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Yotam Alroy, co-founder of Mindspace, has launched Pitlane Capital, a new investment fund focused on entrepreneurship through acquisition, or ETA.Pitlane Capital has completed its first close with backing from private investors, fund managers, business leaders and family offices in Israel. The fund plans to grow to $25 million and invest in Israel and international markets.Yotam Elroy (Photo: Liya Geldman)The fund backs entrepreneur-operators seeking to acquire and lead profitable, founder-led small and medium-sized businesses, particularly mature companies facing succession issues, founder retirements or ownership transitions.Joining Alroy is Omer Ben Shach, who serves as operating partner and is also an investor in the fund. Ben Shach has invested in the ETA ecosystem for more than seven years and has completed more than 60 investments in the sector.Pitlane Capital invests in entrepreneur-operators pursuing the search fund model, in which experienced entrepreneurs identify privately held businesses for acquisition, become CEOs and owner-operators, and lead the companies through long-term growth.Unlike venture capital, which generally targets early-stage, high-risk startups, ETA focuses on acquiring established, profitable businesses with operating histories, employees, customers, recurring revenue and positive cash flow from the start.Many of the companies were built over decades by founders or family owners and are approaching ownership transitions because of retirement or a lack of a next-generation successor.“We’re at a pivotal moment for thousands of small and medium-sized businesses,” Alroy said. “Many economies rely on profitable private companies that have been operating successfully for decades, yet a growing number are approaching a generational transition as founders prepare to retire. This creates both a genuine business continuity challenge and an extraordinary opportunity for experienced entrepreneurs to step into existing businesses, preserve their legacy and accelerate future growth.”Alroy said broader shifts in the labor market and real economy are making ETA increasingly relevant.“Much of today’s business conversation revolves around AI and software, but a significant share of economic value over the coming decade will remain, and may even increase, in physical businesses, essential services and infrastructure,” he said. “As NVIDIA CEO Jensen Huang recently noted, the AI revolution is creating demand not only for software engineers but also for technicians, electricians, installers, infrastructure professionals and skilled tradespeople. Many of these businesses won’t be displaced by AI. Instead, they’ll require stronger leadership, better systems and greater operational excellence to continue growing.”After an acquisition, entrepreneur-operators typically work alongside the outgoing founder or owner during a transition period, allowing for knowledge transfer, continuity for employees and customers, and a smooth ownership handover.The search fund model originated in the United States more than four decades ago and has become a leading investment model within the ETA ecosystem. Research published by the Stanford Graduate School of Business, which has tracked search funds in the United States and Canada since 1984, has shown a long record of financial performance while highlighting the model’s role in preserving and growing privately owned businesses.Pitlane Capital focuses on profitable, stable and growing companies with proven customer bases and positive cash flow in sectors benefiting from long-term structural demand. The fund is already working with several entrepreneur-operators in Israel and abroad who are actively searching for acquisition opportunities.Alroy is a graduate of Unit 8200, an elite Israeli military intelligence unit. He previously served as vice president of business development for SHL Telemedicine, known in Israel as Shahal, in the European market.Twelve years ago, he co-founded Mindspace with Dan Zakai and played a leading role in the company’s international expansion. Mindspace now operates dozens of locations across Europe, the United States and Israel, serving organizations of all sizes, including leading multinational companies.Alroy continues to serve on Mindspace’s board of directors and remains involved in its leadership.“After years of building a global company, I believe my next chapter is helping other entrepreneurs become owner-operators of enduring businesses,” Alroy said. “ETA combines entrepreneurship, hands-on company building, investing and meaningful economic impact. Our goal is to back exceptional people as they acquire outstanding businesses and provide them with the capital, experience and network they need to create long-term value.”