How I Invest with David Weisburd - E90: Lessons from Diligencing 3,000 Venture Capital Funds

Episode Date: August 29, 2024

Marius Weber, Founding Partner, and Jocke Martelius, Investment Solutions Manager of Alpha Q Venture Capital sits down with David Weisburd to discuss the comparison between US and European VC markets, strategies for conducting due diligence on emerging VC funds, and the impact of political and economic factors on European VC.

When we look into the data, we see that a company raising a seed run in Europe has actually the same probability of reaching a unicorn status as a company in the US. So for us, this is actually a crucial point because it highlights the potential for high returns in Europe. Additionally, you know, there's less capital in Europe, for sure, which means that there's a little bit less competition. As a result of this, the valuations are a little bit lower. VC funds are also companies, right? And GPs needs to understand that. And this is very interesting because I think many of the VC fund managers out there don't really realize that they are building a company here. So that team dynamics are as crucial and important as it is in startups or in other companies. And that building a VC fund as a

GP is not the fastest way to become rich. And many of them are approaching this asset class by the idea of becoming rich fast, which is totally, in most of the cases, not true. It's a long path of nose, a long path of setbacks, and a long path of not eating and sleeping until you even know if you're an outlier or not, right? Yoke and Marius, I've been excited to chat ever since our friend Jordan Nell made the introduction. Welcome to the 10x Capital Podcast. Thanks for having us. Thank you, David. Thank you for having us. Marius, you founded AQVC. Tell me about how you went about founding AQVC.

I'm one of the founding partners in Spencer, the Alpha Cube Venture Capital, and I started my career with studying law. Left this environment quite early after even one year. I built one of the first German company builders or co-founders under the brand Rango Founders. So we co-founded roughly 20 companies over a period of seven years. And parallel to that, we started our first VC fund in 2013. We invested also roughly in around 100 startups, mostly early stage. In 2021, then I partnered up with my today's partners and co-founded AQVC. And so we started with a fund of VC funds after having screened more than 3,500 VC funds. We thought that there is dysfunctionality in capital formation between GPs and LPs.

There's so many fund of funds out there. Do we really need another fund of fund? Why start AQVC? Yes, I think so. And to be honest, when we started AQVC three years ago, there were not that many fund to funds, to be honest, at least not fund to funds that re-engineered their structure in a bit. So our mission and vision was and is still today to democratize venture capital as an asset class, right? And therefore, we looked at the products the market

was offering in these days back then, And we thought of building a product that is making the access easier. I network with individuals in family offices. And Joke, you joined AQVC. Tell me about when you joined and what's your role in the company? My background is doing pretty much fund investments for different organizations, family offices, you know, wealth management firm, and also try to raise my own VC fund. I joined AQVC and supporting on different things, right? Currently, we're building an LP community as well.

You know, so speaking with a lot of other LPs as well, other family offices and fund of funds to share notes, research, deal flow, and just in general, just build that ecosystem. I'm wearing quite a lot of different hats as of now. Marius, it's Q3 2024. What are you looking for funds today? Yeah, it's a good question. And first, it's Q3 2024. What are you looking for funds today? Yeah, it's a good question. And first, it's important to know, David, that we invest into both emerging and established

VC funds in a kind of bubble strategy. So when we evaluate a VC fund, we take a lot of aspects, obviously, into account. And you can split them basically into two buckets, which is quantitative and qualitative aspects, right? So starting with quantitatives, maybe, of course, we start with benchmarking the historical performance of either the fund manager itself and or the acting GPs themselves.

So as a cycle from inception over several closings to the final closing, it can take 12 to 24 months, I think typically. So this is important to take into account to be able to compare apples to apples. And therefore, it's important to understand how to correctly benchmark. So before comparing received funds to each other, you need to verify how a benchmark exactly sees the vintage.

Close closing, start of investing, final closing, there are different approaches. For sure, the most common one is Cambridge Associates CA, and they use for the vintage, the inception date of a VC fund. So once you have found the correct benchmark vintage, it's about comparing key metrics that matter, right? I will spare you details now around the KPI excursus, but combined these metrics give a good indication inside of a fund's performance and other quantitative aspects. You will want to look at our loss ratio, fund model, portfolio construction, holding percentages, and the way the fund

sticks to it over time and so on. And on the qualitative side, we do a lot of reference calls with portfolio CEOs, with LPs, with co-investors. We evaluate team dynamics. We have a very close look at the investment decision process. We check everything around the secret sauce when it comes to oversubscribed deals. We look at the network, which is important for buying, selling, fundraising, and so on. Many more things, I think in total, plus three digits of checking points.

