09 June 2022 |

FTT Q&A With Activant Capital’s Andrew Steele

By Ian Kar

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Activant Capital’s Andrew Steele talks growth investing in fintech and crypto, how Activant wins deals, and advice for founders and VC’s starting to invest.  

  1. Why don’t we start off with a little bit about yourself, your career at Activant, and Activant itself?

Absolutely mate. I moved to the U.S. a decade ago from Northern Ireland to study behavioral economics at Harvard. I founded and ran an ed-tech company, went through all the ups and downs of building from scratch, but eventually found myself at Activant in Fund I. I didn’t know much about investing, but I felt the raw energy of the place and the opportunity to be part of building the firm itself. I’ve been fortunate to take part in a number of different aspects of the Activant growth story over the last six years, and working with great companies like Deliverr, Cardless, Truework, Settle, and Eco, 

Activant is a $2.5B growth fund, headquartered in Connecticut with offices in New York City, Berlin, and Cape Town. We focus on commerce infrastructure software – essentially platforms that help to make, move, buy, and sell things better, whether it’s a t-shirt, a mortgage or a digital asset. We partner with founders who are obsessed and have the audacity and focus to redefine massive markets.

  1. You’ve led mid-stage deals into some great fintech and crypto companies. How did you find them and build a relationship, and how did you sell them on Activant? 

In the early days of Activant, no one knew who we were. The only way to get in front of a company and build credibility was to prove it through customer intros and deeper knowledge than anybody else. We were turning up to lead growth rounds and take board seats as a new fund, which required relentless effort. We’d take red-eyes, reverse-pitch founders their own company—whatever it took to prove ourselves. 

And even today, as we’ve seen our work compound into portfolio success, we never take a meeting for granted. It’s in our DNA. We still spend a lot of time digging deep to set the tone of the relationship in the first meeting and become an extension of their teams even before we invest. There are a lot of smart VCs out there, so ultimately it’s a question of where you spend your time and energy.

When we’re introduced to a company, we aim to skip past the trivial questions and get to the core of the business – what makes it special, what will define success. Knowing a space means from the early stages through the incumbents (public or private). Innovation cycles are shorter than ever before, so we take the time to meet everyone, and aren’t afraid to partner earlier than traditional growth firms in cases that make sense. Ultimately it’s about having a 5-10 year view on a market, and avoiding getting caught in group think.

  1. Post-check, how does Activant look to add value and help founders and companies? 

Where we shine is our active involvement in the company’s strategy. Our goal is to be the first person our founders call when they’re thinking about their market. Ultimately it’s about consistently building our knowledge base, something we’re so obsessed with that we opened an office dedicated purely to research. We want to help our founders with the things they don’t have the time or resources to do themselves – looking at public comps, data benchmarking, detailed market maps. We also have dedicated teams for talent & people and design & branding.

  1. What are some areas that you’re interested in over the next year? 

B2B eCommerce. We’ve witnessed a decade-long shift in consumer eCom experiences – it’s not hard to see that the next decade will be defined by the digitization of B2B. This shift will involve the combination of fintech, logistics, marketplaces, and headless commerce platforms – and it’s just beginning. I wrote a little about it in TechCrunch last year.

Another area is workflow automation, specifically the intersection of DevOps and cybersecurity, enterprise software, fintech, and crypto.

  1. What advice do you have right now for early stage and mid-stage founders?

There’s that cliche that times of economic downturn breed innovation, but what makes this current moment interesting for early stage founders is that there’s more off-the-shelf developer infrastructure and embedded solutions than ever before, meaning that if you iterate quickly and find meaningful traction you can build a big business right under the noses of the incumbents..

For mid-stage founders, it’s a tricky time. In the last few years, one surprisingly unpopular topic was the path to exit. This was in part due to the highly competitive capital environment, resulting in valuation inflation and a dead zone for M&A. As the market cools, I think founders and investors should talk candidly about the various forks in the road in the path to liquidity.

  1. What about advice for VC’s getting started in their careers?

For investors getting started, it helps to become an expert on a couple of topics, but don’t take yourself too seriously. For me, being a young investor (that looked as such) at an emerging firm, it was all about the first 60 seconds of a meeting. If I nailed that – and cracked a few good jokes – I could command the attention of great founders and convince them of my ability to help them ride the waves of their business.

Join a firm in its early stages so you can really be part of building something from the ground up. When every dollar is precious, it forces you to take the craft of investing more seriously.

Lastly, while investor frameworks like unit economics and retention curves are the tools of the trade, returns come from not being afraid to have a view on where the world is moving and investing behind that.