The Profile: Marc Seitz, AlphaQ Venture Capital

by Matthias Plötz 26 January 2023

The Drawdown (TDD): You co-founded Intel Ignite in March last year and then moved to AlphaQ Venture Capital as the firm’s CTO in March this year – what prompted the sudden change?

Marc Seitz (MS): I found a lot of satisfaction in working with and assisting startups at Intel Ignite, which gave me the opportunity to move from a founder role to a broader remit, supporting a greater number of companies. However, while I was in that position I was intrigued by the venture capital funds that financed the startups.

Simultaneously, AlphaQ’s founding partner, Stephan Heller, who also brought me to Ignite, shared his vision for the democratisation of venture capital and it resonated quite strongly with me. Personally, I love the unconventional. So naturally, I joined the firm as its CTO.

Being a fund of funds, we want to differentiate ourselves from the traditional asset manager or allocator. We all come out of startups knowing what technologies are available, what they can do for startups and how to apply them in the context of asset management.

There’s so much potential for technical applications across due diligence, scouting, sourcing new funds but also scanning new technologies and unfolding market trends.

We see ourselves as a fund of funds but also as a technology-enabled asset manager platform. However, to actually personify this vision you require engineers. In our eyes, deal and fund data components are just too critical to outsource so we brought them in-house.

TDD: What functions does a CTO at a fund of funds fulfil?

MS: Broadly, the CTO is of course the head of technology. You evaluate technologies coming into an organisation and that is universal – whether you’re working at a startup, a fund or an asset manager.

Specifically, at AlphaQ Venture Capital we have a database that tracks venture capital funds, planned investment targets, portfolios of funds but also our negative portfolio – funds we ultimately did not invest in. It’s important for us to keep track of changes such as fund announcements or new funding rounds.

The market is always changing. Passing on a fund today does not mean we won’t be considering them when they raise their next generation in two to three years. When the time comes, we’ll re-evaluate and be able to base our decisions on a continuously improving set of mission-critical data.

Besides building and nurturing this database, I am responsible for the technical side of fund administration and for building our own software, facilitating investor onboarding.

CTOs, more generally engineering talent, are a massively important part of the asset management industry. On a vertical axis assessing investment velocity, asset management is on the lower end. The velocity of investments is comparatively slow to trading public stocks. Typically, the higher the velocity, the greater the need for engineering. However, there is another axis and that’s the amount of data required. More data equals a greater need for engineering, which is where we come in!

TDD: How has being a founder influenced your thinking as a CTO?

MS: Coming out of a startup, you have a different relationship with your resources and their allocation. This industry is being targeted by very large and very expensive software providers. And being a founder has helped me to be increasingly cautious with our budget, evaluating which tools we’ll be using and for what price.

But this thinking extends because your investors can see and appreciate this approach when they’re performing due diligence. They ask themselves questions like: ‘Who is this person?’; ‘How are they investing my money?’; ‘How are they running their operations?’

Another useful skill is the resilience you build as a founder. If you are one, chances are high that you’ve experienced at least one near-death experience with your company. This will navigate you through future difficult situations, of which, I promise you, there will be many.

After all, as a founder, you have to wear many different hats and this adaptability ultimately makes you a great asset to your team, especially when the team is small and when challenging situations arise.

TDD: How do you see cybersecurity in private equity?

MS: Private equity is like any other branch of finance: you manage investors' capital and inheritance, not your own. Therefore, you need to treat it with the highest level of security.

This begins with the banks you choose to do business with but also concerns the designated roles within your team. Attacks seem almost trivial nowadays. Certainly not in their impact but in their execution, it’s email phishing and bank account change notices.

The industry’s low velocity I mentioned earlier is equally one of its weak points when it comes to cybersecurity. During the term of a fund you might do three to four capital calls. This is where social-engineering attacks are most common and effective, because you might not be aware of changes on the investor’s side that might have taken place during capital calls.

Defensive infrastructure is important but equally key is having the right processes in place, heightening your team’s awareness and discussing it with peers. We are constantly in contact with people from the industry to exchange experiences and opinions – we learn from them and adjust our processes accordingly.

TDD: What is on the horizon for the next 12 months?

MS: Today, 12 months seems like a long time. When I was at a startup, we could hardly tell what was going to happen next month, not to mention the next three months. Having this long-term perspective as an asset manager was a big change for me.

Last month, we made our fund tracker publicly available – as I mentioned before, we track different funds and announcements globally and across all stages. It’s information for us but it’s also a critical data point.

It’s valuable for startups looking to raise capital to gain an overview of who has recently raised a fund. Similarly, for first-time fund managers, they want to be seen and get the word out.

The goal for the next 12 months is to build out this service, make it more flexible and usable, possibly including startup and venture fundraising rounds

We’re not planning to compete with Crunchbase or PitchBook – we’re just doing it to the extent that it’s helpful to our business in making better investment decisions. If we can make something publicly available and share insights and knowledge, that’s great.

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NO LEGACY

Seitz recalls setting up AlphaQ Venture Capital’s tech operations: “It was any engineer's dream scenario – a completely blank slate. No legacy code, nothing to inherit from predecessors. But at the same time, a curse. You have to make the difficult decisions; you’re setting out tech operations at your firm.” He highlights how his and his team's past as founders helped them navigate the situation: “I am lucky to have partners who understand and appreciate technology. Making those decisions felt easier as a group. We were able to discuss things in detail – as heavy tech users, my partners have a great understanding of the product market.”

Categories: ProfileOutsourcingIT & cyber securityTechnologyTech providers

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