Q&A with Talis Capital's Beatrice Aliprandi

Beatrice Aliprandi is a Senior Investment Analyst at Talis Capital. Prior to Talis, she worked for three years in TMT investment banking at Jefferies.

What attracted you to venture capital and working with startups?

The interest goes back to my father. He’s an entrepreneur who founded a business at eighteen years-old, so I grew up seeing him running his company with passion and hard work. When it was time for me to go to university in Italy, I chose to major in business administration and happened to become really interested in corporate finance.

I was drawn to tech publications and crowdfunding platforms and I started doing some micro angel investing. After getting a master’s degree in Finance and Risk Management in London, I thought the natural next step was joining an investment bank to do M&A, as that would merge both my interests: entrepreneurship and finance. I was at Jefferies for three years and for the most part in their Technology, Media and Telecoms team. At some point I realized that the companies I was working with were already formed and mature, and the advisory role was too far from the entrepreneurial spirit I had in me. I wanted to work much closer to start-ups that were growing exponentially and were disrupting the market, and Venture Capital was the best way to do so.

Why Talis Capital in particular?

I had heard about Talis Capital before applying, for their investments in Darktrace and iwoca; it was clear that the fund was at the forefront of investing in some of the most exciting early stage technology companies which were already paying off. When I interviewed and got to know the team better, I immediately appreciated their self-driven and entrepreneurial culture. I saw the opportunity at the junior level to have a breadth of responsibilities that I hadn’t seen before, even compared to other VCs. That can seem scary at first, but it was important to me to build my core investor competencies from sourcing to due diligence to portfolio management, taking care of all the aspects of it.

To explain the background of Talis, we are backed by ultra-high net worth individuals and entrepreneurs. The fact that it’s entrepreneurs’ capital for entrepreneurs allows us to be patient and adopt a longer-term strategy. Also, our companies’ founders can leverage the Talis network and our LP connections and learn from people who know how to run a business. Talis’ founders themselves have decades of experience as corporate directors and company builders. Given their operational expertise, I was excited to learn from them.

Our LP base allows us to be agile and flexible in both our own fundraising and execution of investment deals. We can move quicker than most VCs. Business leaders can spend many months occupied by fundraising, and this often acts as a burden on operational delivery and therefore affects performance. We don’t have strict mandate from our LPs which allows us to explore global themes and build industry expertise through extensive research. So when we find innovative technologies in new attractive verticals or geographical areas, we can invest there. The freedom and culture are what makes Talis unique and good fit for me as an investor.

What was the recruitment and hiring process like for you?

It was a fairly traditional process. Like most people interested in venture jobs, I was subscribed to Stephan von Perger and John Gannon’s blogs and as I mentioned I had been tracking some of Talis’ portfolio for a while. I saw the Talis opening on one of their emails and applied online. I heard back after few days. The first interview was over the phone with 2 associates and then I had another call with a partner. After that, I was brought in for a face-to-face with half the team and then another partner meeting. Last, I had a final cultural fit interview with the Finch family who are the founding family of Talis. I’d describe it overall as a mix of testing my technical skills and soft skills to see if I was well-rounded enough for the role, but from the number of interviews it’s easy to see how much cultural fit is a priority.

A great investor is multifaceted. They can thoughtfully advise entrepreneurs, build financial models, share deal flow, and more. Talis measured for all of these skills. What I appreciated most about interviewing was the way the team asked questions to better understand my thought processes. My opinions were heard and challenged. That’s a sign of a great firm. Through the numerous interviews, I was also able to gauge the personality of the firm and the partners. I could tell they were a smart, fun team focused on quality and also had a great name in the market. All of the new hires struck a balance within the firm. Everyone has a different background and brings their unique perspective to Talis, which makes of a fantastic working environment.

What skills did you bring to this position from previous roles in TMT banking?

I draw most on my background in financial modeling, pulling together companies’ marketing materials, and interacting with corporate clients. My role at Jefferies was quite technical (I spent a lot of time in Excel), but the firm is also known for giving junior employees exposure to clients. It was that interaction that sparked my interest in working closer with entrepreneurs in venture capital. VC draws on strategic thinking, partnership building (with the entrepreneur and investor relationship), as well as more technical financial skills – and that’s exactly what I was looking for.

Another thing I learned from banking was how to weather a competitive and intense environment. I learned how to be determined through the long hours. Being resilient and having commitment are needed traits in an investor which I definitely brought from my previous role.

What does a standard diligence process look like at Talis?

