Jun 30, 2025 · 1h 4m · 20vc
KKR's Head of European PE, Philipp Freise: Do Andreessen & General Catalyst Scare KKR? · 20VC with Harry Stebbings
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In this episode of 20VC, host Harry Stebbings interviews Philipp Freise, Co-Head of European Private Equity at KKR, to discuss KKR's core investment strategies, crisis deployment tactics, and the ongoing structural shifts in global capital markets. Freise shares critical lessons on recovering from major failures, managing liquidity, and the urgent necessity of democratizing private equity to benefit retail savers.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 20.7% of the talking time here. How this is scored →
Harry as informed peer 4.8 Guest teaching 5.2 Guest disagreement 1.6 Harry pushing back 2.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 47:14 Rejection of trade tariffs
Philipp directly rejects Harry's suggestion to tariff Chinese EV imports, declaring himself a free marketeer and framing tariffs as a misguided fix for Western budget deficits.
Hardest push from Harry ▶ 44:45 Challenging PE concentration limitsHarry forcefully pushes back against strict portfolio concentration caps by citing Brian Singerman's 33% Airbnb allocation as the mark of true investment conviction.
Biggest teaching moment ▶ 31:25 Insurance float liquidity masterclassPhilipp educates Harry on how PE firms acquire insurance companies to build balance sheet float inspired by Warren Buffett's Geico model, bypassing traditional LP liquidity constraints.
Harry holds his own ▶ 49:36 Debating macro deficit limits using 1980s JapanHarry demonstrates strong macroeconomic literacy by bringing up 1980s Japan to challenge Philipp on why national debt deficits cannot simply be kicked down the road indefinitely.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Early Career Lessons: Venture Park & Choosing the Right Investors | 3 | 4 | 1 | 1 | Harry sets the stage by bringing up Philipp's early Web 1.0 experience at Venture Park. Philipp explains key lessons regarding bull market humility and selecting long-term aligned investors. | |
| Balancing Market Exuberance with Investment Discipline | 5 | 4 | 1 | 2 | Harry demonstrates industry knowledge by quoting Bill Gurley on market momentum versus price discipline. Philipp explains setting deployment boundaries and conducting post-failure analysis. | |
| The $500 Million Loss in Turkey and the Importance of Rule of Law | 5 | 5 | 1 | 3 | Harry shares a personal investing loss in Pakistan to prompt Philipp's story about KKR losing $500M in Turkey. Harry probes whether political risk means avoiding emerging markets altogether. | |
| The Discipline of Linear Deployment and Temporal Diversification | 6 | 4 | 1 | 2 | Harry articulates principles of temporal diversification and fixed deployment pacing. Philipp agrees and outlines KKR's portfolio construction discipline across European buyout funds. | |
| Does Private Equity Follow the Power Law? | 5 | 5 | 2 | 2 | Harry asks whether private equity follows power law distribution curves similar to venture capital. Philipp dispels common misconceptions, clarifying that PE relies on consistency alongside big winners. | |
| The Owner Mindset and Capital Allocation Discipline | 4 | 5 | 1 | 2 | Harry asks how KKR models high capex burn in volatile sectors. Philipp references Henry Kravis's philosophy on forcing executive co-investment to maintain capital allocation discipline. | |
| Rapid AI Scaling vs. Traditional Software Models | 5 | 5 | 2 | 3 | Harry points out hyper-rapid ARR scaling in AI startups and asks why KKR doesn't flip AI secondary stakes rather than doing operational PE. Philipp defends generalist PE strengths while respecting early VC domain expertise. | |
| Why Late-Stage PE Firms Stay Out of Early-Stage Venture | 5 | 4 | 2 | 3 | Harry directly questions whether KKR's multi-partner investment committee model breeds consensus thinking. Philipp rejects the premise, stressing that institutional culture encourages open challenge. | |
| The Structural Shift from Public to Private Markets | 5 | 6 | 3 | 3 | Harry brings up $3 trillion in locked LP capital as evidence of structural illiquidity. Philipp counters that illiquidity is cyclical, noting that 85% of KKR exits occur via M&A or strategic sales rather than public IPOs. | |
| Demographic Demands and the Expansion to Retail Investors | 5 | 6 | 1 | 2 | Harry analogizes AI hype to Oxycontin keeping VC fundraising afloat. Philipp responds with a macro explanation of global demographics and the necessity of tapping retail 401(k) capital pools. | |
