EP 177: Alberto Chalon | Liquidity Before the IPO Window Opens

Private companies are staying private longer, and that changes who gets liquidity, when, and why.

Founders, employees, and early investors can wait a decade or more for an IPO or acquisition. Meanwhile, venture funds face growing pressure to return capital, and many of Europe's best companies struggle to access the growth capital needed to scale.

In this conversation, Christian Soschner speaks with Alberto Chalon, Co-Founder of Giano Capital, about the rise of single-asset secondary investments and why they have become an important part of the European innovation ecosystem.

Topics include:

• What secondary transactions are and why they matter

• Why many companies now stay private far longer than before

• How founders, employees, and early investors can access liquidity before an exit

• The differences between venture capital, private equity, and late-stage secondary investing

• Europe's challenge with risk capital, fragmentation, and scaling companies

• Lessons from investments such as Revolut, GetYourGuide, and Deliveroo

• The role of resilience, sport, and long-term thinking in business and investing

Alberto also shares his personal journey from entrepreneurship and building businesses with his brother to launching Giano Capital and creating a new asset class focused on late-stage technology investments.

5 OUTSTANDING QUOTES / LESSONS

1.
"Failure in America is part of the learning process. In Europe, failure is a disaster."

Lesson: Europe's challenge may be cultural as much as financial.

2.
"The due diligence is the beginning of the journey, not the end."

Lesson: Great investors keep working after the deal closes.

3.
"Everything has to be already tested before we invest."

Lesson: Giano seeks to eliminate execution risk before investing.

4.
"The loneliness of the entrepreneur is real. I lived that."

Lesson: The best investors bring empathy, not only capital.

5.
"You need to reach the top, and then you have the descent."

Lesson: Investing and endurance sports both reward patience and resilience.

TIMESTAMPS

(00:00:00) Intro

(00:03:00) Why secondaries suddenly matter

(00:07:19) Why IPOs are no longer enough

(00:12:44) Where Giano fits between VC and PE

(00:17:06) Why private information changes returns

(00:21:41) How Giano helps founders beyond capital

(00:26:19) Not pre IPO but three years earlier

(00:31:23) Europe must think beyond countries

(00:37:56) Alberto Chalon on loss and entrepreneurship

(00:42:12) From search engines to professional investing

(00:46:21) How fashion arbitrage shaped his investing

(00:53:47) Building a privacy search engine in Europe

(01:00:51) Ruthless focus without forcing others

(01:07:38) What late-stage governance requires

(01:11:50) Why Giano chose late-stage secondaries

(01:15:32) Inside Giano Capital's deal funnel

(01:19:07) Why community matters in secondaries

(01:24:29) GetYourGuide and Revolut as examples

(01:27:29) How long a secondary deal takes

(01:29:11) Cycling as leadership training

(01:36:23) Giano Capital's ten-year ambition

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Transcript

Intro

Christian Soschner 0:00

Most teams at venture-backed companies grow up believing there are only two ways out ring the bell at an initial public offering or sell to a strategic buyer. Today's guest built an entire investment strategy around the exits nobody talks about. And the reason matters more today than ever before. Because here is the problem. For decades, founders, employees, and early investors were told to wait patiently for a liquidity event. But companies in 2026 are still staying private longer. IPOs arrive later and acquisitions are far less predictable. And the people who helped build these companies often need liquidity years before the headlines arrive. That gap between company success at exit events and investor liquidity has quietly become one of the biggest opportunities in private markets today. And he has lived both sides of it.

Alberto Chalon 1:22

Just to give you a sense, in the year 2000, people running at IPO, even with an IBIA, 5 million revenues.

Christian Soschner 1:30

What follows is a clear eight map of an asset class hiding in plain sight. Single asset secondaries. In this episode, we talk about how to buy great private companies three to four years before the exit. Why staying private gives you an information edge? And the one number that tells you whether a fund's returns are real.

Alberto Chalon 1:53

We always think and dream to buy cheap and sell expensive, but we never get the peak in both sides.

Christian Soschner 2:01

My guest today is Alberto Chalon, co-founder of Charno Capital, who started at 17 with no money and a market nobody else was watching. The fund takes its name from Janus, the Roman god who looks to both the past and the future. A fitting metaphor for an investor whose job is deciding when the right time to enter and exit really is. We recorded this episode in October 2024 when everybody in venture capital and private equity wanted deliberately to delay IPOs. Two years later, many of those companies are finally moving toward the public markets with names like SpaceX, Anthropic, and OpenAI dominating the discussion. Alberto's observations have aged remarkably well. When companies stay private longer, funds like Charno Capital help founders and key employees access liquidity before an

Why secondaries suddenly matter

Christian Soschner 3:00

exit event happens. If you build companies or back them, this is the conversation about the exits you were never told about. Let's get into it. Alberto, it's good to see you on my podcast. Thank you for your time and sharing your information about secondaries. And let me let me start with an anecdote. When we talk about secondaries, before we dive into your model, I started working with venture-funded companies about almost 20 years ago, 18 years ago, was in 2006. And this was in principle the first time when I heard that people found us or investors in companies had the idea, especially when you come from tech transfer, that VCs would buy their shares. And the message from VCs was pretty clear look, we invest in growth, and there are only two liquidity events. One is an IPO, and the other one is an acquisition by name and industry partner of your choice. And that's that. We expect founders and other investors to stay invested until one of these two events happened. And a few years ago, I stumbled over the term secondary. I mean, a few years ago, I think it was four years ago during the pandemic. And this term pops up quite frequently now. Uh, in the preparation of our podcast episode, I was listening to Nikolai Tangen's podcasting good company, where he had a conversation with Peter Harrison, the CEO of Schroeder. And they both emphasized that the term secondary and that the public markets now, public market investors, institutional investors tend to shift towards private markets, especially in innovation, which seems to be a niche that you cater. And also on the Olimp podcast from last Friday, uh Jamaf mentioned that he tried to sell his SARS investments to secondary investors, but unsuccessfully, so nobody wanted them. Can you shine more lights on what secondary investments are?

Alberto Chalon 5:07

So, first of all, thank you, Christian, for inviting me to your amazing podcast. It's uh it's an honor for me to be here today with all of you. So, to answer to your question, first of all, we need to make clear what is secondaries a journal. A journal, we do single asset secondaries within digital and tech, which set us apart the most of these secondaries that usually are GP or LP led positions. To make it clear, GP led position is when a GP coming to the end of the funds and believes that the best exit for his LPs is to find someone, the jump, and get their whole portfolio. So in this case, the buyer can get access to a very, very diversified portfolio, can be 20, 30, 50 companies. We are not doing this, we are just getting it to a single asset, and we pick carefully single asset. The other side of the market is an LP-led transaction when an LP, for several reasons, cannot wait the liquidity event and the end of the funds and is looking for a learning exit. Of course, this is a little bit less interesting in terms of sizing, but again, you get exposed to uh whatever is the portfolio of the funds where you are as an LP. So most of our competitors to today working on GP and LP led, not only in the venture capital and also in the private equity. We are specialized single asset, digital and tech. And we are the funds that is in the between private equity and venture capital, but later I will tell you why we have this belief.

Christian Soschner 6:45

Uh it's good to hear. I think the the message of you from you is that you basically buy equity from founders, from investors in companies. So single asset is a standard company like uh Google when it was private, for example, or Facebook when it was private. Uh, just to name a few names. So Facebook would be an ideal investment for you about 15 years ago, 16, 17 years ago, exactly before they uh go into public market. What I don't understand, and maybe you can can help me understand it better, is what's the

Why IPOs are no longer enough

Christian Soschner 7:19

advantage for entrepreneurs to do a secondary transaction with you instead of an IPO? How did this market uh come to life?

Alberto Chalon 7:30

Okay, very good question. First of all, IPO today is one of the exit opportunities a founder and a board has ahead. Uh we see three main opportunities. First one, of course, is IPO, but bear in mind that it's representing less than a quarter of the exit. Second opportunity is strategic acquisition. So you have a strategic competitor or company that buys your company, uh majority of full control. And third one, it's private equity, where today you have a lot of private equity that love to keep company private, they have a lot of money. So those are the three axes. Why our proposition is interesting, because these three options come with size. So nowadays, if you think an IPO, and then I will give you the same example for the other two cases, bigger is better. So nowadays, if you want to list your company and you don't want to not having liquidities and not having uh pricing, you need to have a decent market cap. And decent market cap nowadays it's five to six billion plus. Because if you go below three billion, the ATS analgos will not buy you. So at the end of the day, you will see very little liquidity. And so the question for you is why to IPO with all the cost, all the compliance, all the complexity to then do not see the liquidities and being with the pressure of this quarterly report. So that's the worst. You don't want to see your company as a zombie. So if you go to the other two options, the private equity and also strategic, they also want to come when you are bigger. So this trajectory to getting bigger, just to give you a sense, in the year 2000, people running at IPO, even with an idea, 5 million reviews with a nothing valuation. And we have seen what happened, okay? But now that's not possible. Now, if you want to go IPO, you need to be solid. And to be solid, it takes 10, 12, 15 years. And this is a long journey. After year eight and nine, there are people that, for personal reason or business reason, needs if possible to find liquidities. And here where we believe there is a great opportunity for our funds, for our world peace. And why eight and nine? Because early stage investors see them proceed, they're coming to the end of the funds. So they need, and now it's more and more frequent, this DPI, you know, what is DPI? And so we have amazing early stage funds. We don't pay per great return three times, four times, seven times, but they have deployed only 20%. So it means if a client has invested a million after nine years, he returned only 200,000. It's nice, but maybe not great. So to do this DPI, they look more for this kind of opportunities. And then also on the other side of the cap table, you can see founders that say, okay, let me sell a little bit, let me risk a little bit, let me increase a little bit my lifestyle. And this also for employees that can maybe buy or start buying the first house, send the uh boys to us to university. So there are many reasons why this is important. We have to understand why we pick digital and tech for two reasons. A, because the cap table is very fragmented, and two, because at this stage of the company, you can still have a digital and tech growing, which is what we expect, at least 30% in year. So for that reason, we believe this is uh a good strategy that is really needed by the market, and B, for the investors can be with a great balance between risk and reward.