Our process starts with a call between the founders and someone generally not at the partnership level. If we think ideas are worth considering and have conviction, we’ll push the partners to take a meeting. If it’s a technical product, we check that it's sophisticated enough and viable in its respective market, and we do that with a dedicated Technology Venture Partner. For us is also important to have a good understanding of the financial model, size of pipeline and conversion rates, customers references, but it obviously varies company to company depending on sector. Overall, we are always on the look for solid teams, sustainable business models and unit economics, and proven product/market fit.

We might ask other sets of questions depending on the depth of our due diligence. That’s usually a last step before the term sheet. We want to speak to as many people at the company as possible – sometimes we might find that the product is great but the founding team is not best placed to execute or have fractious relationships within the company.

Venture capital is like dating. It takes time to find a partner with the right traits and who works well with what you’re looking for, and there needs to be trust. The investors, the founders, and their team need to work together through challenges. Think about this: the amount of time a VC spends with a company in their portfolio is on average longer than the average marriage in the US (Reference 1 and 2).

As I said earlier, we’re flexible with our mandate. Our capital is very patient and long-term. We’re not forced to exit after 5 to 7 years. We can hold if it’s a good business model and maximise our return in the best possible way. Because most of our LPs are entrepreneurs themselves, they know creating a successful business often takes time – and we’re there to support companies for the long-term.

If you had to pick one, what’s the most important consideration for an investment: product, talent, or market?

Definitely the founder if I had to pick one. A CEO has to be a natural sales person inspiring leadership. They are selling their vision. If that founder has been successful once, they can likely do it again. We like sustainable business models, strong unit economics and big addressable markets. But if a founder is solid, we would back them repeatedly even if the market was niche. We definitely have a preference for 2nd to 3rd time entrepreneurs. They also like coming to Talis because of our entrepreneurial investor base. All in all, I’d say even if the product or market is not perfect, we're intrinsically a founder-first VC fund.

How do you learn a new investment area?

I always start by reading as much as possible. Having done this initial research, speak with multiple founders and actively listen. Ask a lot of questions. That’s general advice for anyone interested in VC - never be afraid to ask questions. You can be an expert of a particular sector, but the entrepreneurs work every day in that environment and know it inside out: there is always something to learn from them.

Asking these questions and doing market research… that's what I like about VC. There are always new trends and sub-sectors. Your role is never stale. Industries will keep getting disrupted and you never stop learning about them.

Talis Capital fuses private equity and venture models. Since you're investing primarily in seed extension to Series B, I'm assuming this doesn't mean growth equity. Can you explain what Talis is doing differently?

Depends what your definition of “growth equity” is - we fund and support the growth of companies from late seed, A, B and beyond for as long as it makes sense for both parties. Talis started off with a mission to back great business models and great founders independently of the type of investment. The firm started with private equity in 2009 and we added the first venture fund 3 years later. In general, we want to scale businesses together with the entrepreneurs. It doesn’t matter if the startup needs a minority or a majority position to do that. If there’s a rockstar founder with a fantastic idea, we feel comfortable holding more than 50% of the company and being more involved. It goes back to the fact that our mandate is quite flexible. The same goes for a young company that doesn’t want to sell more than 50%; we take minority positions too. We’ll always help with recruiting and key hires. We’ll also support and advise on the business plan and financial model if needed.

One example of this is Pirate Studios, one of our portfolio companies. They’re a chain of on-demand rehearsal studios for musicians. You swipe in with a QR code and use the rehearsal room and its equipment for the selected hours, then the studio shuts itself down. It’s a great concept partly born from our own firm (Matus Maar, one of Talis’ partners, is a cofounder and helped them since idea to full roll-out of the studios). Talis owns a high stake in the business because Pirate Studios is a Company that we have a lot of conviction in.

You focus on cyber security, business intelligence, fintech and insurtech. When you think about these spaces in Europe versus the United States, what are some similarities and differences?

I love these spaces. In my previous role I had worked in cyber as well as software and fintech, but not so much in insurtech. These have been Talis’ focuses for the past few years. However, as the market evolves we keep adding new themes - we look at a specific trend and see which startups could address that theme and problem. We have also extensively invested in proptech with 6 start-ups from this industry in our portfolio, and we’re adding more, namely health-tech and agri/food-tech. As I said earlier, Talis gives me a lot of independence to build my own pipeline and explore new themes which is such a great opportunity at the junior level.

To answer your question, I think the big difference is risk appetite. Large US corporations are willing to pay huge multiples while Europe remains risk averse and more cautious. We extensively look at financials to see if the valuation makes sense. We aren’t seeing the same hyper-valuations that the US has produced in the last year (for better or for worse). Also, in many sectors, like health-tech, the US is ahead of Europe though that’s likely driven by the fact people are dissatisfied with a market-based healthcare system.