| Innovations in Liquidity: Secondaries, Evergreens, and Insurance Capital | 2 | 7 | 1 | 1 | Philipp delivers a detailed breakdown of capital structure innovations, highlighting how PE firms like Apollo and KKR acquire insurance companies to replicate Warren Buffett's Geico float model. | |
| The Future Scaling of KKR’s European Assets | 5 | 5 | 2 | 3 | Harry points out the irony that European startup gains are mostly returned to US institutional LPs. Philipp agrees on European policy flaws while outlining KKR's European AUM expansion. | |
| Investing in Critical European Sectors: Defense and Space | 5 | 6 | 1 | 2 | Harry asks if macro instability forces investors to take higher risk. Philipp outlines four concurrent global disruptions across tech, geopolitics, currency, and demographics. | |
| The Future of the US Dollar as the Global Reserve Currency | 5 | 6 | 2 | 2 | Harry asks about the US dollar's status and Bitcoin's potential reserve currency role. Philipp provides a macro breakdown, pointing out quantum computing threats to crypto security. | |
| The Power of compounding winners and the need for diversification | 6 | 5 | 3 | 4 | Harry challenges thematic investing and cites Founders Fund putting 33% of a fund into Airbnb. Philipp rejects such high capital concentration, establishing strict 10-15% limits for PE funds. | |
| Overcoming Europe’s Fragmented Public Markets and Over-Regulation | 6 | 5 | 3 | 4 | Harry highlights fragmented EU markets and asks if Europe should heavily tariff Chinese EV imports. Philipp firmly rejects tariffs, asserting his stance as a free-market advocate. | |
| Solving Budget Deficits and the Norwegian Sovereign Wealth Model | 6 | 7 | 2 | 4 | Harry references 1980s Japan macroeconomics to challenge why modern budget deficits matter. Philipp details the risks of inflation, financial repression, and social friction before highlighting the Norwegian sovereign wealth model. | |
| AI Productivity Gains and Redefining the Labor Force | 5 | 6 | 2 | 3 | Harry presses on whether AI will cause widespread white-collar labor displacement. Philipp outlines sovereign equity models that allow citizens to share in AI productivity gains. | |
| The Power of Stock Ownership in Financial Education | 4 | 4 | 1 | 1 | Harry offers advice on buying single stocks for children and asks Philipp about his personal relationship with wealth. Philipp reflects on leaving McKinsey and prioritizing passion over money. | |
| Opera, Art, and Loving What You Do | 4 | 4 | 1 | 2 | In a quickfire round, Harry asks about past missed deals. Philipp candidly admits KKR passed on early Alibaba and explains why major VC expansion into PE buyout territories does not concern him. |
Statements from this episode (52)
Freise: Tariffs Are Not the Solution for Western Democracies
“I think tariffs are not the answer. We need to work on the underlying issues in our Western democracies. To try to raise money through tariffs is not the right approach.”
Freise: KKR Lost Around $500 Million in Turkey
“In Turkey, I think we lost around five hundred million. What we didn't see was rule of law was a bit of a flexible concept there.”
Freise: KKR European PE Avoids Emerging Market Risks
“And quite frankly, we have so much going on in Western Europe. We just don't take the risk. We stay close to what we can control.”
Freise: Founders must pick long-term backers over quick-profit VCs
“As a founder, the Investors you choose are so important. So of course it makes a huge difference. You know, if you're the founder of Helsing and you choose Daniel Eck, because Daniel Eck understands what long-term business building means, you know, and you don…”
Freise: Investors Must Impose Strict Annual Capital and Concentrated Risk Limits
“To have discipline, even in those times, yes, you want to deploy when there is incredible opportunity, but you need to set yourself Limits, right? There's just limits of how much you invest in a year, how many different types of in the theme things you back, b…”
Freise: KKR previously failed in an Ethiopian tulip and rose investment
“We tried also Africa, Ethiopia, where we were the largest growers of tulips and roses that didn't work out for similar reasons.”
Freise: KKR deployed 30-40% of its European fund during COVID
“Many people thought at KKR in Europe we were crazy when we leaned in and invested, I think a third, if not 40% of our current fund during COVID.”
Freise: KKR's $8B fund is Europe's largest standalone investment vehicle
“So Europe for KKR is an eight billion dollar fund. It's the largest standalone investment fund in Europe.”
