5 minutes with… Oliver Freigang and Gregor Kreuzer, founders of qashqade

by Matthias Plötz 23 January 2023

TDD: You created qashqade in 2018 – what inspired you to create the company?

Gregor Kreuzer (GK): Oliver and I had a working relationship prior to qashqade. After I took some personal time, we met again and ended up discussing automating waterfall and carry calculations. Eventually, we built a prototype and brought it to a conference in 2018. While we were there, other providers and possible clients alike told us that building such a tool was impossible. Naturally, if you tell me something is impossible, I will do whatever it takes to prove you wrong.

Oliver Freigang (OF): As Gregor said, all we had was a prototype. We used our own money to see if this idea would go anywhere and were met with positive feedback. At the time, more than 90% of calculations across the industry were done in Excel. Now the number is 86% and while of course the Excel spreadsheet is an excellent tool, it doesn’t lend itself to carry calculations. They’re too complex and hard to automate in Excel. So, we decided to create a tool that allows for the automation of these calculations.

TDD: Have the concepts of waterfall and carry evolved significantly since you started qashqade?

GK: We come across more hybrids of American and European waterfall distribution methods but, beyond that, they have not evolved extensively. However, in the past couple of years GPs have largely driven this development. There was so much money in the market and LPAs were drafted strongly in their favour. Given the current market developments, I am curious to see how this will change over the next two years. Initially, we assumed a degree of standardisation but that just didn’t happen.

OF: To Gregor’s point, there has been a limited degree of standardisation. However, in my perception it was more a symptom of the technology available, particularly its limitations.

TDD: What are the biggest challenges to carry/waterfall calculations?

GK: Term complexity and interpretation for the GP and expertise for the LP. To illustrate the point, GPs spend a lot of their time running various calculations and are experts at doing them. However, depending on which LP they are talking to, take a pension fund in mainland Europe for example, they can only invest a certain percentage into alternatives. So there’s no strong incentive for them to onboard dedicated personnel for these calculations.

OF: Another reason is the open-ended style that LPAs are often drafted in. A popular reason for differences or discrepancies are misinterpretations of terms around carry and waterfall, which arise from the vague language. In turn, this translates to mismatches on the knowledge and technical side, resulting in challenges for reporting.

TDD: Where does qashqade come in to help with these challenges?

OF: Our software can be used by LPs, GPs, fund administrators and auditors, so we cover the full spectrum of industry players. At its core sits a calculation engine that allows you to create and run whatever calculation you require. You can create every step of an LPA, irrespective how complex it might be or what asset class you use, and once you have the carry you can also use qashqade to allocate carry points to individuals and, with an integrated analysis tool, also use it for forecasts. This lets it go beyond simple calculations and allows the user to run complicated scenarios. Say you’re negotiating a deal and want to know the impact on your carry if you sell for €100m more, you can feed this information into the software and it will calculate it within seconds for you.

GK: When it then comes to reporting your calculations, qashqade allows you to slice and dice the data any way you want and ultimately decide which form of output you want.

TDD: What’s in store for next year?

OF: Let’s start with what we focused on this part year. We primarily looked at data and ensured that its integration works end to end. Other key concerns last year were the platform’s security, scalability and performance. They have all been addressed.

For the next 12 months, we’ll be looking at how qashqade integrates with the needs of its users. In practice, this entails taking a look at the portal that is accessed by all stakeholders – GPs, LPs, carry-holders, shareholders of the GP or underlying portfolio companies – and ascertaining whether the data displayed is communicated in a way everybody can easily understand.

GK: What Oliver is saying in a nutshell, is that he is taking my calculation engine and making it smoother and shinier!

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