us to this milestone. If I had to distil it, it is that youthful energy and ambition focused on some of the most exciting technology tailwinds driving growth in Western economies. And today, here we stand again, with GenAI as the next tailwind.

Hg spun out of Mercury Asset Management in 2000, just a year after Salesforce launched one of the first SaaS solutions into a very sceptical market (‘critical data held in the cloud?’). Since then, we’ve navigated repeated technology evolution – internet, mobile, cloud and now AI. Each of these shifts has augmented the way individuals work, creating huge opportunities for automation and for the companies we back.

Over the years, we’ve worked hard to grasp this opportunity, slowly gathering momentum. Five years ago, our assets under management stood at $30 billion. Today, we’re at $100 billion, with a portfolio of more than 50 businesses worth nearly $200 billion in enterprise value.

This acceleration hasn’t come out of nowhere. It is the flywheel effect of years spent accumulating expertise. Developing tools and approaches. The result of trial and error (and failing fast). The 10,000 hours of investment committee time each year looking at software investments. Deepening and expanding our operational capabilities. Specialising. And, most importantly, working with hundreds of incredibly capable business leaders that deeply understand technology and how to scale their businesses.

Getting here wasn’t always linear. We made choices that seemed far from certain at the time. We specialised when others stayed generalist. We built capabilities that didn’t exist in conventional private equity. We took some wrong turns and found our share of dead ends. But as a result, we have evolved some processes and approaches that have later become industry norms. Each decision required a conviction that investing in the long view would eventually prevail.

In the busyness of every-day, we don’t often take the time to reflect on such things. To mark our 25th anniversary, I’ve spent some time thinking about the handful of big decisions that got us here today and, more importantly, guide on where we are headed.

Today, Hg is one of the most active private equity investors focused on software and ranked in the top 10 firms globally. But it wasn’t always the case.

We started making tech and software investments in 2001, when our chair, Nic, joined to form and lead the Hg TMT team. This resulted in our investments in IRIS Software Group in 2004 and Visma in 2006, both of which remain as active investments today.

Nic became CEO in 2007. He saw what a handful of others did at the time; that software was beginning to eat the world. Crucially, he is also one of the most competitive people I know, and he has no ambition to be second best at anything. His conviction was to transition Hg to become a business software specialist. Looking back, it seems obvious, but at the time it was a brave decision, and Nic knew it was crucial if we were to emerge to compete with the best in the industry.

Why software? It was clear that businesses everywhere were automating manual processes and continuing the move from paper to digital. But the driver underneath this was more fundamental. As Moore’s Law predicted, ever more powerful computers would be on every desk and in every pocket, enabling software to address an ever-greater number of problems, and demand would naturally follow. And to get that business software into every corner of Europe created a huge opportunity for investment. Plus, it might have helped that IRIS and Visma, amongst others that followed, turned out to be great business with potential to compound growth over many decades.

The global financial crisis ensued, and the resilience of our software investments through that downturn, validated the thesis. Mission-critical tools retain customers even when budgets were slashed elsewhere. So, by 2011, we were ready to go all-in. We launched Mercury, our first software-only fund, led by yours truly. Having quit my job at Apax, I was betting my career on this belief (although I may have presented a little differently at home!).

But it’s not just ‘software’ that defines Hg. It is much deeper than that. What started with tax and accounting software then expanded into ERP and payroll, then a series of other ‘white collar’ vertical applications – each carefully assessed. This ‘inch wide, mile deep’ approach is so critical to building real expertise. Narrow and focused. We took time to learn what good looked like in each vertical. We understood the specific challenges of finding and scaling these businesses and developed pattern recognition.

Today, we invest across eight vertical ‘clusters’ within business software and services, looking for fragmented customer bases, mission-critical applications, and subscription models. From small to large, across multiple investments per cluster. This focus allows us to move quickly and critically to be the very best partner for business leaders on that journey. To contribute some of our accumulated expertise to the development of those businesses – whether that is in sales, customer success, software development or now building product that uses AI.

Over the last two decades, European application software has truly come of age. SAP continues to lead the ERP pack and, at the time of writing, is Europe’s most valuable business. We’ve also seen a host of other companies, including our own such as Visma, IFS, P&I, and Access Group, become industry leaders. Businesses need sophisticated software to handle their complexity, creating opportunities for those who can deliver it. Our growth, the growth of the businesses we back, and the growth of the businesses they serve – reinforces one another.

Today, twenty years on from Nic’s initiative, the workplace automation trend that drove our original thesis hasn’t slowed. If anything, it’s accelerating.

Even the greatest investment strategy is useless without capital to execute it.