Christian Soschner 11:38

That's fascinating. I totally agree with what you say about the IPOs that uh, especially at the peak of the bubble, a lot of companies went public without a business model, which is pretty odd to see companies listed with uh negative operations, uh cash flow from operations or uh losses and no established business model. So staying private longer makes sense. Before we move deeper into the mechanics of secondaries, maybe we can do some clarification about terminology. What I found interesting is that you mentioned venture capital on one hand, uh IPO with 25% of the exits going to the public market. You mentioned strategic uh acquisitions, which is also clear the company then merges with another company. And for me, interesting is you mentioned separately private equity. And this I find fascinating. So we have we see private equity, and it seems that secondary is something in between or completely new. Before our conversation, I would have said, okay, secondary is probably a form of private equity. Um, I understand, for example, Warren Buffett uh would be a large private equity inversor surprise private companies to just keep them alive and let the management work.

Where Giano fits between VC and PE

Christian Soschner 12:44

Uh, what's your approach or what is your definition of these three different styles: private equity, venture capital, and uh the area your fund catters into?

Alberto Chalon 12:55

Okay. So first of all, uh the area where our funds stay is an area that you're not considering, as you're saying, uh, private equity buyout because the percentage of the owning of the company. We are ready to stay minority, we are ready to stay very small, shroud in a very big cap table. We'd rather jump in a great companies that we can own zero point whatever, and which is not the concept of these big TE firms where they want to have best case majority, and if not, an enough minority with a lot of control. The way we see it on the stage, we think that if from zero to nine to ten years, your company is doing 100, 200, 300 million, is growing 30%, is profitable. We rather follow the founders, we rather accept the actual governance, we rather pick the right company with the right business model and follow. The approach of the private equities is different. They say, okay, we want to invest a lot of money, but we want to change things and control. So that's I would say one of the main, main difference. We are more flexible in the amount, we are more flexible in the governance. We believe more in the, I would say the venture capital system, where founders, especially when they are successful, they have a lot of power and a lot of governance, which is still confirmed. The example that you brought, Facebook, as you know, Mark has not so many shares, but he still has a lot of control. And my personal opinion, as long as he's doing a great job, well, it should not find that, right? So he's providing so much, and the same example you can have with Dinomaska Tesla is a lot of power, but it's bringing a lot of value for the shareholder. So our view is let it do it as as long as provide us, you know, what we expect in terms of returns.

Christian Soschner 14:54

When we talk about returns, what what's what's your case? What's your business case for Channel Capital?

Alberto Chalon 15:02

Our business case in term of return, it's very simple. We want to enter in companies that are growing at least 30% year-in-year, and for us, this is how we call it the risking power. And with that, we want to stay up to four years, and because if you do 30% minimum year on year and you compound, you should reach four times your revenues in the four years, and we are happy to make three times our money, money, money, which then leads for a 20% year-on-year IR return for our LPs as a netlet. So this is to build this, then of course we have a lot of methodology, and that's what we'll talk maybe a little bit later in the evaluation. But this is our target, and we tested these strategies with our own capital, with our family offices in 2016, and uh we have 35 plus IRR, but the most amazing number is DPI. We have 1.35. And going back, why funds need liquidity, and we mentioned before, is that because in 2016, venture capital US and Europe are today in a range of 0.2. So we are six times better, and this proved that this thesis is very short, very opportunistic, and when you pick the right companies, you can have a very early exit with a good IRI.

Christian Soschner 16:31

So it's in principle an interesting opportunity for LPs to go with your fund and uh to spread a little bit their investment risk. So not only invest in uh private equity, uh not only invest in uh public market investments or venture capital, you offered uh another opportunity. It's a separate asset class. If is this the right understanding? Yes, it's totally separate asset class.

Alberto Chalon 16:54

Yesterday I received a very interesting question from an LP. He's saying, Yes, Alberto, I do understand uh you did secondary is an amazing company. Well, why should I

Why private information changes returns

Alberto Chalon 17:06

come with you in your funds and pick this company when they are still private? Why not I I wait for the IPO and start having this company once they are public? Okay. My answer was simple as that. A, when a company is private, they can decide with whom they want to share confidential information, right? So once we have this chance, which is a very important part of our strategies, we never invest in a company if we cannot access to the founders, to the manager, and to have a proper due diligence. So our fund, yes, it's secondary, but we work like a growth fund, like a PE fund, we do serious due diligence. So that and when you have access to this information, you have an asymmetric information, you have an advantage, and if you have the capability and the expertise, as we have a general capital to understand what is an opportunity and what is the risk, here you can jump in a company. But when this company is pri is public, the problem that you have is A, the kind of information by definition has to be the same for the market. I would say even you take your time to study every public document you can find on this company, you might realize oh, that's in a good opportunity because today the multiple is not where it should be. I expect uh a grow of ABC, but the risk that you have when you are public is that for the emotion of the market, emotion of like public investors' algorithmic strategies. Maybe your view that it could be correct is not going to be confirmed by the market. While when you are private, there is not this mark-to-market pricing, there is not this emotion, so you are more safe. So I think earlier it's a little bit better, and B, it's safer when it's private rather than public. So that's that's the answer. And I will complete saying two out of three companies will not go in public, so you're gonna anyway miss the one that's gonna be sold to big PE or strategic acquisition.

Christian Soschner 19:18

This is a good hook point. Uh, companies are sold, so you are a fund and not a conglomerate like uh like like Berkshire Hathaway. Uh, can you explain a little bit more your strategic goal with uh an investment? What do you want to see uh with the company? What's the end point of your investment? I mean, Warren Buffett just to give more detailed information. Warren Buffett with Berkshire, when he buys a company, he just keeps them forever, especially the private part. And he's looking for solid companies with strong management that have a business case that lasts forever. Uh, what's your goal with your investments? What should the founder and VCs expect when they start talking with you?

Alberto Chalon 19:58

Okay, uh, this I think is two questions within one question. So, A, what is our goal and what B, what they expect. Our goal at this stage is to see companies where we have zero risk on business execution. So everything has to be already tested. The only risk we can, I would say, face is that the market will change, and here is our judgment to make sure that at least in the next four to six years, this is not changing. So, our view is to stay in a company up to four years. And I think, especially in the digital and tech environment, to stay more than 10 years is very difficult to predict because there are new technologies, there are new disruptive business models that can get quickly to an end to your company. So let me say that Warren Buffett strategy, although they respect, maybe does not apply to this industry, can apply to more industrial business. And I can, and of course, there is a lot of examples where companies reach a peak, and then for several reasons, they cannot pivot to other businesses. So, this is one. What we want to see, we want to see uh extremely uh strong and capable management team that are capable to execute, they are capable to go to the next step of the company, they're capable to scale, but even they are generating a lot of revenues and the company has a lot of value, they still stay very humble, they are still ready to catch whatever other

How Giano helps founders beyond capital

Alberto Chalon 21:41

signal of the market that are able to open and openly discuss with their investors, but with any other people in the ecosystem. Because when you lose this kind of humbleness, here I'm where you might start having. A problem. So it's this, of course, then this is also related to have great TPI in terms of cac, lifetime value, growing, habitat, cash position, all classic things that any kind of sophisticated investor will look at. What can we bring them? Of course, cash is point number one, where we are okay to invest at certain price, but two, because my background, and we'll talk a little bit later as an entrepreneur, and my general partner that has been the executive board member at Action Spring and VS Ville. We also always ask to ourselves, okay, we are investing in this amazing company, but what can we do to help them with marginal gains? What can we do? Even we can improve them from one or two percent in some area. Let's do that. So we sit down and we help them with that. What also we do is that from a relationship point of view, we always share with them the fact that we know that in the next four years, when we're gonna stay together, they will probably have some issues, some headaches that maybe they will not feel comfortable to share with a team. This is at the founder level, a CEO level, or with the board, they can always come to us because we have been already living some of that problem. And then from a human perspective, they will find A, a lot of empathy, and B, probably we can get solutions, help them to brainstorm and find a solution. And this is it's extremely important because at this level, this kind of company needs this kind of support. And as you probably know, there is this word, the loneliness of the entrepreneur. It's really true. I live that, and now that I'm on the other side as an investor, I really want as much as possible give this comfort to these amazing partners. And this, I think, set us a little bit apart and kind of lock very, very good deep discussion. And uh I think uh it's a very interesting journey at every level. So return and investment, but also human, because at the end of the day, uh it's the human part that makes this company great. People, people, people.