And this is obviously very dynamic, right? So once you are looking at the emerging manager side, the qualitative aspects are more important than the quantitative ones. And once a fund is more established, you have more numbers and more aggregators to do. At the very early stages, just a natural person investing into a natural person, right? So in the emerging segment of VC funds, it's not necessary to find big brands or names and you need to find managers who are going a different way

and are willing to go for a long, long feedback loop. Managers we look at need to understand that the hard walk of life before becoming an outlier. Our edge to getting to top managers maybe is we are offering unique LP value. So we are three partners now, operative partners, and on top of a team of very, very experienced founders, allocators, former GPs. And we walk the way from founder to company manager to GP to allocators. Of course, it helps when stepping in early on a GP's lifecycle. We've seen this year, first-time funds are getting 90% less allocation than last year,

which was down from the year before. What gets you to write a check into a first-time fund today, Q3 2024? We have the mandate, right? And the question is basically why we invest into both emerging and established managers. So established managers obviously can provide a baseline solid performance. Right. So 48 percent, I think, is the statistic of the top quarter funds maintain top quarter status and direct subsequent funds. So this is great. But choosing carefully, emerging managers can outperform. Right. And even though the amount of funding they get in these years, 70% of the top DeSalle funds globally are emerging and developing funds. So to ensure the best sector coverage, we split between those both and have this mandate also to take emerging managers by the hand and

walk them also through the journey of becoming an institutional investor one day. Okay. Tell me about AQ Discovery. What is AQ Discovery? Well, AQVC Discovery is a software for GPs and LPs in the VC industry. So through the platform, we're offering tech and services across the entire VC fund value chain of capital formation, right? So the idea of AQVC Discovery was actually born from our own needs. So we as a fund of fund have a massive inbound deal flow a lot of that deal flow is emerging managers i mean which we like because

we actively back emerging funds but you know we quickly noticed that a lot of these managers who apply for our capital are presenting themselves very differently everyone shows their numbers and kpis in different ways so there's really no standards or structures in place in our industry which makes it quite inefficient and difficult for LPs also to review funds. So based out of our learnings as a VC fund of fund and based on feedback from other active allocators, we built a solution for both VCs and LPs where VCs can actually present themselves in the best way possible to their potential LPs, manage those relationships, and also we support them with LP lead generation. So if you think about it, through our platform and services, we function kind of

as an extension of their team. Also, the fundraising market has obviously been quite challenging in the last few years. At the same time, a lot of managers don't necessarily have the resources or experience in fundraising or broad LP networks to tap into. So this is where AQVC Discovery comes in to fill those gaps. And at the same time, the platform allows LPs like ourselves to screen and diligence fund managers much more efficiently. And that's what it's all about, to enhance the capital formation process in the venture capital industry. You mentioned presenting information to LPs is an issue. As an LP, what do you like to see in a data room? What is the minimum viable data room that you like to see in a data room? What is the minimum viable data room

that you like to see from an emerging manager? You need to compare one GP to another before investing into a certain sector and to a certain geo. As an example, we decided to have or want to have an impact fund in our very back then early portfolio, right? And therefore we were able,

as this is our full-time job, right? We were able to screen plus 200 impact funds and decided to invest into one of them. And this is kind of the essence. We screened more than 3,000 VC funds over the last two years, and we came up with an essence of our portfolio of 19. So it's all about data normalization and standardization. This is very important. And this also is the crux why not more people, at least from the private wealth side, have the capacity or skillset to invest more money into a venture capital

because GPA sends you a deck with KPIs on slide nine. GPB sends you a deck with KPIs on slide 12. And as already also mentioned, there's a lot of KPIs to compare. So some of them report in IRR growth, some in DPI net. So you need at least the full-time analysts to do the math behind it and be able to compare one we see to another. Or we learned that this is one of the bigger problems and makes capital formation very dysfunctional or very ineffective within or between GPs and LPs. And this is also one of the reasons why we created an accuracy discovery and structured a very data standardized and normalized profile, which we as a heavy allocator,

