EXCLUSIVE: “The VC’s View” – Nicholas Shekerdemian, The Venture Collective in ‘The Fintech Magazine’

World preservation, life improvement and human empowerment are the ambitious goals of The Venture Collective. We sat down for a fireside chat with Co-founder Nicholas Shekerdemian

Launched in 2019 by Nicholas and his partner Gina Shekerdemian, US/UK-focussed fund The Venture Collective seeks early-stage investment opportunities in sectors that can contribute to its mission to leave a positive impact on the world – and democratising wealth creation puts fintech firmly in the human empowerment box.

Shekerdemian studied Chinese at Oxford while simultaneously trying to launch a graduate recruitment app, but then ditched his degree and won a place on tech investor Peter Thiel’s Thiel Fellowship for college dropouts. The Venture Collective currently funds 46 firms that are reimagining business to meet environmental, health and wealth goals.

We asked Shekerdemian to share his insights on the fintech industry, market downturns, the current state of VC and the entrepreneurial mindset.

Shekerdemian on… fintech: “I’m very bullish about the market, although I think the multiples are still exceptionally high. Ultimately, margins will compress as the market becomes more competitive. But, as investment targets, I like that many fintech business models involve high transaction volumes and diversified risk. And, while customer acquisition costs were a challenge for neo banks, some, such as Monzo and Revolut, have turned things around and got themselves in a good place.

“There’s a lot of noise in payments and it’s challenging to see innovation there. That said, within our portfolio we have Lopay, which is doing really well in the SME space. It’s focussed on empowering small business owners – people such as taxi drivers – with a cheaper mechanism for receiving payments.”

“You see a founder’s true colours when things go sideways, which happens in 99 per cent of entrepreneurial journeys”

Shekerdemian on… economic downturns: “You see a founder’s true colours when things go sideways, which happens in 99 per cent of entrepreneurial journeys. It’s a painful moment when someone who has been able to raise cash easily and has become reliant on venture capital, suddenly has to make the economics of their business really work. But ultimately, that’s healthy. Businesses that can do that will be better for it.

“It’s exciting for the market to see resets because it brings a new wave of people into the field – 2008 to 2010, for example, was a great time for venture capital because many people were becoming entrepreneurs and you could invest at reasonable prices.”

Shekerdemian on… the current investment slump: “The extension of IPO timelines and the weak merger and acquisition environment is obviously making it more challenging for people to exit. It creates a vicious cycle where limited partners have a lack of realisation, so commitments to new funds are reduced. I think there’s a lot of C-series capital and investors are willing to take modest investment bets on smart people, but there’s a funding gap where bigger firms would have come in earlier. I don’t see a lack of funding at the pre-seed and seed level.

“The macro cycle is challenging, but, ultimately, it means people have to make better investments into companies that are going to work. The companies that are being funded are generally of better quality relative to the pricing, which I think is great.”

Shekerdemian on… the entrepreneurial mindset: “Entrepreneurial intuition doesn’t go away. When I was building my companies, I used to joke that if all else fails I’d get a real job. But if you’ve got the bug, you just move onto the next company and try to learn from previous mistakes. Some of the best learnings are from company founders who got off the ground, did get scale, but ultimately things didn’t work out. It’s a painful fall but it builds a lot of resilience.

“However, I do worry about the sheer number of people who were encouraged to build companies when it was easy in 2020-21 – it brought in a lot of people who may be great operators in a small business but that doesn’t mean they have the resilience to take the punches that come with being CEO.”

Shekerdemian on… what makes a great founder: “I look for differentiated perspectives. That may sound crazy since that should be the aim of a startup, but so many pitches lack any major insight. I like stories where if the founder’s right, they’re expanding or creating a new market – Airbnb was a great example of that.

“I’m also looking for a deeper passion, because frankly, it’s not that glamorous building a startup. It’s a long struggle, so resilience comes from being passionate. It’s important to stay backing people who have a deep interest in the category they’re focussed on, rather than just opportunistically building there.”

This article was published in The Fintech Magazine Issue 33, Page 29