Christian Soschner 24:34

That's true. I couldn't agree more. Alright, before we dive into your amazing journey, let me ask you one or two questions uh around the European environment. Uh, but let's first tie together what you said for the audience so that they really understand when it makes sense to approach you and what are your cases. Um if I grasped it right, um, the pre-seed and seed stage are not your focus. Uh, also the venture capital series A, series B stages are usually not your focus. It's the time when companies find their business model, when they see, okay, we have pulled from the market, this might scale, and then they test it out with a series B, probably a series C. Uh, your point is right before an IPO. So the business model is established, the executive board is established, the team is established, the company has a growing model where they can prove that they deliver 20 to 30% growth in revenue and in the profits, and you have the confidence that this, what they started building, will continue for the next 10 to 20 years and prove to be a solid market. Of course, markets can change, we know that, but this would be the right point in time for you to invest in the company and to say, okay, it's good, we now start the due diligence. So you do a proper due diligence process and uh don't just buy any equity that comes along along your way. So you really dive into it like a private equity fund and analyze the company. This is the right the right understanding for your model.

Alberto Chalon 26:04

It's the right understanding, however, I want to be precise. We're not pre-IPO investors. Because pre-IPO investors, people that come in 6 to 12 months before an exit.

Not pre IPO but three years earlier

Alberto Chalon 26:19

Which is not what we want to do because we believe in this position, the only leverage that you have is the multiple, and you are betting that your enter multiple is lower than an exit. And then this has to be also compounded with the local period. This is what we don't want to do. We want to enter three to four years before an exit. That IPO is one of the possible exits. And why? Because again, we want to get our return on investment thanks to the increase of the value. And if just come with a higher multiple, this is a nice to add, but cannot be the only reason to make money. So we are not pre-IPO, we are three to four years. Now, let's see what are the kinds of companies. It's very difficult to say if we come after C C V. I don't care the letter, I don't care because this is depending on how many runs, how many capital, how long it takes you to being profitable. And this is very depending on my business. For us, what is important is to have a company that generates at least 50 to 100 million euros, better 100 million plus, 50 is in the lower end, growing 20% and being profitable. So if you are in this area, happy to have a look. And then, of course, you need also to explain to us that you are believing you, the cap table and the board member, that in three or four years you will seriously look for an exit because this is also important for us because our funds, our mandate is 5, 5 plus 1, and we want to present a very short fund because we believe that in the market today there are a lot of opportunities in 10 plus 2 or 11 plus 2. And what we feel as LPs as a family office, that it's too long. We don't want to stay so large, so long. So it's better to have a shorter fund and to make sure I need to stay with you only four years. So that's the kind of company we are not uh looking too much at how many series, we're looking about other criteria.

Christian Soschner 28:21

And the last point to to this fund mode at the beginning, we come later to it, is you buy existing shares, so you don't provide capital to the company for growth. You take the shares of uh venture capitalists and founders, you buy their shares at an agreed price. In most of the cases, is what we do.

Alberto Chalon 28:41

But because we know that during the journey we are in this company, they might require additional capital, typically for acquired company, not because the company doesn't need, we give flexibility to our mandate to invest up 30% in primary runs. So our way to enter into the company main route is secondary. However, there is also this primary that can come at the beginning or after when we are already in a company as a pro rata, right? So we stay flexible just to give a good balance to our uh portfolio.

Christian Soschner 29:18

So you cater basically to one of the biggest problem areas in Europe, in my opinion. I recently read last weekend in Money Week that Europe has um as much startups as the United States, but we all have problems with scaling because the capital is not so great. Uh the availability of capital is not so great, like in the US. Uh, my question to you is how is your assessment of the European market when we look at the availability of risk capital?

Alberto Chalon 29:45

In my opinion, uh, the capital is not the biggest uh missed opportunity in Europe. The problem we have here is that Europe is still very fragmented. So for companies, it's very difficult to scale in 20 or whatever 27 market, because we are still very difficult, very different in terms of regulation, in terms of languages, in terms of mentality. If you think to do advertising, marketing, especially you have to you know do things differently country by country, and sometimes regulation is so difficult. So for AUS investors, it's saying, okay, when something works in Miami, it will work in Silicon Valley right away. If something works in Berlin, I'm not sure it's gonna work in Milano or in Zurich. So that's the problem, and the capital is a consequence. So this is one. The second, I think also there is not only that, there is also a problem, I would say, of mentality where, by definition, the US investors are much, much more risk-taker than Europe investors, where we are more conservative, and this gives us less uh, you know, less capital, uh, less capital available.

Christian Soschner 31:10

Yeah, conservative. Um, do you but what are the three biggest uh ways out of the dilemma in Europe, in your opinion? If uh politicians come to you and say, um Alberto, give us uh some hints as an investor,

Europe must think beyond countries

Christian Soschner 31:23

how would you solve these uh problems that you see in Europe? What's what's just just just guess because of curiosity? Is there any way out or is it just the way it is?

Alberto Chalon 31:34

Hi the problem is that uh we need to stop to think individually as a countries and think as European market. And this, in my opinion, if it's not happening in five, ten years, it will happen in 50 years, because otherwise, think Europe before was a big continent, was a market. Today, let's focus only on our business, digital and tech. We are not considered, because if you think the most successful platform from search engine, uh social network, payments, everything is started in the US or in Asia, because Asia then put their wall and they do China whatever they want. So you see, Europe just buys service from other people, and we we have the same amount of people, the same, roughly the same GDP of the US, but we're not capable to keep talent. And even when we have a great company, and I will mention one among others, let's say Spotify, I believe if you go to teenagers and you ask where Spotify was created, they will say US because it's listed in NASDAQ. You have no idea that this company is starting Europe. So I think how it has to be a little bit retaught at a politician and start thinking about Germany, Italy, Spain, and France. I don't know how, but we need to make sure that we are really one market, and which is not not easy because when you see you know countries like UK with the Brexit and with everything changing there, and I don't know if it was a right choice, it's not too middle to say it, but seeing these taxes increase, maybe since it was not the right one, and you know, we need to be more strong together.

Christian Soschner 33:18

It's interesting you mentioned uh tech um that we don't have any in Europe by services from uh everywhere in the world, but don't uh nurture our own startups. I think it was different in the 90s. Um, search engines, uh all the services they existed in Europe, but for some reason after 2000, with the big crash, I think everything was leveraged in Europe and didn't come back. While Silicon Valley kept growing and uh investing, also China, Southeast Asia made a huge leap.

Alberto Chalon 33:45

Um the reason really appreciate that very big reason. This it's a mentality reason, not only risking. You know what? It's really failure, failure in America, it's part of the learning process. In Europe, failure is a disaster, right? So no one will give you back money if you fail with your first startup in Europe, right? It's very difficult. In America, they would say, okay, look, Christian did a mistake, okay? Let's be honest, yes. So you learn something and they give you trust again. So if you take it at a very high level, that's why they believe again after the unsuccessful bubble in 2000 that also you had sovereign, they say, okay, we need to keep going. We understand from our mistakes and we scale it. In Europe, we say, ah, we made the loss. Sorry, it's it was a mistake, we'll never do it again, and we stopped doing things. And here we miss the train, and you can see we miss the trend again with artificial intelligence, right? And this is gonna be if you if you see uh most funded companies in AI has raised 200 million euros, and every newspaper is on a way challenging the investors saying, Well, why are you giving such amount of money? It's a precise round, what are you doing? But if you compare these French companies to OpenAI, they got tail time less. So they are in the same league with tail time. So I'm not sure OpenAI will win, but at least there's more chances because it's just 10 time funding, it can attract 10 times better people, better talent, and make no mistakes, develop it, develop it again and again, and probably we'll get uh winning the battle.

Christian Soschner 35:30

Yeah, I totally agree. I saw this uh 10, 10, 15 years ago. That's the availability of capital in the US is much better than in Europe for founders. So you mentioned Spotify, but uh for me it was WIPAF. Um company I invested on the when it went public, I invested in this company and bought some some some equity. Which one? Christian, which one? UI, uh P-A-T-H. Yes. Yeah. And on my podcast, I learned with another investor that this company started in Romania, if I remember it right. And I've always thought it's Silicon Valley at some point. I mean, it's listed on the Nasdaq. And I was so surprised this company had its origins in Europe, but it basically describes the founder story. If you found a company in Europe, it's fine. But at the end of the day, at one point in time, it makes sense uh to head towards the United States or Southeast Asia, grow the company and then come back to Europe to scale it where investors like you wait. Is this uh would this be a journey that uh you see?