which means investing to five to 10 or more VC funds per year, want to see. So there are, I think it's in the meanwhile on the profile, plus 400 data points you might or able to fill in as a VC fund. So the depth of information can be very deep. And if you want to have a high data density, you also need to provide a lot of information. But what we look at most, I would say, is historical performance of the acting people. And therefore, it's a quantitative measure. And it helps just to have very, very normalized data,

very standardized data. And this also applies to all other LPs out there, right? So even other heavy allocators, talking from the European ecosystem right now, using the platform and are using the way we decided how funds should display themselves in the best and most efficient way for them. And also on the opposite,

we see funds have a certain type of capacity for fundraising, making it more effective, especially in these days where fundraising is, the cash, the money is not just lying around how it was maybe five years ago. So we need to kind of do your fundraising in the most efficient way and therefore sort out everyone who's not interested very fast. A quick no is almost as good as a quick yes, but nurturing over months with LPs that are not even fully interested

is just a waste of time. And this is why we created the way of AQVC discovery how it's created right now, the best possible way to display for VC fund and the best possible way for VC funds to fundraise in the most effective way. You mentioned a quick no could be very valuable. A lot of times you see LPs ghosting or not responding.

Talk to me about the game theory. Why do LPs do this? Actually, David, I'm not very sure. I think it's also a matter of education. So even if you, of course, get coldly approached, then maybe you just not have the capacity to answer everyone, right? But if you start a conversation, I think it's a matter of good education to at least say, no, thank you.

Ghosting is something we saw developing over the last years more and more, to be honest. It certainly also has maybe something to do with the culture of venture capital in the last years. VC is today there, in our opinion, where private equity was standing 20 years, roughly, ago, right? So a lot of infransparency, a lot of not very well done communication, as the last years were just kind of an hockey stick in terms of performance. And almost every VC fund, the communication was, I think, not treated very well. So VCs, not in total or in general, but many of them need to learn how to properly communicate in the future again.

Or we saw a huge correction phase in the last few years, and many of them learned first time, I think, that it's not always just going up. And therefore, proper communication is very important. It's all about transparency and about trust. And we see this need to find back to the method or way of treating each other in a very trusty and respectful way. Yeah, it's interesting. I think there's not only analogy to private equity, I think there's an analogy between VC and startups as well. People don't remember this. When I pitched to Andreessen and Horowitz for my second startup in 2012, they had revolutionized this concept of saying no. It was this revolutionary thing where they would give you feedback. And it

was very smart. And I think it was very long-term greedy because once you get that feedback, you're more likely to come back to that firm for a second startup for a future round. I think LPs like VCs falsely believe that if they just don't communicate, maybe at some point they'll be able to come in and say yes. But just like founders, GPs also have long memories and they remember who treats them. And any GP, I think that's worth their weight in gold. Understand when somebody passes on a certain round or a certain vintage, I don't think that kills the relationship. And I think there's a false premise on that, that basically kicking the can down the road is somehow going to create optionality where I think it actually hurts the relationship more than helps. I totally agree, David, to kind of everything you said right now, because a no is always okay. I mean, there might be a GP that is a total rock

star, but just does not fit into our portfolio right now. And therefore telling no doesn't mean you are a bad person or your skill set is not good enough. It's just like, it doesn't fit to us as an allocator. And we also have a mandate towards our LPs, right? So we need to have restrictions and stuff like that. So it's not always that you like to discredit other people. It's more like, yeah, it's just not a fit. And a good no, and think of that, you just said in reason kind of revolutionized the no in 2012.

So it's 10 plus years ago. It's not that much water down the river since then. And also I think is seen or an asset class and talking also again out of the Euro glasses, it's a new one, right? Compared to other asset classes and there needs to be development in this direction. And it's easier to compare to private equity

as an analog because private equity just, they learned the same hard way that communication is everything it's just everything being transparent and also we tried as a qbc and obviously most of our answers are no take telling you about three and a half thousand we see funds we had a look at and invested in 2019 means most of them receive a no right and we also try to find the best possible and nicest law on the market and also the platform serves here as a kind of support anyway so we cannot support every single fund around the globe with capital because we have also limited resources right and portfolios

to structure but what we can do is help you as a VC front anyway. And this is what we really, really try hard with our platform, Make a VC Discovery. So either we have capital or we have a platform that could help you or even more. Congratulations, 10x Capital podcast listeners. We have officially cracked the top 10 rankings in the United States for investing. Please help this podcast continue climbing up in the rankings by clicking the follow button above. This helps our podcast rank higher, which brings more revenue to the show and helps us bring in the very highest quality guests and to produce the very highest quality content.

