Interview with Natallia Chykina, CFO and Partner at iTech Capital and a co-founder of AIRR
How did you get the idea of AIRR?
At iTech Capital, we have more than 80 investors and 20 portfolio companies. As the person responsible for the firm’s operations, I’ve introduced several IT platforms to manage our data. We are using Salesforce as a CRM, Xero for accounting, we also have a BI platform for reporting & analytics, and a couple of other platforms.
Unfortunately, at some point we faced difficulties in putting together all this data and making the relevant information available to our LPs. There was no solution on the market that suited our needs, taking into account our integration and presentation requirements on the one hand, and our budget on the other. So, we gradually came to the decision to develop our own product.
Why did you decide to start with AIRR?
We realized that we’re not the only ones in the fund management industry with integration & reporting problems. Many of our peers in private equity and especially in the venture capital world follow a similar approach of switching back and forth between a number of SaaS platforms, just the stack chosen differs from fund to fund.
Also, the reporting requirements from LPs are growing at a high pace. What used to be a set of static pdf-reports in the past, now should be a mobile app with all the metrics updated in real-time. We wanted to make this technology available to our LPs, and to investors of other funds as well, so we’ve built a SaaS product to make it happen.
What is the vision behind AIRR?
In software development there is a well-known concept of DevOps (Development Operations) – these people make sure that the product created by the development team, is delivered to the production stage quickly and reliably. Similarly, they often talk about RevOps (Revenue Operations) – a set of systems designed to make your sales funnel work efficiently. By analogy, PE/VC funds need “PE-Ops” or “VC-Ops”, a set of technologies that will simplify their daily work and provide the infrastructure for their key business processes.
PE/VC funds need “PE-Ops” or “VC-Ops”, a set of technologies that will simplify their daily work and provide the infrastructure for their key business processes.
Our vision is that VC-Ops should be easy and convenient to manage. In many small funds all the work falls on the shoulders of a team of 3-5 people. Therefore, it is very important that these people are able to interact efficiently in a situation where time is lacking, and basic things like regular reporting or KPI portfolio control are maximally automated. To do this, as data volumes grow, some kind of unified IT system becomes necessary.
How difficult was the start and which challenges did you have to overcome?
The task of building such a platform from scratch is very ambitious and time-consuming, as there are a lot of business processes in the fund to cover. That is why we decided to focus on building integrations with other products (CRM, BI, accounting). We connected these as external solutions and made AIRR the most open platform on the market. A new fund that wants to use AIRR does not need to give up its IT systems and rebuild everything from scratch, they can just connect their existing tools to AIRR and use it as a single portal for integration.
We tried to strike the right balance between simplicity and functionality. In the market of investment management solutions there are 2 types of products – either extremely simple tools that only let you look at quotes and the structure of the portfolio or – in the other extreme – expensive and difficult “fund ERP” solutions which together with all additional necessary software will cost from $ 70-100k a year. Thus funds like ours and small family offices usually need something in the middle ($500-700 a month). With AIRR we strove to hit the right balance between these two opposing extremes. We think we have worked out all the complications that arose to finally deliver all the key features necessary to a small PE/VC fund.
Who is your target audience?
The main target audience are PE and VC firms with less than $500M AuM (Assets under Management). These firms face the same kinds of challenges as we do and have similar processes to automate. They usually need a web portal for GPs (General Partners, Managers) and LPs (Limited Partners, Investors) and a mobile application for LPs to track their investments.
However, as we are adding new features, the platform becomes more and more useful for Funds of Funds, Family Offices, Accelerators and other types of professional investors who seek to improve their day to day investment management and may need special features.
What is the USP of your startup?
We are the only fund management platform on the market with an open approach to integrations.
We are the only fund management platform on the market with an open approach to integrations. You can continue using the software you currently have, and we are here to help you to make better use of it by pulling the data together and improving its usability and transparency for the investors. We do it through our mobile app, web portal, data export API for customizable reporting and many other features.
Can you describe your typical workday?
It’s sometimes difficult to combine a full-time job of a CFO & Partner in iTech with my role in AIRR. However, in some sense I’m lucky because there is a significant overlap in those roles: the better AIRR becomes as a platform, the easier is my life as a CFO of the fund that uses it. For instance, a fund audit with PWC last year went very smoothly for both of our funds, as we had AIRR’s portfolio valuation functionality in place, so all the numbers were easily traceable for the audit team. Investor relations improved significantly as well, as we now have all historical transactions and KYC/AML documents in one place and in proper order.
Where do you see yourself and your startup AIRR in five years?
We are the kind of startup that is doomed to become global right from the start, as the market niche we’re targeting is very small in most countries in the world. It will definitely be an interesting experience to see how AIRR becomes a global story. Hopefully, we can also expand into other segments of the investment management ecosystem providing the AIRR platform to a broader set of investment professionals.
What 3 tips would you give to founders?
My advice would be to prepare to scale from day 1, as you can’t imagine how fast things will move very soon. For example, you need to think about things like good IT infrastructure, security, product localisation, logging and alert monitoring etc. right from the start, as those things are usually more difficult to introduce once the code base starts growing.
Next, aim to become part of the ecosystem of your client, as most likely, the customers will not use your product in a standalone fashion. This is something that people usually forget about: not just “how brilliant my product is” but rather “how well it fits into the whole process”.
Another tip would be to hire professionals for part-time tasks and not to lose your focus. Once you get going with a startup, you will face a lot of small things that need to be done and that you’ve never done before. It’s important to find the right balance between delving deeply into these new things and delegating tasks and to find the right people for the latter.