Alberto Chalon 36:31

Uh not really, because when a company going into the US and becoming a US entity, especially at the holding level, I would say it will be much easier for them to attract US capital. And for us being a European investor, if we do not have personal relationship with the founder or some of the board members, if we get exposed to secondary deals, it's gonna be the long tail. Usually say, okay, this is the long tail, it means that the US people have seen things that I'm not seeing at this first page, but it smells bad. So I prefer to focus our effort in Europe where there is uh less opportunities, so less uh cash, less supply, and where because we have this extensive network, we live here. Uh my partner is in London, he's very well known in Germany, I've been living in France, so we have a lot of different uh big countries for digital and tech in Europe where we have kind of you know network that can help us to you know unlock, I would say, the best opportunity available here.

Christian Soschner 37:37

You mentioned before that you bring more to the table than just investment capital and taking over shares. And during the preparation I read uh through your CV and saw that your journey started with 17 as an entrepreneur, and you made some great choices and uh had some great stories to

Alberto Chalon on loss and entrepreneurship

Christian Soschner 37:56

tell. Um, can you tell me more about uh your uh 17 and why what drove you to become an entrepreneur an entrepreneur?

Alberto Chalon 38:07

Actually, uh at 17 years old, uh I realized our life was fragile because uh uh my father uh passed away. I mean I was still at the high school, and here I will try something to become independent. And here where I start this vibes, this strength, this passion, call it as you want. And then right after the union at 23, I was wondering how I can become an entrepreneur, and I started actually with no capital because I had no family business to manage, which at the beginning was very difficult, but then turned as an opportunity. As always, I think when you start in a difficult landscape, if you're applicable to them, you know, survive this gives you more strength. And here I started and joining forces with my brother, we we would start a group that today it's working with all the fashion uh leading brands, and um we're doing several services with them. Now we are leading position, and thanks to that, then uh to this success, to this capital, this value creation in 2010, I was seduced by digital and tech, principally because I see people that in three to five years can create amazing value. And if I compare 2010 to today, this three, five years, it turned three months now, right? So at that time I said, okay, look, I need to dedicate as much as possible to digital and technologies, mostly for our next generation, because that time I was like 37, 38. I was okay, maybe in my case I can grow our company that is in non-digital and I can finish my career happily. But thinking about our next generation, and we at the time we had young, young, young kids, I say it's better to start, you know, to look at this industry that seems to be very attractive. And my view is like, you know, when you are outside of a pool and you look at the water, it's always look very cold, even at the sea, right? But then if you are a little bit smart and courage, you jump into, and depending on the real temperature, it takes you from a few seconds to a few minutes to get it warm. You just swim. And this is like so. I thought, okay, from outside it's very difficult, the water is cold, but let's try to do that. And I enjoy so much the journey. Then in uh 2012, I have been 2012 and 13. I became a co-founder of a search engine uh base in France that respect privacy. I be I become the CEO for four years, and uh in this experience of four years, I did three things. A, we were capable to raise uh nearly 70 million from three big investors. So actually Springer Group, which today again, Andreas Vida is my general partner. So our friendship, our business reservation starting in 14. Then we had European Investment Banking, we were the first company getting in Juncker Plan, and then KZDPO. With that capital, we developed technology, we signed an agreement with big corporations like Microsoft, among others, and then finally we were capable to have this search engine pre-installed in all the French public admin. And here we become a cut local sector. Now, going back to your question, how to scale it to Europe, I realized that it was not possible to copy paste. So even the French institutional will call the colleague in Germany, in Spain, and in Italy, there's no possibility that they say, okay, let me see how you did in France, and I will copy and paste. So we had to go back to this process, and this is was a little bit of frustration for me. So then I decide to uh stay as a non-executive, and uh since that day, with

From search engines to professional investing

Alberto Chalon 42:12

the knowledge that I got from quant, which in in a nation is two elements. One is an understanding about the logic of the internet behind the scenes, and second, raising this amount of capital from such sophisticated investors uh makes me think that I was enough prepared to try to become a professional investor. But then I say, before trying to go to the market, I need to prove to the market, but also to myself. So I start investing our own money into digital and tech, uh, getting exposed to 20 direct investment and uh more than 10 funds, including fund of funds, just to understand how this ecosystem works. In 19, I've been approached by European investment funds that make a very, very extensive audit and due diligence of me, how I invest, why invest understanding what are the logic behind every single investment. And finally, I had this honor and these possibilities to be nominated as one of the business engines that work with IF. We are, I would say, 80, 85 people in Europe. And uh the opportunity for me is that any of my early stage investment or private investment, it's based on a one-to-one ratio of IF. And this for me has been the last achievement in my career that pushed me to say, okay, look, uh, your track record is great. Your, I would say, honesty and integrity is great and it's highly confirmed, but having this access to IF with full trust and uh I had at that time already found out the beauty of the model that today stays at the heart of our investment basis. So single asset into secondary transaction in the digital and tech space. And I was already seeing great return. And I said, okay, look, we can start the journey to try to make available for other LPs. So here I regroup with Andreas Ville and we sit down for a long time and we decide then to launch our funds. It took us a long time to set up and to do everything. But now, since our first closing, that was like July 23, we are deploying three companies, a substantial amount of capital. We are still on one side on a fundraising, on the other side, deploying capital. So it's a very exciting journey, and we can prove to anyone listening to us that uh we are yes, emerging manager, but because of our experience, because of our personal track record, we have been already testing everything. And uh, in the case of the secondary, we test until the exit in the three ways that you can see. So the IPO, we can see pro and cons, uh the PE and the strategic acquisition. So I think we have enough experience to navigate properly this ecosystem.

Christian Soschner 45:20

That's a fantastic journey, Alberto. Uh, you are did I get it right? You are open for investments. So institutional investors can still approach you and participate in your fund.

Alberto Chalon 45:31

Yes, we're looking for investors, we're looking for any kind of investor. At the moment, we have ultranet and family office, and hopefully, institutional will join. I know that institutional usually are a little bit slow mover, it's part of the life. But but I I'm not I'm not complaining. They know how it is on the other side. When they move, they move uh fast with big size. So, of course, if any institution listen, I want to welcome, we're gonna be here to start to engage in and building relationships.

Christian Soschner 46:03

What's your minimum ticket size that you accept in the fund? 500,000. Okay, so everything above 500,000, uh, you're the right spot to call to add another investment class to the investment portfolio. Alberto, I have a few questions to your join.

How fashion arbitrage shaped his investing

Christian Soschner 46:21

I think it's really interesting. You started in fashion with the fashion industry. What made you fall in love with fashion, except being Italian?

Alberto Chalon 46:31

Actually, uh has been really, really a lucky combination because when I was at the university, it was end of uh 80s. You probably remember, at least was the case in Italy, where everyone was looking to buy short sleeve for or a floral. And I don't know how much you remember about it, but the retail price in Europe was much higher than in the US. And that's because it was a US brand exporting to Europe and for distribution and other costs, it was much, much more expensive. And back in the days, I realized that there were smart people in the US that can get good quantity of polo at domestic price, and there is room for an arbitrary. So they ship this for a year. There is someone that can buy it and take, I don't know, 10% uh trading fees and resell it to the market. And the people buying here, they're still cheap and they can make this arbitrage. And here, what I realized is that this kind of secondary, call it parallel, call it gray market, it's one of the few markets where actually you can do without capital. Because usually you can ask to your client to pay you in advance because you are bringing him something premium at a cheaper price than the local. And then with this cash, you keep your margin, which technically is a commission, but actually become your margin because he has no clue where you're buying, and your supplier has no clue is the client, so you control you know the whole chain, which usually, when you are intermediary, because you are not putting capital, you lose the control because you put together the two people, then you commission maybe one or two times, and then they say, Okay, look, I cannot pay you again 10%. And this is where I like this business, and I started in fashion. But this can be applied to any secondary market, it can be in watches, can be in car, it can be in a lot of industry. And we started because without capital, it was one of the few opportunities to scale without capital, make your margin. And then the second step has been to saying, okay, look, now it's good if we invest our capital, and here where we maximize profits, into inventory. So in fashion, at the end of the season, you need to uh keep the goods for six months and then recycle in outlets. But outlets are not enough because, as you know, outlets is one year older goods and they come with a discount. But usually brand has much, much larger quantities, and here where we come. We buy this larger quantity with a good discount and resell it after through different channels, and here where we maximize our profit. So now the two reasons it started by necessity, but I think again, bring in Italy was the right spot because we have a lot of brands, we could get a lot of access. So always it's a combination between needs and opportunity.