Thank you for your support. And Joke, speaking of the platform, the AQVC Discovery, what problem cases are you solving around? Why do funds come to you to sign up? Yeah, good question, David. Obviously, there's a lot of things that we do through the platform. One of the things is obviously the standardization of data. And for a lot of emerging managers, just having a pitch deck is not the best way. And a pitch deck that's not created in an optimal way for sophisticated LPs.

By just sharing your pitch deck with LPs as well, it's not ideal because usually LPs read the first five pages of that pitch deck. So you need something else that allows you to share your profile, share your data in a way that's actually designed based on LP needs. So through the platform, they're actually able to create a profile of their fund that allows LPs to run their due diligence from start to end. And this includes all of their fund terms to videos about their team, about the strategy, news section, due diligence questionnaire. But on top of that, funds can then actually also ask for feedback through the platform from potential LPs or LPs that declined the opportunity. And most of BSE funds or all of them have LPs that says it's not for us right now, but let's circle up later on when you're coming back with the next fund.

And these are huge opportunities that VC funds need to actually take and nurture those relationships. Because when you're back in the market, it doesn't help if you don't keep those relationships warm at the same time. To serve some funds who actually need it, we do also LP lead generation as a service. So we try to identify suitable LPs for their fund. So there's quite a

lot of different dimensions that comes to the platform and what we actually do with the funds in question. You mentioned keeping relationships with LPs from vintage to vintage. What's the right cadence? What's the best practice? Marius, you're a fundraising expert here. Yes, at least the title says that. I think the right cadence, at least at AQVC, we divide into certain buckets of following up or nurturing prospects, potential investors from a very low cadence, meaning just signing up for our newsletter and you stay up to date to a more, let's say, very high cadence, which means follow up or following up every kind of day. So weekly, I would say on a weekly basis. That really depends on both. very high cadence, which means follow up or following up every kind of days. So weekly, I would say on a weekly basis. That really depends on both, I would say the maturity of the investor. So lower maturity investors need to be kept in a more close way to just be attached or keep them attached to the asset class and to your product.

And I think a higher cadence makes it easier to follow, even though the follow-ups are maybe in a less regular basis. So it really depends. And also, this is a thing that we see as an asset class needs to learn. It was for us shocking to see how venture capital funds are able to educate their startup portfolios in how to fundraise, how to segment, how to know your customer, and how bad the mass of VC funds is really in, or at least how less time and effort they put in segmenting their investor base. So you really need to know your customer,

especially in days where not one or two of 100 MLP contacts is investing, but more one or two of 200, you really don't want to waste your time. And do you think there's an 80-20 rule to LPs in that you spend 80% of your time focusing on the larger check writers? What have you found in terms of LP composition and funds? It also depends really when funds do or when funds start as an emerging manager, as a nature of things, the biggest chunk of the capital of the aum comes from high net worth individuals and family offices smaller ones then single bigger ones and worldly family offices up to some corporate or insurance or institutional money

or foundations even and it's also like with fundraising for a startup you start with business angels right and increase your check size over time it's a nature of things and when you raise your third fourth fifth generation it's either important to increase your check size at least when you want to increase your your aum per vintage at aqc to be honest we we like funds that are smaller so beautiful is what we think in most of the cases applies here and also increasing aum for vintage to vintage is not the very best style always so the best case is you raise your fund and you stick to your investor base this is what every mc hunt really wants to do this will not work for everyone as the high net worth individuals or smaller investors tend to not re-up into new upcoming vintages. And therefore, the time you spend,

and this is back to your question, the time you spend per bucket will change over time. At the beginning, you will really work hard for a 500k ticket and becoming more and more professional or also institutional and fundraisable as a VC fund, as a company for LPs. You will also start spending more time on bigger tickets.

But the statistic anyway says that at least a family office or high-end with individual tickets comes on average after two years of knowing the GP, which means you need to learn and you need to spend a lot of time on this type of package and investors. You've raced for startups, for venture funds, and now for fund of funds. Which one is the hardest? Which one is the easiest? And rank those for me. Super easy.

