Operating

Companies built around the model, not beside it.

Directional Holdings – Operations buys established software companies, or forms joint ventures with them, and rebuilds them with AI at the center. The same acceleration that's driving hardware adoption is accelerating model capabilities, which can be leveraged to a high effectiveness if the company is AI forward.

Public markets

The portfolio.

Long-only public equities across the AI value chain, weighted toward physical bottlenecks.

Investments

Operating · This page

The operating vehicle.

Private acquisitions and joint ventures in software. Its own structure and mandate, with hands-on ownership.

What we do

Three moves.

  1. 01

    Acquire or partner.

    Take control of, or form a joint venture with, an established software business that already has customers and a working product.

  2. 02

    Rebuild around AI.

    Re-architect engineering, support, onboarding, and delivery as model-driven systems to best leverage model advancements.

  3. 03

    Compound with the models.

    Model improvements are leveraged immediately by improving cost-cutting measures or accelerating product iteration.

Why it compounds

Let the flywheel accelerate the company.

AI models are accelerating, and the flywheel keeps driving it: better models unlock more use cases, more use cases drive more usage, more usage forces more and better hardware, and the hardware produces the next generation of models.

A company built around AI inherits that acceleration. Its product, engineering, and operations run on the models, so every turn of the flywheel makes the company better. Margins widen and reach expands as a direct result, and nobody has to reorganize to capture it.

The models in use today are the worst models we will ever use. Work they cannot do yet, they will be able to do soon. We build each company to be ready when those capabilities arrive.

AI × Hardware flywheel
01 Better models
02 More use cases
03 More usage
04 More hardware needed
05 Better hardware developed

Two levers

Where the value shows up.

01

Margin expansion.

In most software companies, the costliest lines are services: support, onboarding, implementation, QA, maintenance engineering. Rebuilt as model-driven workflows, these lines stop growing in step with the customer base.

02

TAM expansion.

When serving a customer costs less and shipping takes less time, segments that were never worth serving become viable. So do adjacent products that were never staffed. An AI-forward engineering organization widens what the company can reach.

Structures

Two ways in.

Joint ventures · Preferred

AI-forward engineers, industry operators.

Our preferred route. Directional's AI-forward engineers pair with people who know their industry: its customers, its workflows, and the product that already works. Directional typically funds the build with its own capital, so the transformation does not become a new cost the business has to carry.

Acquisitions

Streamline, then hold or sell.

Majority ownership of established software businesses, streamlined around AI into cash-flow machines. We either hold for the cash flow or sell.

What we look for

Good businesses, built for a different era.

$2–20M
Annual revenue.
Sticky
Software that customers rely on and rarely leave.
Niche
Industries off the beaten path, where AI-forward competitors have yet to arrive.
AI-forward
Owners who would rather embrace AI than wait for it to roll over them.

The window

A golden era, for those who embrace it.

In the near term, AI opens a golden era of margin expansion. Work that once scaled with headcount can run on models, and product iteration cycles that took quarters can take weeks.

The advantage goes to those willing to embrace the tools. Most companies will move slowly. The gap between those that adopt and those that wait is the opportunity.