Christian Soschner 49:34

Yeah, I remember I grew up in Syria and Austria driving to Italy to buy uh fashion with my parents. So it's uh this was the 80s for me, 80s, 90s, early 90s. Uh, fashion, I mean you basically were the Gary Weinerchuk, the European Gary Weinerchuk of uh of the 80s, you flipped uh in principle, you flipped goods. Is this uh is it would you agree to that? Yeah, well I say it again. So uh Gary Weinerchuk is uh is a European uh US influencer that I don't yeah that uh his story is that uh he started with flipping goods basically wine. He he sold wine and uh started to sell wine over the internet. And he always recommends young people, if you don't have money, uh flip goods. So basically buy buy stuff somewhere in the world and then develop a nice story and sell it over the internet these days. And uh I said uh ironically a little bit uh that you basically were the Gary Vaynerchuk chuck of the 80s. Um, in the fashion industry, you did basically this model that he suggested, and uh the reason is for young people who still today valid uh when you don't have capital, uh connect people, basically buy goods and telling a story and sell it via the internet or in real life to other people at a higher price, and you can recognize margin. Is it still possible today, in your opinion?

Alberto Chalon 50:55

No, it's uh still is still possible thanks to internet. And uh in 2008 and 10 we started experiencing that there were a lot of individuals selling uh goods on eBay. Of course, today the market has changed, but it's still possible. There is always an opportunity to make money in uh the right industry with the right prices, the right access.

Christian Soschner 51:21

And uh, was this the reason then that you pivoted towards the tech world, the dynamics in 2008-2009?

Alberto Chalon 51:29

The reason was that we were seeing this wave in our industry about uh you know uh special sales like uh prival, we were seeing eBay, we were seeing Amazon arriving, and we say, okay, look, we believe that the big market will be there. And also another thing that we've seen back in the days was that if you think on a product, right? And if you think you are localized, let's say in Paris, everyone in one district gives to this product the same value, the same price, because you see in this windows, but then you don't know on the other side of you know the world, in Silicon Valley or in Japan, the same item can work 20, 30, 60 percent buyers. So then this is the beauty of internet. So another reason was for me saying, okay, look, there is something that here we price it 10 bucks, but there are people in Japan that can buy it at 15. So if through tech, through internet, through e-commerce I'm able to reach, I can make more profit. So that was one of the easy reasons. And then jumping in the search engine was a reason to say, okay, but if I'm successful with that, I can have really, really part of control of this ecosystem. And uh, thanks to that journey, I understand a lot of things behind the scene about the data. I'm not an engineer, but I clearly understand several business models, how they can be, you know, made possible in this industry, thanks to what I've seen, uh, you know, co-founding a search engine.

Christian Soschner 53:05

When did you start with the search engine? In uh end of 2012. I'm curious what motivated you? I mean, um, in the 90s there were a lot of search engines, then uh Google came along. I think they started in 1997, 1998, got venture funding in the early 2000s, and I think in 2012, Google was already the biggest on the market, the biggest search engine on the market, and uh basically wiped every other search engine out. What I mean it is is a similar story, like the iPhone. I mean, it was also uh surprised that Steve Jobs in 2007, I worked in the mobile industry briefly, was surprised in 2007 that Steve Jobs put another mobile phone on the market, and

Building a privacy search engine in Europe

Christian Soschner 53:47

uh the success proved him right. Um, what was your thesis in 2012 to put the search engine on the market when Google was so dominant?

Alberto Chalon 53:58

Your reason A was to try to tackle uh the European appetite to get back sovereignty. This is one, two, anticipate this privacy topic. Because back in 13, when we really think about search engine and what should be our position, we were ahead of the time and we say, okay, look, privacy is something we need at some point to care. And as you see, Europe was an early adopter, and we were the first search engine on a full privacy base, okay. And I think that we could be much, much, much more successful if we were in a market where every country was you know trying to help each other, as we say now for other business, right? So our success has been limited by I would say uh the fact that every country is looking at its own, you know, uh strategy vision and mission. Otherwise, if we could scale from France to the 20 countries, it could be a really, really European championship success. Which stays like a question if this is doable or not. But that was the vision, and uh for us, it's been a successful investment and journey, but uh has been very, very small compared to the big picture that we had back in the days.

Christian Soschner 55:32

So your US people's privacy with the search engine.

Alberto Chalon 55:35

Yes.

Christian Soschner 55:35

Yeah, yeah, I think this is an important part now in 2024. I mean, I agree totally to what you say about Europe. I think we we still grew up with the stories of the European empires from 1700, 1800, something, but the world has changed. And uh Europe needs to unite and become a single market if Europe wants to stay relevant. I'm still surprised that uh France and the French are proud about France, the Austrians about Austria, the Germans about Germany, and that we all have these uh localities which makes it difficult and challenging and bureaucratic uh to roll something out in Europe. If you can access the market all at once, like in the US, one language, uh for example, if you could agree on English, uh, one system, uh, one financial market, one capital market, it would be much better for the startup world.

Alberto Chalon 56:21

Absolutely, but not only for the startup, for everyone, for any company can scale easily from Germany to France to Spain to Italy, and you know, and uh one VIT system, everything digitalized can be really, really much, much better. I hope that something will change in a few years, but you know, let's stay positive.

Christian Soschner 56:40

Yeah, that's true. I mean, the tech has arrived, so we don't we just need to use it, we don't need these complex systems anymore. Uh I'm curious, you've fashion, uh you went from fashion to tech and then to finance. What was this turning point uh in your journey that you said now I go from the search engine business, uh, which of course truly has potential. I mean, it's world and privacy is a topic, and there is a lot of two. Uh why did you decide then to go into it's the third part, it's completely different. It's fashion, it's tech and finance. What made you shift your mindset?

Alberto Chalon 57:20

So, first of all, uh when we start raising capital, I start looking at how this industry works, and then staying closer and getting the attention of Archispringer, which has been, I would say, the largest and the most sophisticated investor in Europe, investing in, I don't know, a lot of companies, several billions. Open my eyes to this uh industry and these opportunities, right? And then it was for me, it was clear that I I have to start this with our capital. So I say, okay, look, let's start to see how you can make profit out of it. And then when I realized that we were good, I say, okay, let's work, let's make it a full-time job. And this also meets my my passion because me today, first of all, I'm doing that again as when we started in tech for our next generation. I have two boys, my brother had three boys, so in total, we have five young boys from 23 to 12, and uh so opening for them opportunities. I believe digital and tech is gonna be one of the roots. Um that was my one of my you know leaders. And then uh I will say I have so much fun today, because on one side, for me, most of my colleagues saying, Oh, I really hate fundraising. Well, because I started as an entrepreneur, I love the fundraising because I love to sit down, having coffee, discussing with ultras, mainly family office today, but tomorrow can be also institutional, and hear and get to learn what great journey they had, share what I know, and get exposed to what they know that I don't know. The other things that I like is always connecting people, connecting the don't. So, what we do at Jano and our investor day has been the first case, and we had hundred investors from Europe. And what we did, we did a couple sessions of speed dating that it took us a lot of effort to make this matching, but then to see all these exciting people from London connecting with Zurich because we know they have in common, I don't know, real estate strategy of passion. And it was simply amazing. And we're gonna go more and more. So, this is one side of the market where I'm still very, very passionate. So, fundraising for me is not an issue, actually, it's an opportunity. On the other side, investing in such growing and big companies like the one that you can see in our portfolio, it's exciting. Sitting down with this top level management that explains you what they are going to do in the next 12, 24 months, 36 months, new product, new feature, how they're gonna maximize the value of a client, who means a lot of exciting and keep me really fashioned and young. So I see it as what try what helped me to wake up in the morning with smiling and being very happy.

Christian Soschner 1:00:34

I guess very long term. What I found uh interesting in the questionnaire, I have a questionnaire to prepare for the podcast that every speaker has to uh fill in to give me some information about them. And you described yourself in the questionnaire as

Ruthless focus without forcing others

Christian Soschner 1:00:51

ruthless in the pursuit of goals. What drives you? What why why do you describe yourself in that way?

Alberto Chalon 1:01:01

Uh, first of all, I'm a very, very challenging person, and I challenge myself a lot, right? And for me, I always try to keep a balance between where am I and when I want to go, but I'm very ambitious. So uh everything I I do, I want to try to do as best. I'm not a generalist, I do a few things where I try to focus as much as possible. Everything stays out of my focus, no clue. So sometimes people we go into dinner and say, Have you heard about this? And it looks like I'm not living here. I say, Oh, uh, what's happened? You know, and on the contrary, if you ask something about what is my personal, what is my passion, which is nowadays in the last 12 years, has been cycling, right? I can tell you, I would not say everything, but a lot of things. Because every day I'm focused, every day I try to learn before you mention about or leave, right? I think that today we are very lucky, we can listen to amazing podcasts, you're among others, and get you know, exposed to amazing people that even for 30 seconds for two minutes teach you something. And if you are capable to stay focused and careful, you catch something, and this can then give you ideas and give you knowledge, right? So, and and really, I was listening on in, and it was funny to hear Chamat uh saying, I cannot sell my SAS. Okay, but reality is that secondary investors are not stupid, so if they're not buying this SaaS company, it means that there is a problem, right? And he knows it, and that's why he's making fatabody. So that's that's me.

Christian Soschner 1:02:55

Well, I mean, focus is good in business generally speaking, uh, but what does that mean for founders who want to work with you? Are you uh do you focus them in the same way?