Freise: KKR targets around 15 portfolio investments per $8B European fund
“In a fund of eight billion, typically you have around 15 investments, ok?”
Freise: KKR's investment in space firm OHB will be a big winner
“My space company in Bremen, which is OHP, we just did that investment. That's going to be a big winner given everything's going on.”
Freise: Aiming merely for 2x returns in private equity is failure
“It's a common misunderstanding that my industry is sleepy, boring, and just You know, aiming for those doubles over five years. If we do that, we don't do our job, really.”
Freise: KKR European PE average check size is $400M to $600M
“On average it's like, 400 to six hundred million.”
Freise: 75% of KKR European PE deals are structured as partnerships
“In the last 1015 years, Three quarters of all the investments we have made are partnerships.”
Freise: KKR European PE holds 10% to 15% of capital for reserves
“Always do, but it's more like 10, 15% of the fund. So you would, of eight billion, you would retain, let's say, a billion or so as a reserve, because we do not need as much capital for follow-on rounds, because this is, you know, in terms of the maturity of th…”
Freise: KKR turns non-founder portfolio CEOs into equity owners
“We making those entrepreneurs that are in there or these CEOs or these families, we make them Owners again, right? Because many of them weren't originally the founders of these companies.”
Freise: KKR Is the Largest Owner of Fertility Clinics in Europe
“We are the largest owner of fertility clinics in Europe, ok?”
Stebbings: 20VC Has Three Companies Scaling $0-100M ARR in One Year
“We have three companies that have gone from zero to a hundred million there in a year.”
Freise: $0-$100M ARR AI Scaling Speeds Will Not Become the Norm
“So I'm making the bold prediction that you have just seen three of the incredible winners in the space, but they will be not the norm for whatever comes afterwards.”
Freise: Traditional SaaS Models Will Remain Good Investments Despite AI Hype
“When you see those winners, you better invest in double down and triple down, but it doesn't mean that software, you know, SaaS models investment, that is the bread and butter of many in our industry still. Will not be good investments anymore, and you just ha…”
Freise: KKR's DNA will never extend to early-stage venture
“I don't think that the DNA of KKR and of other later stage firms. It extends to what Insight does or what growth funds do. It will never extend to venture because it's a different skill set. It's a very different skill set.”
Freise: Markets Mistake Cyclical Liquidity Droughts for Permanent Structural Ruin
“I've seen at least three, if not four cycles where liquidity goes from unbelievable exuberance, like we've seen in You know, 20, 21 to the drought that we see now. Only for people to say at the peak, liquidity is, is limitless. And we, the party is, is never e…”
Freise: 2021-2022 fundraising velocity was artificial and unsustainable
“The party that was celebrated in 21, 22, in terms of the velocity of fundraising and investing was absolutely artificial, inflated, and not sustainable.”
Freise: Only 15% of KKR's exits over past 15 years were IPOs
“Over the last 15 years, only 15% of our exits were actually IPOs.”
Freise: AI capital intensity prevents private fund sizes from halving
“I agree, and that is why we don't see fund sizes halving, because exactly of what you said, a lot of these opportunities are so capital intensive, because you suddenly have some interesting places to deploy.”
Freise: Only 1% of $192T individual wealth is in alternatives
“I think it's one percent of the 192 trillion are invested in alternatives. If that only goes To five percent you suddenly have 10 trillion dollars.”
Freise: KKR is the largest investor in its own funds
“We ourselves became owners of a five billion pool that had been valued at one and that became 10 and that's now 30. So we are actually the largest investor in our own things.”
Freise: PE firms like KKR and Apollo acquired insurance capital for liquidity
“So basically we Apollo and others have now taken under our wings insurance companies that provide all this liquidity.”
Freise: KKR Europe's assets under management will double or triple in 10 years
“If you ask me will KKR Europe's asset under management, ah, double and triple over the next 10 years, the answer is yes.”
Freise: KKR's European deal scale grew from $1.5B for BMG to $10B for Axel Springer
“When I did the BMG deal, that was a one and a half billion deal for a 50% stake In that music company, you fast forward 10 years, and we had a ten billion deal to buy half of Axel Springer, which again was a fifty-fifty deal with the family.”
Freise: Vast majority of KKR Europe LP capital comes from US
“The large majority is, is America. You have some pockets in Europe, like Holland and Norway that are very strong. The Middle East is incredibly innovative and takes a large chunk.”
