AI can already automate close to 50% of knowledge work. Sahil Patwa believes the real opportunity isn’t building another SaaS tool. It’s acquiring entire industries and transforming them from within.
In this episode, Andreas sits down with Sahil Patwa, General Partner at Tenet — Europe’s first inception-stage investment firm dedicated to AI-powered rollups. Tenet just launched and has already made its first investment in the German tax advisory space.
This conversation dives into the difference between search funds and AI rollups, what makes the model venture-backable, the importance of founder empathy, and why some SMEs might go from 10% margins to 40% margins faster than we think.
The thesis: AI-powered rollups
Tenet calls its strategy AI Pro — AI-powered rollups.
The idea is simple:
AI can already automate ~50% of knowledge work
Many white-collar service businesses are low-margin and slow-scaling
Instead of selling them software, acquire them
Build an AI-native operating layer
Transform margins and capacity
Scale through M&A and organic growth
Sahil describes it as moving from:
“Sleepy service businesses to companies that operate and scale at software-like margins and software-like pace.”
This is not incremental digitization.
It’s structural transformation.
Why not just sell SaaS?
The common approach is obvious: build AI software and sell it to fragmented SMEs.
But Sahil argues that’s often the wrong model.
Many SMEs aren’t under-digitized because they lack tools.
They’re under-digitized because implementation and behavior change are hard.
Traditional SaaS requires:
Changing workflows
Structuring messy data
Re-training teams
Adopting new habits
AI changes that.
If product design is done right, the system adapts to how people already work — instead of forcing them to adapt to software.
In Sahil’s words:
“In the AI world, things can happen based on how you’ve always done them — just better.”
Why this isn’t a search fund
The obvious comparison is ETA (Entrepreneurship Through Acquisition) and search funds.
Buy a business.
Improve operations.
Sell at a higher EBITDA multiple.
Tenet’s model looks similar on the surface — but the underwriting logic is different.
Search funds optimize.
AI rollups transform.
Capital isn’t just used to buy one business and layer on debt.
It’s used to:
Build a proprietary AI platform
Automate core COGS (often 50–60%)
Improve margins dramatically
Create industry-level competitive advantages
Sahil explains:
“We’re not underwriting buying a business and running it slightly better. We’re underwriting fundamentally transforming industries using AI.”
That requires venture-style capital, flexibility, and product building — not just financial engineering.
The founder profile: empathy + AI-native thinking
Tenet typically writes €5M first checks at inception.
What are they looking for?
1. Empathy-driven operators
Change management is the hardest part.
Integrating SMEs, modernizing workflows, and aligning teams requires founders who respect what already exists.
Sahil spent years in digital transformation and emphasizes:
Empathy isn’t optional.
It’s the core variable.
2. AI-native builders
Not just ChatGPT power users.
They want:
Strong AI application engineers
Builders who know how to combine LLM “Lego blocks”
People who can drive 4–5x productivity internally
3. M&A capability
Corporate finance and integration experience are a plus.
Some founders learn it.
Some bring it.
But the skill must exist in the team.
Case study: Tax Force (German tax advisory)
Tenet’s first investment is Tax Force, operating in the German tax advisory market.
Why tax?
7–8 years to qualify as a tax advisor in Germany
Severe talent shortage
Firms actively refusing new business
50–70% of current work automatable today
Administrative burden dominates the profession.
If AI can automate even half of that:
Advisors focus on relationships and judgment
Capacity expands 3–4x
Organic growth unlocks instantly
This isn’t theoretical.
Demand already exists.
Capacity is the constraint.
Integration: the uncomfortable reality
M&A is notoriously hard.
SME integration is even harder.
Sahil’s take is pragmatic:
The key isn’t force.
It’s alignment.
Founders must:
Respect legacy operators
Understand incentives
Bring teams along
Use product design to reduce friction
AI works best when it enhances existing behavior rather than replacing identity.
The real moat isn’t just code.
It’s trust.
A bigger shift: services > SaaS?
One of the most interesting ideas from the episode:
In many verticals, it may now be better to sell AI-powered services than AI software.
Instead of:
Selling tools to operators…
The operator becomes the platform.
Margins move from:
5–10% → 30–40%
And scale begins to look more like software than traditional services.
If that model proves repeatable, it creates a new category sitting between PE and venture.
What Tenet wants
If you’re:
Building an AI rollup
Considering transforming a service vertical
Deeply AI-native and operationally experienced
Tenet wants to talk.
They believe AI rollups could define Europe’s next decade.
And they’re underwriting that belief from day one.
One-line takeaway
AI rollups aren’t about buying sleepy businesses — they’re about turning fragmented service industries into AI-native platforms with venture-scale upside.