We have benefitted over these decades from a close and extremely supportive relationship with our investors. The hundreds of pension plans, endowments, and family offices that trust us to invest their capital. Having a large and hugely dedicated team focused on their interests means we have never lost sight of why we exist. Our purpose isn’t just to invest capital, but to do so consistent with a set of values and to ensure that it returns for the underlying individual. Our investors are ultimately millions of savers who depend on us to deliver. These can be nurses, firefighters, and teachers who will need this money when they retire. Our responsibility is to those individuals, and we keep this at the front of our minds, always.

For us, this responsibility meant introducing structure and discipline. To stay true to an investment strategy focused on backing long term, compounding technology businesses, during even the most exuberant market contexts. Of investing continuously in our capabilities and people and never resting in the quest for improvement. And ensuring that the interests of the fund and its investors are always put first.

And doing so transparently. Raising our mistakes and listening intently to our investors on how we can improve. We’ve been told repeatedly that our investors value the candid communication we provide about challenges, as well as victories. This is what builds trust over the long-term and allows us to strive to improve knowing that our customers are aligned.

The results validate our common goals. In 25 years, we’ve delivered around $30 billion of cash proceeds to those investors, or 3x what we originally invested with more to come.

Our discipline has not come at the expense of innovation. Hg was arguably the first private equity firm to really pioneer the truly long-term hold. Investing in businesses over generations of maturity across different funds. Our 20-year partnership with Visma has taken capital from seven Hg funds supporting a company that has grown more than 50x in enterprise value. To make this possible we have frequently recapitalised the company, providing liquidity to investors while continuing to back this exceptional business for the long term. For us, it’s about patient business building, supported by patient clients, invested across dozens of such long-term compounding businesses.

Today our clients are more important than ever. As we enter a new quarter century, our industry is more mature, but we remain as deeply appreciative of the support, engagement and feedback as ever that we get from hundreds of investors. You keep us on our toes, and we are so much better for it.

If your strategy is to build great software and services businesses, you soon spot that the recurring challenges of scaling technology companies could benefit from sharing accumulated expertise.

What started as a small portfolio support team two decades ago has grown into a several hundred-strong value creation engine, with C-level experience across growth, pricing, AI, technology, cyber, product strategy, talent, ESG, finance and legal.

Our focus on business software means we can keep investing in the team, knowing that every team member will leverage their expertise across each company that we back. We expect to roll up our sleeves to help. And our portfolio to do the same. It’s a close family with businesses able and willing to share insight, expertise, customers and even products. Looking out for each other, sharing homework.

This narrow approach has paid dividends during the cloud transition. Each time we helped a company move from an on-premise product strategy to SaaS, we learned more about obstacles, timelines and costs. This experience meant we could set expectations, minimise pitfalls and contribute. Pattern recognition (and volume of such ‘training reps’) is what really matters.

Today, our AI team is helping our funds to target similar benefits. The AI landscape changes weekly, but with visibility across various end markets and a couple of thousand products selling into those markets, we can quickly iterate what works. When we learn how to optimise AI product builds with one company, we can rapidly deploy that learning elsewhere. When another finds the best way to deploy AI-first operational product architecture, the whole portfolio benefits.

Our Serial Chair programme also exemplifies this approach. This crack squad of a dozen highly experienced leaders work closely with portfolio CEOs and CFOs, providing the kind of guidance that only comes from having been there and now wanting others to succeed. Experience counts for a lot and the feedback we get on this unique group proves that it is invaluable.

As AI transforms the value of workflow software, our value creation model will evolve too. That’s why AI is our largest and fastest growing capability. We’re also ‘refounding’ each of functional teams to be truly ‘AI native’. But the principle remains: combine deep expertise with hands-on execution to help our investors’ companies succeed. Invest in what might work, fail fast, and follow on.

Perhaps the unifying thread that links every action over 25 years is culture. It started with the founders of standalone Hg, the formidable duo of Ian Armitage and Frances Jacob, who led that spinout a quarter of a century ago, and drove a sustained culture of learning, improvement and teamwork that has permeated the walls ever since.

Today we have augmented this cultural bedrock with a leadership team of lapsed engineers. This creates a foundation which combines discipline with entrepreneurship – a mindset that weaves through every decision. Discipline ensures long term consistency. It’s the reason we’ve stayed true to our promise and remained focused on workflow software. But entrepreneurship also matters, where people are empowered to challenge conventional thinking and experiment.

Our culture is closely aligned to that of a tech company. This means embracing constant iteration and improvement. We ask how things could work better rather than defending how they’ve always been done. Even when we’re performing well, we look for the next improvement. We invest. Take calculated risks. This restless curiosity percolates through the entire organisation.

Our approach values substance over style. When someone has a good idea, it doesn’t matter who they are or where it came from. If you’re open to feedback, colleagues will help you improve – directly but constructively. We value this highest quality mindset in everyone.