Freise: US directs 10% of defense spending to innovative startup ecosystem
“The US has done by saying 10% of the spend of the Department of Defense needs to go actually in the innovative ecosystem and space the same, right?”
Freise: Innovative European defense and hard-tech startups are emerging faster than expected
“Short answer to your question is, yes innovation, what, you know, what you know best Is the answer to these problems. But I wouldn't be so negative. They are coming now much faster than some people realize.”
Freise: US dollar's share of global reserves will decline slightly over ten years
“I do think in 10 years time, the percentage of reserves the US represents will probably have reduced slightly.”
Freise: The Euro is currently the only credible alternative to the US dollar
“Right now, the only credible alternative is the Euro, and we in Europe, we need to get our act together.”
Freise: Bitcoin and the Euro will gain share in a multi-currency reserve system
“I think Bitcoin will take a larger share as will the Euro, but it's going to be more of a mix.”
Freise: Other defense leaders will emerge alongside Helsing's founder within five years
“Torsten is, is the best, but in five years time, we look back and say, of course, Torsten couldn't have done it all by himself. There will be more, there will be others.”
Stebbings: Investors should back existing category winners rather than searching for alternatives
“If you want to invest in the next Helsing, don't. Just invest in Helsing. I spend my life with investors who are like, oh, I'm trying to find the next OpenAI, the next Android. Don't. Just put your money in the winner.”
Freise: KKR limits single-company fund concentration to 10-15%
“So we are absolutely rock solid you know, disciplined on this. You wouldn't, normally you don't do more than 10% of one fund. You know, I think in terms of underwriting, the absolute maximum is 15%, but it's in that range.”
Freise: Europe needs a European SEC and a single pan-European stock exchange
“Yes, of course we need a European SEC. Yes, of course we need A bit more of one pan-European place where people can go public. It's extremely important.”
Freise: The European Union has severely over-regulated AI and stifled innovation
“We absolutely over-regulated that space. We need to unleash the power of that technology, technological innovation, and not stifle it by too much innovation for sure.”
Freise: Displaced European auto engineers immediately find jobs in defense and sensors
“When the automotive industry is shrinking because of some of the factors you mentioned, those people immediately find jobs in other industries which are growing. Whether that is censors, whether that is defense.”
Freise: Interest on national debt exceeds healthcare and defense spending in many countries
“If you think about 20, 25, 30% of all of our budgets going to two sources. One, to just serve, serve as the interest of the existing debt stock. It's huge. I mean, in many countries, these are higher expenditures Than our healthcare or defense budgets.”
Freise: Indebted governments resort to financial repression to inflate away debt
“So if you don't, if you can't really raise taxation And if you can't really reduce expenditure, the only other way to do it, to get rid of your, you know, interest income, if your interest load is to inflate away your debt, right? So you do financial repressio…”
Freise: AI productivity gains will trigger a painful disruption phase
“It's too early to tell. I totally, I, well, I think it will. However, productivity gains, which will be extremely beneficiary to the world, don't mean that the challenges I just mentioned will be solved, because there will be this disruption phase where many, …”
Freise Allocates 30% of His 401(k) to Private Equity
“I do, and I allocate it every year. I'm just a long-term investor, so there's no point in checking it every quarter, but if I check it every five years, and I reallocate it to the same allocation, by the way, I allocate, I think, 30% to my industry, and the re…”
Stebbings: Buying children a single stock drives engagement and financial literacy
“If you want your children to give a shit about companies, buy them one single stock, because the minute you have any form of ownership, your interest level will go through the roof.”
Freise: KKR portfolio production company co-produced Brad Pitt's F1 movie
“One of our production companies produced it”
Freise: KKR Met Spotify Early but Lacked a Fund to Invest
“I was the first institutional investor through the door. I just didn't have the fun to invest.”
Freise: KKR Passed on an Early Investment Opportunity in Alibaba
“We literally at KKR had the chance to invest in Alibaba a long time ago, and that came on my desk, and I said no.”
Freise: KKR isn't worried about VC firms entering private equity
“I think the industry is big. Everybody has its place. I have done venture myself to know that it's an entirely different you know, skill set, so I'm not worried about it.”
Freise: KKR aims to increase retail investor base to 50%
“We have six hundred seventy billion under management now. This number will go up massively, but what I want to see, I think historically the kind of individual retail type, broad based investor base is roughly 20%, maybe 30%. I want to see that to go to 50%.”