To make it easier for you to read this article, we suggest downloading it in PDF Format.
Let’s start with GenCap’s founding story. Both of you bring very different backgrounds—operator and investor. How did these complementary experiences lead you to identify the opportunity for GenCap Partners?
We bring complementary backgrounds that directly address Southeast Asia’s SME succession challenge. Zachary spent 8 years in private equity, evaluating over 1,000 businesses and deploying more than US$150M in investment capital. He observed that while VCs excel at funding high-growth startups, a large, underserved market of profitable, established SMEs often goes unnoticed. Eric, on the other hand, spent a decade as COO across three tech startups in payments, advertising, and Web3, experiencing firsthand the complexities of building businesses in Southeast Asian markets.
We both recognized a major opportunity: hundreds of thousands of profitable SMEs generating strong cash flows are facing succession crises. These businesses represent the vast majority of the private sector but fall between traditional investment models—too small for most PE funds and too mature for typical VC targets.
GenCap brings together three critical ingredients: quality assets (profitable SMEs with succession needs), intellectual capital (experienced operators who can grow these businesses), and financial capital (structured with downside protection for investors). By pairing searchers who excel at deal-making with operators who know how to manage and grow businesses, we aim to capture proven value while avoiding startup risk. It’s a complementary model designed specifically for Southeast Asia’s diverse investment landscape.
GenCap adopts a self-funded search model with a unique twist: combining operators and searchers. Can you walk us through how this hybrid structure works in practice?
We split responsibilities between searchers and operators based on their strengths and interests. Searchers lead deal sourcing, diligence, and capital raising. Operators focus on operational due diligence, development of the operating plan, and investor pitch. This early collaboration is critical—investors evaluate both the deal and the future management team.
Post-acquisition, the searcher becomes Chairman, focusing on corporate development, financial management, and bolt-on acquisitions, while the operator takes on the CEO role, running the business. Both hold meaningful (sweat) equity stakes, with operators typically receiving more given their central role in value creation.
What makes this work is a combination of complementary skills and a clear division of labor—searchers excel at deal-making, operators at business-building. By partnering from the outset, we leverage their respective strengths, foster mutual respect, and increase the probability of success.
In many ways, GenCap operates more like a platform with the goal of executing serial acquisitions. What is your overarching strategy, and what value do you offer to both searchers and operators?
We’re building a decentralized network of quality SMEs, each led by high-caliber managers. Every company retains its independence while gaining access to shared resources and operational expertise.
For searchers, we provide proprietary deal flow, best practices, and proven operators. For operators, we offer deep acquisition expertise (via searchers), operational playbooks, a peer community, and leadership coaching.
We scale by having multiple searcher-operator pairs working in parallel. Searchers can partner with different operators based on industry fit, creating a dynamic ecosystem where expertise compounds.
What sets us apart is our deep Southeast Asia focus. We’ve built a local ecosystem of intellectual capital and provide investors with access to regional opportunities they understand. We’re not pushing for consolidation—we’re preserving what makes each SME unique while providing the tools for growth.
One of your key goals is to significantly shorten the typical deal cycle, from around two years to just 6–9 months. What processes or support mechanisms make this acceleration possible? In your view, why do some traditional SFs struggle during the search or acquisition phase?
We’ve embedded agility into our operating model through several strategic mechanisms that enable fast, efficient deal execution. Our searchers maintain a continuous market presence, positioning us to spot and act on opportunities quickly while building a shared knowledge base that accelerates the team’s learning curve. We also maintain trusted relationships with experienced brokers who understand our investment criteria and pre-filter deals, allowing us to focus on viable opportunities rather than dead ends. This persistent market engagement gives us a significant first-mover advantage in competitive situations.
Organizationally, our localized investment committee is streamlined for rapid decision-making because they understand Southeast Asia. Most importantly, we exclusively partner with operators who bring proven domain expertise. Their industry knowledge eliminates the steep learning curves that often derail acquisitions, allowing them to focus immediately on value creation and operational improvements.
Together, these systems form a competitive moat that enables us to move decisively when the right opportunities arise.
Asian markets are built on relationships that take years to develop—time that traditional search funds often can’t afford. While private equity managers may spend 2-5 years cultivating deal pipelines and partnerships, search funds typically operate within a compressed 2-year window to source, evaluate, and close a deal. In Southeast Asia, deal timelines often exceed this window, and valuations tend to reflect the region’s high-growth profile, especially in markets like Vietnam and Indonesia, which global investors may not always fully appreciate.
Are there particular sectors, regions, or initiatives you’re especially excited about as you continue to scale the GenCap model?