What gets me excited is the entrepreneur community at universities. You have so much talent coming out of Stanford, MIT, Harvard… that’s not remotely comparable to London School of Economics, London Business School, or Oxbridge which are fantastic universities, but as a VC community we need to further champion entrepreneurs out of university. This is something I think the US does well and I’m trying to foster in the university community here. We have a growing number of accelerator and incubation programs – I’m a mentor at one of them, Kickstart London – which I hope are going to make the difference.

I'd love to hear your thoughts on insurtech, especially as someone working at Oscar, one of the biggest insurance startups in the US. We're seeing new models insurance (like peer-to-peer insurance) as well as startups carving out niches in particular industries (auto, life, etc.) and others streamlining the value chain whether that's in claims, distribution, or risk. Google, Alibaba, and Baidu have made massive investments into insurance startups - do you have any speculation as to why?

London has long been the home for Fintech and Insurtech but the sector is now ripe for consolidation and we’re continuing to see the rise of large incumbents in the space as well as the barriers to entry being high due to the EU regulatory framework. My opinion is that big corporates have experienced massive growth in the past few years, but they’re now reaching a point of maturity where growth is slowing down and they’re afraid of being the dinosaurs that grow at 2% per year. If they can’t get it from their core competencies, they can leverage their massive databases, and tap billion-dollar balance sheets to fuel growth. Google and Alibaba can use their rich datasets to tackle sub-sectors. You can see that synergy clearly with healthcare. Google through Nest can serve the senior category and help them live independently. Amazon is making moves into healthcare with the acquisition of PillPack and their own medical device brand. Apple Watch includes a heartbeat tracker. The Googles and Amazons have businesses set up to categorically disrupt insurance for the better.

One of Talis' most successful investments has been in Darktrace. Can you walk me through what led your firm to making that investment?

When I started at Talis, Darktrace was in process of raising the latest Series E round that valued the company at $1.65B. Back in 2012, the Talis team decided that cyber security would be a major theme for them. New machine learning and AI technologies were emerging and being validated by the market back then. Darktrace was one of the first ones to apply ML techniques on cybersecurity software. The software acts like a human immune system. Human bodies continually adapt to new threats that are constantly mutating and our immune system learns what is normal for our body and neutralizes outliers that do not fit.

Darktrace applies the same logic to cybersecurity for enterprise and industrial environments.

The founding team is made up of experts in computer science, immunotherapy, and the intelligence community. The founders were great, the tech was amazing, and the market was ripe for the product. We partnered with another fund, Invoke, and led the Series A. We helped them gain a few more customers leveraging our network (their biggest client at the time was a business that we introduced to Darktrace), which then led to the Series B with Summit Partners, the Series C with KKR and Series D with Insight Venture Partners. We were really glad to add value from early stage and helping them scale up.

All in all, the decision to invest came from a macro theme coupled with a phenomenal founding team and product. What also makes me proud is the fact that Darktrace’s two CEOs are both brilliant women, one covering the UK and the other the US.

Have you faced major challenges as an investor/as a woman in venture? Where do you find and build mentorship in the community?

The major challenge doesn’t relate directly to the fact I’m a woman - it mostly has to do with my age. I’m still in my 20s and many founders and co-investors are people over 35-40 who I respect and listen to. I don’t want them to feel belittled by someone who is much younger, giving them advice on their business. I’m still working on ways to best calibrate how I give recommendations in these contexts.

As for mentorship, I don’t have a specific mentor. I think I have a collection of people that I take inspiration from. One great person that I’ve never actually met in person is Eileen Burbridge. She’s a founding partner at Passion Capital and fintech advisor to the UK Treasury and Mayor of London. She’s recognized as one of the most influential tech personalities and serves as a model for women like me.

I’m also happy that one of Talis’ founding partners is Rohini Finch, who continues to inspire me through her achievements and very successful career. Not every woman in the finance industry has the honor to have an executive of the same gender, who you can look up to and relate to more easily.

Finally, I do believe I get inspiration and mentorship by my team and the extensive VC network on a daily basis. Also, the female VC community is an extremely supportive network and we interact very often for advice and recommendations. We all bring something different to the table and learn from each other.

What advice would you give to young women who want to enter VC - on the investing, operations, or platform side?

What helped me a lot the beginning was talking to as many people in the industry as possible, via call or over coffee. You’d be surprised that 90% of investors are very nice and willing to help you. The networking side can help you with recruiting; it’s opaque and not many roles are advertised, so being top of mind can give you a leg up. It can also help when you’re in the job to share deal flow and co-investment opportunities with each other.