Startup is easiest. We see funds then and fund of funds is the toughest nut to crack. Why is that? To be honest, David, I think when we started three years ago and went live two years ago, we are still also an emerging manager in terms of being a fund of fund, right? The thing is, when you start to fundraise for a startup you really pitch a vision you pitch a team obviously we are able to pitch a team as well but the more you get up from startup to receive from to fund a fund the more

disconnected you are from the vision right so the problem for a fund of fund is that i cannot really pitch a visionary product or an idea or what I need to. And we are a financial product, right? So the fundraising is way more neutral, way more focused on we are a good financial product for you. It really makes sense. It's not nothing for visionaries, to be honest. It's hard to sell the vision of venture capital, which we all are getting up in the morning for, right? We at least have been entrepreneurs back then

and are still by heart, but pitching a vision today is as a financial product, not that easy. And this makes it just difficult and different from raising a startup, especially in the early days. Joke, tell me about European Venture as it stands in Q3 2024.

Where's the market at? Obviously, it's been quite challenging market for Europe as well, but both for the US and other regions. But I mean, looking forward, we're actually quite optimistic about the future of VC in Europe. Firstly, as Marvis told already, you know, Europe is our home market. We have quite an extensive network here, you know,

everything from VC funds to angels to founders and other LPs. So, you know, this gives us already quite a lot, a significant edge in understanding the market dynamics and identify promising opportunities in Europe. I mean, it's true that Europe is lagging behind US in BC, but this is also quite natural in a way, considering that the asset class is actually born in the US. So it takes time for other regions to catch up if they ever do. But I would say Europe is steadily closing this gap. Despite being a quite fragmented market with 20 to 30 different jurisdictions and regulations, progress is still

being made and the asset class is still growing when you look at on a longer horizon. When we look into the data, I mean, we see that a company raising a seed run in Europe has actually the same probability of reaching a unicorn status as a company in the US. So for us, this is actually a crucial point because it highlights the potential for high returns in Europe. And additionally, there's less capital in Europe, for sure, which means that there's a little bit less competition. And also as a result of this, the valuations are a little bit lower. But in general, it's a pretty good environment to find promising fund managers who are able to find innovating companies in Europe. And we still see innovative companies being founded in Europe.

It's for sure not a perfect market yet, if it ever will be. But of course, we want to be part of that ecosystem and also help and support European ecosystem to grow. Marius, I wanted to double click on what you said about diligencing 200 impact funds. Tell me about how you went about learning about the market and what did you learn through having so many conversations? Take me through that evolution. You learn a lot, especially when you also need to make a difference here, David, when you evaluate emerging funds comparing to established ones. So established funds, as mentioned, the quantitative part of the DD is way higher than the quantitative part when evaluating emerging managers. So in this case, I mentioned earlier,

we were looking for emerging or developing fund. And therefore, we learned a lot of people and team dynamics. And VC funds are also companies, right? And GPs needs to understand that. And this is very interesting because I think many of the VC fund managers out there don't really realize that they are building a company here. So that team dynamics are as crucial and important as it is in startups or in other companies.

And that VC funds or building a VC fund as a GP is not the fastest way to become rich, right? And many of them are approaching this asset class by the idea of becoming rich fast, which is totally, in most of the cases, not true. It's a long path of no's, a long path of setbacks, and a long path of not eating and sleeping until you even know if you're an outlier or not, right?

So we learned a lot about different team dynamics, different team settings, different people being humble or not, and therefore how to believe or how to invest in being or becoming convinced of very young teams where you don't have a lot of quantitative aspects to prove and to check. This was, I think, one of the most important learnings for us. When you do the quantitative tracking and analysis, it's just a matter of good and very efficient and scalable comparison, right? So qualitative one is always the one

where you need also experience, where you need a feeling for people. Not only a reference call will help, but also your feeling of the team. And if they are able or in the situation that they can crack this nut by building a very, very experienced

and also, yeah, in some day institutional company that is doing VC and fund investments. And this was the crucial learning. How long does it take to become rich as a GP? Take me through the economics. I didn't do or don't have the math provided here and blame it. But on average,

founding a startup to exiting a startup will take you 10 years. It might be six, it might be eight, it might be 12 or 14. We have seen everything in the last years of doing venture capital as a trust. We had exits that were very fast. We had exits that were, for whatever reason, not that fast. We know the companies were great. And also, the market and the dynamics are changing heavily in these days. So, I mean, as you all know, we will not see a lot of IPOs which are not profitable, companies that are not profitable in the future.