Alberto Chalon 1:03:07

No, everyone, everyone, especially when you are a successful founder, has his own recipes. You cannot think to change people, right? You can give them friend advices and do not expect they take 100% of your advice if they take 25, it's a nice increase. So, no, uh, my way to see things is to always let zone the the people are doing well, well performing. Everyone has his own approach, his own lifestyle, and actually the diversity makes us richer. So I'm able and I'm happy to share what is my benefit, what is my strategy, but I do not think it fits for everyone. So I'm happy to let the founders, the board member, or any person in the company to work as he thinks, to act as he thinks, as long as the result is on his side. And if it's not, let's sit down to discuss how we can improve it, but always keeping the right balance between, you know, motivation, emotion, and uh accepting that we are everyone is very different.

Christian Soschner 1:04:16

So, on one hand, you are ruthless in the pursuit of your own goals, which is very focused and ambitious, with an excellent leadership understanding that uh when founders scale the company already to a successful story that they become interesting for your fund, uh, that you let them live their strategy, but are always open to have a conversation with them if they need in coaching styles some ideas, what worked in other industries and uh pitch ideas with you, chat these ideas with you, what can be transported to their company and how they can make it better, but you don't come in as the ruthless Italian uh um uh pirate who takes over the company and then shows people how they how they can win.

Alberto Chalon 1:05:00

I'm rootless with myself, not with everyone else, only with myself, right? And but everyone else, on the contrary, I try to understand and again the expectation is that when they take 25-30 percent, that's more than enough, and never take things personally. So, again, another point that changed my career when you are an entrepreneur, especially for me at least early days, you stop being a woman's show, and then the evolution is okay, one man's show, it's gap. Let's be two, three, one man's show, then 30, then 40. And then when you become a co-founder in your public money, you understand for me, governance is an opportunity because it's true that you are not free to do everything. That's true. However, if you take the other side of the coin as everything in the life, if something happens, the mistake is shared. So I don't want to listen. I miss you, we are on the board, we decide to do one straight. If it doesn't work, okay, I put this strategy, but you voted with me. So we have to think that. And the evolution when you are an investor is saying, okay, it's never personally you are one out of many you're in the room. If you bring smart ideas, interesting topics, probably if the founder will not get it, the other investor will get it. And we help you to make the founder see what you see. Sometimes it's a question of perspective, and we don't see the same things at the same moment. So I accept it, and it takes time. And being an investor and being a board member, especially supported, it's also like this being very, you know, quiet, waiting. It's a little bit sometimes like politics. Okay. You cannot think Monday you have an idea, Tuesday it's realized. You need to take time. And I learned by the experience, but I think it's part of the game.

Christian Soschner 1:06:57

Yeah, especially when companies are bigger, it takes time until ideas come to fruition. Remember my time in the virtual acquisition. Uh startups usually can move fast, but the bigger the organization gets, the longer information take needs to disseminate, and that results are showing up. Um, when we when we come back to to your fund in the discussion, you mentioned that your fund is positioned in the late stage. Um not pre-IPO, but before an IPO, and IPO is a potential access scenario. And uh one reason that you said why companies should come to you is uh IPO is much more difficult. You have a different governance structure, and private is easier.

What late-stage governance requires

Christian Soschner 1:07:38

Um, what are your expectations towards governance as a late stage fund? I mean, it's not completely like it's on public markets, but what is your minimum requirement?

Alberto Chalon 1:07:48

Okay. Uh in governance, I think more we could focus, of course, governance. We see what is the actual shareholder, and usually we have no ways to impact and change it. So either we accept it or we say no. Most of the cases we say yes, because nowadays, especially at this stage, those companies have already polished this shareholder agreement because you have sophisticated investors before us. And actually, this is another good signal. We want to enter in company where we see at least tier one investors that usually have this good balancing governance. What we expect more than that, because this is, let's say, on the due diligence phase, we say, okay, we like this shareholder agreement, we know what our rights are, that's fine. What is very important, I think, is the reporting system. So how you can track your investment, how you can track company performance, how you compare actual performance to budget, that renders giving you opportunities if you things where you can give help to the company. You can ring the founder saying, okay, look, I've seen a decrease of here, I've seen an increase of cost here. What is the problem? How can I help you? Reporting is very important. I would say nowadays I'm quite impressed with some companies, how they are becoming very good in reporting, becoming very transparent. And you know, some of the companies now they do some report, but I would say they're not too far from the public companies. They give you enough details, they invest money to have two, three people to dedicate to this uh, you know, extensive reporting. So for us, important reporting for us is important to have, you know, one hour per month to discuss with, I don't know, the CMO, the CFO, and things. And uh, so that's that's very important for us access to the management.

Christian Soschner 1:09:43

What um I liked before in the personal section is we mentioned you are in podcast and how amazing it is today to access information uh via the internet, which uh your colleague Maurice is joining. Um I will just uh say briefly hello to him if he joins and then move him to the ITs so that we have uh a clear stream. I think it takes some time to join. Okay, okay. Let me just um check where I can do that. It's here. Control to attendee. So then we have just a clear recording and a clear framework is better for the post-production. I hope it doesn't mind. Um what I liked before, you were talking about your podcast and how amazing it is today to access information via the internet. You see excellent investors and entrepreneurs on podcasts sharing their real journey, real information, real stories, and especially in business. I mean, starting business is a social science, so not everything that works in one company works in another company. You just need to find the bits and pieces and stitch them together. Remembering the 80s, it was completely different. It meant traveling, the ecosystem were more local. It was really hard to get access to investors like Warren Buffett or you. I mean, thinking back to the 80s, we would probably have never met directly. A podcast was impossible. But there is one downside with this dissemination of information. Um, trends are everywhere. And when you think about the last 10 years, everything was about startup. Everything was about the startup world, especially the all-in-podcast is still a podcast dedicated to the startup world and scale-up world. What motivated you in this noisy world where everybody talked about early stage startup investments to say no? My fund is not becoming a startup fund or a super angel fund. We go into the late stages.

Why Giano chose late-stage secondaries

Christian Soschner 1:11:50

Why did you and your partner decide to become a late stage when nobody's talking about late stages on the internet? Why did you choose this contrarian way?

Alberto Chalon 1:12:00

Uh especially because we believe the risk reward is much better. Uh B, we think there is a big demand in the market. C, we think that when you are ahead of the time, it's always better to take market position. For all these reasons, I think is the best choice. I'm not saying to being an early stage investor is no good, but the market is so, so crowded. And there is another reason that I like is that our business is not related to being local. What I mean with that is that if you are based in Berlin, you probably could meet the next successful founder if it's raising its company startup in Berlin. But if this guy is probably in Paris, I don't see you, Christian, meeting this guy. So when you are a late-stage investor, there is a lot of public data. And even not in Berlin, if I don't know, let's make the example of Get Your Guide is successful. I can always take a flight and going to visit Get Your Guide Management because from even far I can see how good this company is so for a lot of reasons we think it's interesting, our our ecosystem. Of course, this ecosystem cannot be possible if they are not early stage investors, round B, C. So it's a whole ecosystem that needs to work, and everyone has to pick where you want to stay in the market.

Christian Soschner 1:13:25

Yeah, I think uh you you found the right great spot because I think the need is there, and uh there are not many people in this area, and this is something that I criticize uh when I look at Europe, I criticize it constantly that uh we have uh a lot of uh early stage investors, but after Series A, basically the market in Europe is that. And my usual recommendation to founders is when they want my advice uh look towards Dubai, look towards Saudi Arabia, look towards the United States, Southeast Asia, which region you prefer, choose one, go there. And it's not Europe, and you'll close a spot on the market, in my opinion. Thank you. And it's an important work. Um when you look at public market investments. I mean, the research is quite simple these days. You have the internet and uh have a governance structure and needs to publish reports frequently, and you can get a lot of information. And when you read about public market investors, they usually prefer solitude and say, okay, I don't want to go with the crowd. I need my space on a mountain, and I'm more like um a monk and uh do my due diligents at home with information from the internet. When I look at the VC style and I read through the literature, it's pretty clear VCs are out on the market constantly hunting for opportunities and need to go where no information is available yet and find the founders and interesting ideas. What's the secondary style when you look at your research? How do you access the market? Are you more on the public market investor side and uh are more passive in your approach, or do you pursue more an active style like UVC or something completely unique?

Alberto Chalon 1:15:01

Uh, we'd say we are in the middle because we can access to a lot of information, not maybe as much as public, but we have this advantage to being able to access to a certain level of information. And uh we are like the VC because we need to handle this opportunity because on the public market, everyone can access you call your bank and they say, Okay, buy may buy for me this stock or sell this stock. So we are, I would say, in the between.

Inside Giano Capital's deal funnel

Christian Soschner 1:15:32

Um how how active are you? Set your hand for the opportunities. Uh, how can uh just describe a usual process when you when you found an opportunity? How does it look like?