We are particularly drawn to niche businesses that generate stable cash flows within non-cyclical industries and demonstrate strong long-term growth prospects. Our target sectors span a diverse range of defensive industries, including industrial and engineering services, food processing, technology enablement, healthcare, retail and wholesale distribution, professional services, financial services, and education. These sectors align with our investment thesis of acquiring resilient businesses that can deliver consistent returns regardless of broader economic cycles.
Geographically, we’re currently focused on Singapore. It’s the ideal market to validate our model: strong rule of law, available debt capital, and a mature SME ecosystem facing real succession challenges. We’re working to close a couple more deals here while building our network of search and operator partners.
Malaysia is our natural next step, given the cultural similarities and our familiarity with the business environment. However, we’re disciplined about not spreading ourselves too thin. We aim to execute a few deals exceptionally well in Singapore before expanding elsewhere.
The beauty of our model is that it’s highly replicable once proven. Each successful deal strengthens our playbook and credibility, making the next one easier, thereby creating a flywheel effect. We’re building for the long term.
You recently closed your first acquisition. What can you share about that deal, and what does your current pipeline look like?
Our first acquisition is at the intersection of healthcare and software. We partnered with a former healthcare startup co-founder to acquire a 20-year-old company providing clinic management systems, hospital information platforms, and data security solutions. With over 2,000 clinics and 30 hospitals as clients across Malaysia, it generates strong recurring revenue. The deal came via a corporate spin-off—the parent company no longer saw healthcare software as core to its strategy. This misalignment allowed us to acquire a profitable, established business at 4–5x EBITDA, well below typical software multiples.
Since then, momentum has grown. We’re past the purchase agreement stage on an accounting services business and currently conducting due diligence. We’re also in advanced talks for a freight forwarding company and actively arranging financing.
Our broader pipeline includes compelling targets across corporate training, early childhood education, and MRO (maintenance, repair, and overhaul) services, all aligned with our thesis of stable, cash-generating businesses in defensive sectors.
Asia is emerging as a dynamic region for SFs, particularly in markets like Singapore, Japan, and Australia. What market dynamics are fueling this growth? And how would you describe the unique aspects of negotiation and deal-making in the region?
Three key dynamics are driving search fund growth in Southeast Asia. First, aging SME owners face limited exit options—their businesses are too small for meaningful IPOs, and traditional PE often overlooks them due to its focus on larger deals. Second, talented operators are increasingly dissatisfied with corporate roles and are seeking business ownership opportunities, but starting from scratch is risky given the region’s startup challenges. Third, investors want direct and structured access to profitable, cash-flow-generating businesses—an asset class that has historically been difficult to access systematically.
Deal-making in Asia demands significant cultural sensitivity and relationship-building expertise. Through extensive first-hand interactions, we’ve observed that sellers frequently anchor their valuations on historical capital invested or personal retirement goals, rather than objective business metrics or market comparables. On the flip side, the transaction process extends well beyond financial considerations, as sellers prioritize employee welfare, legacy preservation, and cultural fit alongside pricing—viewing potential buyers as stewards of their life’s work.
Additionally, many business owners expect immediate transitions without fully appreciating the complexities of ownership transfer, due diligence requirements, and operational handovers. Our approach emphasizes patient education and relationship cultivation, utilizing local market benchmarks and transparently explaining buyer evaluation frameworks to bridge the gap between seller expectations and market realities. This methodology has proven essential for building trust and achieving mutually beneficial outcomes in the region’s relationship-driven business environment.
While Japan and Australia have more mature search fund ecosystems worth studying, we’re focused on Singapore first, then Malaysia. Each Southeast Asian market has unique characteristics—from regulatory requirements to family business dynamics—that require local expertise and patient relationship-building.
What are your long-term goals for developing the ETA ecosystem across Southeast Asia?
Our vision is to establish ETA as a compelling alternative to traditional startup ventures in Southeast Asia. This requires building a robust ecosystem with three key components: (1) sophisticated intermediaries who can educate sellers and guide transactions,
(2) expanded acquisition financing that matches ETA requirements, and
(3) a deeper pool of high-caliber operators attracted by proven economics and lower risk.
We’re actively building this ecosystem. We’re creating a community where investors, operators, and searchers share best practices openly. We evangelize ETA to help operators understand the mechanics of M&A, freeing them to focus on building enduring businesses. We are also documenting success stories to show SME owners viable exit options beyond family succession or closure.
Each successful deal creates powerful momentum. These deals validate that ETA works effectively in Southeast Asia while unleashing previously constrained demand across the ecosystem. Our case studies inspire more operators to pursue business ownership, encourage additional investors to consider the asset class, and build seller confidence in ETA buyers as credible partners.
Success ultimately hinges on fostering broader market understanding of ETA as a legitimate pathway to business ownership. By demonstrating consistent returns and building institutional knowledge, we aim to catalyze an ETA market that benefits sellers, operators, investors, and the broader business community.