But the market is kind of changing and turning. And I think also that private money, therefore, needs to be available because you will see later stage IPOs that we saw in the recent years. And therefore, I think exit horizons will also increase. So very, very fast exits are a thing of the past war, still a thing of good luck in the future. So you need to build really stable and in the best case, even break evil companies. So that will take just time. It's not the easy way to become rich. The way that I look at it, just the simple math is just like any other business, it requires compounding. It's an industry you want to go into if you really want to do it for 10, 20 years, because what happens is, let's say you start a fund one,

it's $50 million, you get your 2% management fees. If you do a good job deploying that in two years, you get another fund with 2% management. So you start to stack the management fees. And by roughly year six, year seven, if you have a good fund, you've now returned one XDPI. And now you're into the carry. A lot of people say a fund takes 14 or 12 years to return all the capital. The real question for a GP side is when do you start getting carry? And that's roughly about year six, year seven. So if, and this is a big, if, you know, very few funds actually make it from fund one to fund three. If you're able to get to fund three, you get the benefit of three vintages of management fees, and you start to really get into that carry. benefit of three vintages of management fees, and you start to

really get into that carry. So it really is, like all things in business, a very long term game, you're really focused at a QVC, in terms of democratizing venture capital, in many ways, you're going in the opposite direction of traditional venture, which raises from endowments and pension funds and foundations. How does your product differ for the high net worth and for the family office network versus the traditional venture capital LP? First of all, we see Pund of Fund, which is a for Europe new product, let's say.

It's just a few years old, I think. And this is because the ecosystem is not the oldest. So we are talking about 20 years now of a kind of developing ecosystem of venture capital in Europe. And therefore, for fund of funds that wanted to screen the market and really have the possibility to compare companies before creating a portfolio like we did. Again, 3,000 plus VC funds screened and ended up with an essence of 20 roughly. So therefore, you need enough portfolio potential, right? And I think this is even possible only in the last or since the last year. So therefore, risk is one of the most important

hurdles we wanted to mitigate by offering fund-to-fund. The second one is, I think, in transparency. So normally, when you invest into a VC fund, a classic one, a closed-ended structure, you invest in a dry powder or dry clothes status, right? So you invest really purely into the team. You don't know what they will buy, where they will invest, when they will invest. With a QVC, you receive almost done portfolio structure, right? So you immediately are diversified with investing or with the moment you are investing. We are an evergreen structure. That means that once you invest today, you invest into everything you see ahead, right?

And this also contains the historical portfolio. Also, of course, the upcoming investments, but there's focus as well. And we aim for starting very early, fulfilling our investment strategy. So we want it to be kind of done within our investment strategy in the first one, one and a half years.

And then within the strategy, grow piece by piece. And this is what we actually were lucky enough to do. And so the portfolio and the strategy of the portfolio is kind of there and it's proving how we plan to structure the whole portfolio now we are just growing in this strategy the third aspect i would say is access so we are doing this since years in europe and we have a great ecosystem we i think started earlier than others with proper communication and a good network. So we think that also by how we can add value to the

GPs we are investing in as an LP with our fund, brings us into deals where maybe people, family offices that don't have the capacity to do this full time, or even the skillset to do this, have access to, right. And promise to have a better access and structure a better portfolio than just a single multi-family office can do it. And last but not least, the problem why many of the European or American conservative families

or island-worth individuals are not investing more or even actually foundations or institutional investors in Europe are not investing more into venture capital is in liquidity, right? So as you mentioned it, David, you wait for 10, 12, 14 years until the full capital is paid back by ABC funds.

So you kind of invest into a black box and then you are stuck for 10 plus plus years. And we tried with AQC to re-engineer this product or the structure, how to invest into venture capital as a class, because venture capital is, as we all know, the fuel of innovation, but it kind of missed in the last 20 years to reinvent itself as a product, as a financial product, how to approach and access this asset class. And this is what we tried to do with ABC. So our product is structured as an unlisted stock company, and it even makes it structure wise possible to exit during a year.