Alberto Chalon 1:15:43

Yes, uh that's that's a very interesting question. So, first of all, you have to know that in the last 12 months, Jano has been received between inbound and outbound over 100 opportunities that from from the outside fits our criteria. Out of it, we have been in a in a certain level of detail that could make us capable to fill our proprietary scorecard 42 companies. Out of it, we have invested in three, and in the remaining that are 39, I would say we have still 25, 26 that we believe can have kind of interest between six to eighteen months from now. So just this give you a sense. To reach this level, what we do is of course, we're starting to have our brand awareness. People start to know Giannis Capital, especially we have been having good relationships with top MA, uh, bank, small boutique within Europe. So everything, when there is a primary with the secondaries, they ring us and say, Hey, Giano, are you interested? This is one slide, but we are very active in the market. So, what we do is that we have today over 300 companies in Europe under our radar, and then we look at signals where we say, okay, the maturity of the companies, the the length of one investor in this company is 10 years, 90 years. There are a lot of signals, and then we approach the company. We look, okay, how can we approach the company? The ultimate goal is to be incapable to sit down with founder and CEOs. So can I get in touch with him through a friend, to an investor, through a board member, through a lawyer? Everything is possible to keep and open this door. And once the door is open, it's our role to get engaged, to spend time together, to start this due diligence, to know each other. And this then at the end of the journey, after due diligence and relationship, leads to they're happy to have us in the cup table, and we are happy to be in the cup table.

Christian Soschner 1:17:49

You have a 3% investment rate. So from 100 companies, uh, that's you get into your deal funnel, you invest in three. Is this a general generally a general statement? Uh that's possible. Can you generalize it that way, or is it just uh from this first hundred patch?

Alberto Chalon 1:18:06

No, because remember that we still have 25, 26 companies that are still in the kitchen. So I cannot say three. I can say much more than three. So it's not three percent. And then also you have to think that our funds was to have a very limited number of positions, we think 10 to 12. So we don't need to scale to 100 positions because at this stage we want to have 10, 12 solid companies and focus our effort to help them rather than having 100 companies. And here we are a little bit like Warren Buffett. We like some position, but stick with it, and we have highly convention. We don't believe in a very, very highly diversification.

Christian Soschner 1:18:44

Do you reinvest in companies when you see that the company works really well and it makes sense to keep it private? Would you be up to reinvesting or is it a one-time investment and then comes the exit right after?

Alberto Chalon 1:18:54

No, no, we are open to reinvest, especially in the secondary, because it can happen that we invest in a company after six months. The founder ring you back and say, okay, look, I have for ABC reason another needs, and uh, if we have

Why community matters in secondaries

Alberto Chalon 1:19:07

neon evaluation, it's gonna be very easy to write the check.

Christian Soschner 1:19:11

That is good to know. That's good to know. How important is uh community and relationship building for your fund?

Alberto Chalon 1:19:18

That's extremely important. Uh what I like in our industry is that it's an industry where there is a lot of sharing, right? And uh information circulates, there is this sharing, which is a little bit different than in PE because PE they're competing for the same deal, and there's only one winner. In our industry, I would say we can share this winning and we share the risks. So building the community is super important at every level, from LPs, from bankers, from GPs, and uh from founders, from board members. So we really, really try to engage as much as possible and build for every community the right approach, the right track record, which at the end of the day, our goal is to in the next five years being called at least 90% of the time there is a secondary transaction in Europe. So that's our goal. We want uh when there is a secondary transaction, 90% of the time they will send us an email, they will send us a call, and they will say, okay, look, can you have a look? Then it doesn't mean we're gonna invest, but at least we have a full access to the market.

Christian Soschner 1:20:31

You keep the European companies longer in Europe, because on the other hand, I mean, if you don't exist, they would need to jump ship far quite a lot earlier. I mean, when a company gets in US investors on board at the end of the day, I think the road is clear to the United States. I see it. I mean, I worked mostly in biotech in the last decade, and I saw it very often when a US investor got interested in a biotech company. Five to six years later, the company had its headquarters in the United States and uh listed in the United States. So your work is keeping European companies in Europe.

Alberto Chalon 1:21:05

I would say that our work, I don't know if keeping the company in Europe, but I for sure I think give a little bit of relief to founders and board members when they have people in the cap table that getting stressed and when getting out. So this is an important thing. Things if you are a founder and you have an ear-stage investor that two ones calling you in this DPI, this CPI. So if you can get rid of these investors, you get this DPI and you replace it with us where we support it. This is the typical case where I give relief, which is the same if you have like people that are pushing for a little bit liquidity on the stock option plan, and you as a founder, you want to them being motivated, and if you give them like this 10% of stock option plan liquid, make them more happy and you are more happy. So this, I think, the main goal. Rather than keeping the company in Europe, that can be the case, but we have not such a big impact, to be honest.

Christian Soschner 1:22:01

How is the support from Brussels for your stage of investment? I mean, you know that uh European investment fund invests very heavily in early stage funds uh uh in fund managers who go into startups and uh early stage scale-ups. How is the support of AEF for the later stages? Always thought that there is um there's not so much support in this area. It's just for me for information.

Alberto Chalon 1:22:27

Yeah, yeah, yeah. Uh try to answer this question with two answers. A IF just launched, I don't know, one year ago, 18 months ago, a big fun for late stage, because they realized what we were sharing that at this stage a lot of companies going to US. That's great. However, they're not having a specific mandate to work within our strategies. We've been talking to them, and probably this mandate, I hope, will come soon, because this is again a loop that has to be, you know, at some point closed, because keeping your team motivated, keeping this DPI in the early stage investor through secondaries without pushing the company for an early exit when they are not ready, it's super important for all the ecosystem. And I think we are not far to get there, but not yet.

Christian Soschner 1:23:30

Yeah, it's David Starner on my podcast uh about a year ago, and we were talking mostly about startups in the early stages. And it's good to see that in the later stage, also the AAF is uh closing the gap. It's super important for the taxpayer. I mean, we invest a lot in research and in early stage development, but when the companies then move to the United States, my personal opinion is that most of the tax returns at the end of the day then happen, of course, in the United States and not in Europe, which is out for the taxpayer. And also your fund and your strategy is super important uh to help the companies uh grow in Europe, in my opinion.

Alberto Chalon 1:24:06

Agree, 100%.

Christian Soschner 1:24:08

So I hope that AF is listening and is doing something uh at the end of the day. Uh, when we go, I mean, your fund and your experience is there, you invested. Uh, can you walk us through a success story from your fund um so that people can uh see and hear how it looks like from the

GetYourGuide and Revolut as examples

Christian Soschner 1:24:29

first engagement uh to your investment and uh how the company then evolves if you have uh one company or so that we can can work through, it would be helpful, I think.

Alberto Chalon 1:24:40

So I can give you the example of uh Get Your Guide, which is an extremely successful European companies. And uh I would say eight, nine months before we close our investment, we start discussing with the founder and CEO the needs of this secondary process, and we were very early engaged in the process, discussing about the opportunities and how we could approach it. And then uh we were one of the first investors believing on this potential secondary transaction, and we are very happy because since that day the company is still keeping the pace, growing, health grew, and uh we see really, really a very good future for the company, and of course for our investments. So that's that's uh one case, and uh the second case is just happened with a company named Revolute that we invest as with our fund, but we were already invested on a cloud deal basis when we were testing the water for our friends and LPs back in 21. So we can see even with a crisis, even with a lot of difficulties, Revolute could increase the evaluation from what was in 21 to 24. And this answer to a question that is okay, what's happened if you pick the right the sorry the wrong moment investing in a in a hype and then the market going down because you deploy the capital so fast. And Reveris is a good example. We uh had our first transaction November 21, I would say at the peak, and then here three years later, the company got like 50% more invaluation, and uh, I think there is a lot of value to be unlocked, and this shows and prove that if you pick the right team with the right business model, with very good capability to execute, you can always, with a little bit of patience, you can always get a good return on investment. We always think and dream to buy cheap and sell expensive, but we will never get the pick on both sides. So let's try to accommodate position with high convention, let's bet on people, on business model, and let's be a little bit when needed, a little bit patient, and the return is there.

Christian Soschner 1:27:12

When founders or RPCs approach you from the first engagement to basically closing off the transaction, um, what's the timeline they should expect when they start working with you? So when they send your

How long a secondary deal takes

Christian Soschner 1:27:29

31st email to you, uh we talking about uh one week and money is wired, or are we more on uh maybe six 12 to 24 months or longer?

Alberto Chalon 1:27:40

Okay, let's say that I'd like to consider as a starting point where we agree that we can access to the information. Anything else, it's a preparation that can take one day or six months. So once they say, okay, look, we are ready to open you to a data room, it can take us. For us to complete our due diligence, I would say from three to six weeks to go into our committee. And if we say yes from that time, it will take another four to six weeks for cruising. So I would say anything between two to three months to close an investment process.

Christian Soschner 1:28:20

That's a fast turnaround. So when you're interested and when they are ready to open the books to you, it's about a quarter that uh everything is uh sealed or changed down. I mean it can also be some material findings at the end of the day. There's no guarantee with a due diligence that they can close it.

