1Mby1M Virtual Accelerator Investor Forum: With Doug Atkin of Communitas Capital Partners (Part 3)

Sramana Mitra: You said you’ve invested in 10 companies from this vehicle. Could you talk about some examples? Specifically, talk about in what stage did you encounter them and what was it about what they had that called you to make the investment. I’m trying to understand how you evaluate investments.

Doug Atkin: Let me give you a couple of examples – one late stage and one very early stage. Because we’ve been in the business for so long, we’re inundated with deal flows.

Even those who are not raising capital approach us and want us to get involved. We see a lot of inbound flow. Where we don’t see companies coming in for our strong thesis, we do go out and poke our nose and look for one.

One example is a company that is from Silicon Valley. They approached us and wanted us to be involved. They didn’t have any venture investor. They have the who’s who of individuals out in the Valley. Going back to pattern recognition, the equities market went from two exchanges to 40 exchanges.

What you need is a technology middleware that aggregates all the market data, enables you to route orders effectively to those exchanges, perform analytics on all that data. There’s 130 crypto-exchanges. What we found was a company that did the same thing; it linked all the exchanges together. It performs analytics on all the data within each exchange and across exchanges.

In essence, it powers up hedge funds to trade. It has also created an app development platform so that people can just build their apps on top of this operating system. That was very early stage.

The late-stage example would be a company called ComplyAdvantage, which is a UK-based company that does anti-money laundering analysis and KYC. It’s a very inefficient process. It’s very inaccurate for the big banks and the insurance companies. This company has come in and is using massive amounts of data and technology to do a much better job for these big clients.

Sramana Mitra: One area that is coming up is the financial services industry. It is full of fat back-office business processes that are done manually or outsourced somewhere. Many of those are ripe for AI-driven automation where by applying software, you take out a thousand people or 5,000 people. Can you comment if this is a trend that you are seeing as well?

Doug Atkin: You need two things. You need tools to help increase revenues or tools that help decrease cost. Going back to ComplyAdvantage, you are using technology to do an extremely important function much more effectively and at a lower cost.

We are looking for business models that do the same thing. I completely agree that the big banks are desperate for technology that can help them cut costs significantly.

Sramana Mitra: Also, the smaller fund managers are dependent on data. Data is the area where this kind of AI-driven automation is going to have the maximum ability to impact business processes.

Doug Atkin: Yes, that’s more on the revenue-generation side. The most valuable data for hedge funds is alternative datasets that they bring in and put analytics on top of to help them make better investment decisions. That’s where the smaller hedge funds are spending a lot of their time. 

Sramana Mitra: Fantastic. It was a very interesting conversation. Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Doug Atkin of Communitas Capital Partners
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