And we offer this twice a year in a so-called semi-liquid structure. Visual admission on this is that we will be able to have a semi-liquid product one day where people just can invest ECF-like into a VC 500 Europe or even globally and more or less enter this asset class. It's not only one single region or one single team or one single industry. You should be early also as a dentist or a butcher around the corner. So not an institutional investor with deep, deep, deep pockets to be able to invest into this very innovative asset class.

And therefore, illiquidity is necessary. And venture capital is by nature very illiquid, of course, and we will never solve this fully as it is an intransparent or illiquid asset class, but making it more and more liquid and accessible for kind of everyone someday is what we are aiming for. Joke, you oftentimes compete to get into the very top funds. What's the value out that AQVC brings to GPs? Good question. I mean, if you look at the AQVC team, first of all, I mean, we have experience of being, you know, founders, angel investors, VC fund managers, VC fund of fund managers. So as a group, we know the value chain from A to Z.

And we've probably seen and experienced quite a lot of the same hurdles or challenges that VC funds face today, meaning that we're able to support them with different topics. And so, you know, we can support them with fundraising strategies, LP introductions, leveraging our network, introduce co- and follow-on investors, and recruiting, for instance. And yeah, this is something we have done in the past. Then, of course, all of our portfolio funds will get access to the QVC Discovery platform, where we also give them hands-on support. On top of that, we are quite active on bringing more visibility through our newsletter and LinkedIn, which we leverage quite a lot. We actively showcase the funds and

people behind our investments. Obviously, not all VC funds want or need any support from us, and that's fine too. But those that do, we will for sure help them as much as they want. And I think that's the philosophy we follow in general, everything we do at AQVC. I mean, we want to be a value at LP, but we also want to support and strengthen the VC ecosystem. So we're producing quite a lot of educational materials to both VCs and LPs out there. Everything from fundraising guides to pitch deck templates to guides on fund marketing regulations. So I think VC is such an important asset class that we want to help to grow the ecosystem. Where do you see AQVC in five, 10 years? In five to 10 years,

AQVC will be one of the leading funder funds in Europe and the go-to address as a platform that makes capital formation within the venture capital asset class more official. And if someone thinks of venture capital funds,

they should think of AQVC. This is where we want to go. What would you like our listeners to know about you, about AQVC or anything else you'd like to shine a light on? What I want to go. What would you like our listeners to know about you, about AQVC or anything else you'd like to shine a light on? What I want to tell emerging managers is it's a tough road.

It's a tough journey. And I think what should not be treated or what can't be treated enough well is team. So team dynamics, choose your right partners is kind of everything. And therefore, I think this is one of the things that also makes QVC unique. Not only that we have by ourselves a great team and a great partnership with all our colleagues, but we also try to be for every VC fund a really good partner. We know that it's really tough out there.

We received tons of no's over the last 15 years. And we will receive another ton of no's in the upcoming 15 years. And we will receive another ton of roles in the upcoming 15 years for sure. But when you have, or once you have the right partner at your side, I think this is doable. We as a QVC want to be the partner that helps you as a VC fund or as an investor into startups

with either capital or with support on any kind. And the mission is also not only investing and creating profit. Also, sure, we are a fund that wants and will create return and profit for itself. But we also want to really support the ecosystem of venture capital, not only, but especially in Europe. Europe needs that and Europe needs innovation to be able to survive in the upcoming decades. And therefore, innovation needs capital.

It's not only the idea, right? It's unfortunately also capital. What's the biggest constraint to Europe, whether it's financial, political, or however controversial you'd like to be? What's the main constraint to keeping the European VC ecosystem from reaching its potential?

I think Europe has the huge problem besides the political side of right-hand wings becoming more and more airtime, which is not a good development, obviously. But the big problem in Europe is that it's very fractured. So you are very fragmented. So you have totally dozens of different regulations. Marketing is really an issue cross-border. You have different systems, different financial authorities. And therefore, by itself, Europe is per se a huge market, but divided

into very, very many markets which you need to conquer and cover somehow. And this is really a problem. Also, Europe is very good in regulating themselves before even having started with something. And this is also, I think, a mindset that needs to be changed somehow. Thanks for jumping on.

Look forward to continuing the conversation in person and chat soon thank you for having us David thanks for more ideas on how to raise venture capital in this market make sure to subscribe below