Alberto Chalon 1:28:35

No, I we need to approve the investment, right? So once we approve, I think it's two, two, three months.

Christian Soschner 1:28:41

I I think this is sometimes important to mention that the due diligence is not the agreement. So there's still something at the end of the day. Not not at all.

Alberto Chalon 1:28:49

The due diligence is the starting of the journey, not the arrival.

Christian Soschner 1:28:54

That's a good point. Um when I look at what I found appealing in our conversation in the preparation is that you mentioned that you do a lot of cycling and that you really like sports and do a lot of sports and also Jim, remember. Um

Cycling as leadership training

Christian Soschner 1:29:11

when we talk about leadership and building companies, what's your opinion about leadership and sports? Why is that important for leaders? Uh I would say for several reasons.

Alberto Chalon 1:29:24

The first one, there are a lot of lessons from sport that can be learned and apply in our day-to-day life, not only in business, but also with friends, with family. So that's why. And if you want, we can go deeper in details. And two, at a personal level, I love to do cycling, but before I was in love with tennis and other sports when I was younger. And I would say every age can have different sports if you want to change in life. But sports for me give you the opportunities to clean your thoughts, clean your mind, getting you fresh air, sometimes, especially in cycling, uh, being capable to manage your emotion, your frustration. And you know, you start with a new page, smiling page, white page, and also cycling. I love it because especially when you think about climax, it makes you understanding and accepting the difficulties, but understanding that 20 minutes after, 30 minutes after, one hour after, you're gonna get the flat and then the descending. And this is everything in the life. There are days where things are very difficult, and the easy ways to give up, but I don't think it's the right way. And like in cycling, you need to reach the top, and then you know, you're gonna have the descent, a lot of fresh winds, a lot of relief, and a lot of happiness, because you should be then proud of yourself. So on my WhatsApp, my picture is nothing truly great comes from a comfort zone, right? And for me, because I'm again ruthless and I challenge myself, I always try to stay a little bit outside from my comfort zone. And here where there is this mix of emotion where I like it, but I need to push myself. So, you know, and this is this is how I see things and why I think sport is so important. And if you see successful uh entrepreneur, founder, investors, most of them dedicate time to sport with, I would say, this kind of you know, approach as I described.

Christian Soschner 1:31:41

That's true. So we are coming to the 90 minutes, Mark, and I would like to ask three final questions, if that's fine with you. Five minutes. Five minutes. Um you said sports uh teaches a lot of valuable lessons to leaders. Um, if one leader is listening, and I could imagine that someone say, Yeah, but uh I haven't done sports in my life yet, so why should I start now? What are these lessons? What would be the three most important lessons that you could tell them to say, okay, these are the lesson number one, two, and three, why you should consider doing something like cycling or running or playing tennis or playing football, whatever they like.

Alberto Chalon 1:32:19

Okay, first of all, if you have never done any sport, if you even start today, it's gonna be the it's not gonna be the performances that make you happy. And it's gonna be not the performance and the result that make you a better funder, is the approach. So we are not professional. We're not professional in cycling, in running. We are amateurs, right? So it doesn't matter if I can do, let's say, the New York marathon in three, four, or five hours. I don't care. We are the same. What I need to get out of the marathon, let's make this New York marathon, which is well the main objective of people in life when they do running, right? Is A, you understand how important is your preparation. Usually it takes six to twelve months. And then when you go deep in the preparation, you know that you have two, three things to consider. A, of course, the training, which means how many hours per week you can dedicate. And then B, if you're a little bit more sophisticated, and you say, okay, what is the quality of my training? C, you say, okay, can I have a coach or not? Then there is another part of preparation, which is nutrition that comes with, I would say, diet, weight, losing, then coming with integration, where you're saying, okay, after I'm running 20k, I'm exhausted, so you need to integrate. And then finally, also to manage your expectation, your frustration, and then it comes to the day to go to run this marathon. If I'm not wrong, Sunday there is New York marathon, and then let it go. And this is like your business, right? It's preparation, mentoring, getting uh people that know better than you and can help you to navigate, and then you let it go. You manage your frustration, you manage your emotion, your expectation. You also accept in a long marathon, 42 kilometers, that there are like four or five days where you feel very tired and you think, I'm not gonna go to the end, right? And we are at 31, 32, and you say, Oh, look, I still have 10k, how can I do that? But experience, I can tell you, will show you that maybe at 37 you are much, much more energy than at 31, which you will never believe and thought about it. This is again investing. Sometimes you are you know devastated, you say, Oh, think that's very difficult. I cannot see the light at the end of the together, but you see it and it's there. So that's it's kind of a lesson that sport teaches you. And then when you have this belief, everything is more easy because you're doing with the right approach. Positive mindset and smiling will help you in difficult uh moments.

Christian Soschner 1:35:04

I couldn't agree more. It makes sense for leaders, especially in the in business, to add sports to their schedule and make time for it. That's absolutely good advice.

Alberto Chalon 1:35:14

Um I add something for reader for leaders that think that while they're doing sport, it's lost time. I suggest to do what I'm doing recently, use your sport also to listen to podcasts. So, what I do, I like to do indoor cycling. Sometimes I listen, podcasts, you, all in, or whoever, I run outside in my park, I listen to podcasts. So at least I get exposed to a little bit. Maybe sometimes I listen carefully, sometimes less, but at least I don't feel guilty. And then when you think that you don't need that, just go to take sport, breathe, and relax.

Christian Soschner 1:35:50

I totally agree. When I run in the morning into one way, so the first half is uh without music and without podcasting. What I find amazing with cycling also um is that the mind starts sorting out things, that the mind starts automatically, it's like an automated process, starts sorting through things, gets rid of things that are not so important, starts focusing on the important things and always comes up with a solution. In the second half, then I do this, what you suggest, plug in the podcast and run back with some information in my mind, and there's

Giano Capital's ten-year ambition

Christian Soschner 1:36:23

always something to learn. Absolutely. I agree. Alvettoff, where do you see Charno Capital in 10 years? What's your long-term vision for the fund?

Alberto Chalon 1:36:34

Uh, the long-term vision is, as I mentioned before, to being able to see 90% at least of the secondary transaction in Europe. Uh, we want to develop, of course, uh our AUM, but we want also to build, and we just started, a trustworthy community of family office and LPs. And uh we have started this year with our investor in September, where in Monaco we had hundred LPs coming from all over Europe. And we start connecting them. We spend a lot of time with our LPs and prospects to get to know each other because we believe this is again kind of personal connecting, where especially in a fund like us, where an LP is a family office, can have direct access with DGP. There are many things we need to know uh each other. And then once I get exposed to them and I know them, I can then connect with other people. And this for us, it's very easy because being an entrepreneur, one of the qualities you must have is connecting the dots. So this is why we love to do. And so in 10 years, we want to be in the biggest communities, and people would like to stay with us for not only the economic return on Django, but also with this big community of family office and ultrinet.

Christian Soschner 1:37:52

Yeah, community building is super important, and podcast is uh is an excellent way to do it and to accelerate it these days. Um, I come to my final question. Um, when we look at your journey, I mean, you have an amazing career. You have seen a lot of different industries, especially now with your fund, you're talking with a lot of family offices, a lot of LPs, a lot of institutional investors. You saw retail, you saw search engines and tech, the finance world. Uh, and I'm sure you learned a lot of lessons. In the last part, in the last question, what's one lesson that stands out and that you think helps entrepreneurs one step forward?

Alberto Chalon 1:38:38

I would say resilience, because in any business it's a very long journey, and every successful business has been obliged, if not completely pivoting the first or the second business model to adjust it, and when they did it, it was as a champ in a black hole. So do not at that point in time believe that because you're doing that, you did something wrong, right? This is part of the journey. So resilient, stay confident, stay open to new opportunities, to advise, staying humble. This is what I think makes you uh successful founders and entrepreneurs.

Christian Soschner 1:39:30

That's great advice at the end of the podcast. Alberto, thank you very much for being part of the show. I enjoyed every single minute of it, and let's catch up in a year or so and see how your font evolved. Christian, thank you very much.

Alberto Chalon 1:39:45

It was my pleasure, and I hope to see you in one year and get here another 90 minutes with fresh topics.

Christian Soschner 1:39:53

Let's do so. Alberto, have a great rest of the week. Have a great Halloween and let's talk soon. Thank you. Bye bye. Bye bye. Here are my three things I am taking from this conversation with Alberto Cholon. First, the exit math has changed. Most companies will never IPO. And the smart money now moves years earlier through single asset secondaries. Second, paper returns lie. The number that matters is the cash that actually comes back. And third, Europe's problem was never a shortage of capital. It's fragmentation and the courage to treat failure as learning. If this gave you a new way to think about private markets, the most useful thing you can do is like this episode. Leave a comment with the part that stayed with you and share it with one founder or investor who should hear it. That's honestly what helps the show grow and brings more conversations like this on your way. Follow beginner's mind so the next episode finds you, and I will see you in exactly that. The next episode. Have a great time.