As a result, we have deep teams not individual stars. Ask any sports fan what drives long term success, and it starts with the whole team. 1,000 people to get the car and driver to the track on Sunday. A breadth of team sharing expertise and knowledge to own collective success. Often, I read an internal announcement of a new fund investment or a major project and the list of direct contributors across our firm is at least 50 people long. More than 50 individuals who had a direct hand in one deal happening across dozens of disciplines. An army of expertise actively collaborating.

Such a culture remains the foundation of our success. Strategic decisions, operational capabilities, and financial discipline all flow from team dynamics and culture. In a rapidly changing world, culture keeps us learning, disciplined and entrepreneurial.

Today, Hg operates from both sides of the Atlantic, with teams operating from offices in New York and San Francisco alongside our deep European roots. This transatlantic presence has become one of our defining investment strengths, but building it required patience and careful thought to maintain what makes us distinctive.

We opened a New York office in 2019. By then, we were already spending significant time with our portfolio and peers in the US, and the transatlantic potential of the highest-quality software businesses made such an expansion logical. Nevertheless, we had to seek to do it properly.

San Francisco followed in 2022. We’d seen the benefits of New York and knew California would be fertile ground for people, ideas and investments. Importantly, it gave us presence on the West Coast – home to an ecosystem of executive talent, software innovation, and AI development that remains unrivalled. In January 2025, this culminated in our AI ‘Immersion Therapy’ summit – bringing together leaders from the likes of Anthropic, Cognition, Intercom, and many others with dozens of our portfolio chairs and CEOs in Menlo Park. The practical conversations reinforced why physical presence matters. The speed of innovation, the density of expertise, the informal networks where real insights are shared.

Such transatlantic presence creates unique advantages to scaling great software businesses. We help European and US headquartered portfolio companies navigate everything from go-to-market strategies, product adaptation, to regulatory requirements. We provide access to talent pools and customer bases. Our expertise is practical, accessible, and supported by the community.

At our industry wide Software Leadership Gathering in Lucerne earlier this year, Nobel laureate Geoffrey Hinton delivered a sobering assessment of AI: "What we’re seeing now is shocking from the perspective of 10 years ago, and I suspect that what we see in five years’ time will be shocking from our perspective now."

The pace of AI development is unprecedented. Models today are already good enough to drive transformational change, but they keep improving. AGI is a near term prospect. When I look ahead to the next decade, getting this "right" could create so much business value. And more than two decades of software investing should have prepared us to tackle how jobs may transform in the everyday workplace using this incredible technology.

The most tangible impact so far has probably been in software development itself. We’ve actively rolled out AI coding agents across the portfolio. They are already delivering material productivity gains, and we expect that to double or more in the next year. For the first time, software development is getting cheaper, not more expensive. We’re moving from scarce to abundant developer resource, meaning product leaders are no longer asking ‘what can we afford to build’, but rather ‘what should we not build’.

Product focus, understanding and capability is critical. And now Reinforcement Learning is bringing that same capability and performance improvement from coding into vertical applications.

Of course, we are alive to the risks of platform shifts. SaaS took almost two decades to meaningfully displace on-premise solutions in many end niche markets. In fact, the trend continues to this day with many niche verticals still on the journey to SaaS. The pace of AI development suggests today’s leaders may need to move faster this time ahead. And I know we won’t get everything right during this period, but we are on it, learning, trialling, adapting and executing.

There's also the broader impact on work itself. Some disruption is likely, and some sectors will be affected more than others. However, if history is any guide, the nature of work will evolve, with humans finding new roles where we add most value away from the mundane and repetitive tasks that today characterise many white-collar roles. And where there is unmet demand – in need for healthcare for example – the productivity effect should be profound. What is certain is that workplace automation, the trend we've backed for 25 years, will continue.

Despite the rapid improvement in AI’s capabilities, succeeding in workflow software is often about the ‘last mile’. This is the in-depth understanding of customer workflows that’s required to eliminate friction. Adapting the product to different use cases, regulatory frameworks and business cultures. Our portfolio companies have spent years navigating these intricacies. We and they understand why German public sector payroll is a distinct segment, or why vertical industrial ERP customers have unique workflow needs.

This domain expertise gives our companies an edge. But we know this advantage must evolve. The companies that come out as winners from AI will be those that combine their domain expertise, workflow data with AI-first thinking, moving at startup speed while leveraging decades of customer workflow understanding. That's why we're investing heavily. Our Data & AI team has grown to dozens of in-house specialists, supported by hundreds of external contractors, working across many hundreds of live AI projects in the portfolio. We're approaching AI with startup intensity. We're experimenting daily, iterating rapidly, and staying intellectually flexible.

This mindset has helped us build partnerships with the leading businesses like Anthropic and OpenAI, as well as AI pioneers like Cognition and Replit to bring their products and capability to the portfolio. We launched our in-house AI product incubator in early 2024, which has already helped build and successfully launch revenue generating products in many portfolio companies.

The potential is huge. AI innovation mixed with decades of scaling application software as the value of technology increases in every white-collar workplace.