Where does your interest in startups come from?

Whenever you’re involved with startups, you deal with topics that are relevant to our future. I like this because it satisfies my curiosity and keeps me mentally fit. The founders of startups I met are without exception very intelligent and interesting people that combine passion and vision. As a private investor, I can contribute a small part to strengthen Europe as a successful innovation hub. But my motivation isn’t just altruistic. I also want the high returns venture capital provides.
In my professional career, I first came in contact with startups in the early 90s. Back then, the Swiss startup ecosystem was still in its infancy. I led ZKB’s first startup investments as part of its corporate client business.

What is your track record as a private investor in startups?

I made the large majority of my private investments via Verve Venture’s platform. Over the last seven years, I built up a portfolio of more than 50 startups, and already had 8 exits. While I do believe in my ability to understand and analyze different business models, I am also aware that many important success factors, for example, the reaction of the market to a new product, are difficult to predict. This is why I prefer to make smaller investments in many different industries with the goal of reaching broad diversification. This approach has a nice side effect. It forces me to delve into topics of the future that are unfamiliar to me, and I find this very satisfying. The topic I might know most about, fintech, is the one I’m most skeptical about. Maybe that’s because I spent 40 years working in banking. What I especially like about Verve’s investment platform is that it gives me access to financing rounds I would otherwise not get in. The platform has no emotions and does not care if I invest in a specific startup or not. When I receive pitch decks from people that believe in a startup, it is more difficult to say no to them – even if they say they don’t mind.

You look back at a stellar career in banking that took you from an apprenticeship to the CEO position, and you guided one of Switzerland’s most important banks through the years calmly while other banks were beset with crises and scandals. What motivated you to join Verve Venture’s board of directors in 2023?

I spent 4 decades in a corporate job with all the pros and cons that come with it. Today I have the privilege that I can do only what I want to do and with people whom I am happy to see. Over the past decade, I came to know Verve’s founders and team very well, and I especially like their pragmatic way of doing things. I am fascinated by venture capital as an investor and want to help other people discover this fascination for themselves. By joining Verve’s board of directors, I want to signal to everyone out there that Verve is a company I believe in personally and that Verve is a company you can trust and should know if you want to invest in startups.

Why does Martin Scholl trust Verve?

Verve has been around for almost 15 years now and has developed a very good reputation and a sophisticated investment infrastructure with a fully digital investment process. It is a Swiss company and not someone offshore. I sense from the founders as well as the team members the desire to build a long-lasting and solid business, and they managed to hire exceptionally talented people on all levels. To make investments in venture capital, you have to know the companies inside out, you have to actually understand the technology and the team. That’s what you get from Verve, not reselling deals others have done, not following big “brand names” out there that are overhyped in the media, but actual on-the-ground work to find the best founders and startups out there. I think this is something that people who have built or run companies understand, that you have to actually understand a business to grow it. I think this is why people like me choose Verve. Furthermore, as an investor, you need to be able to trust that the execution of financing rounds is flawless, and this is the case with Verve.

You’re very enthusiastic about startups and Verve’s digital investment platform. What is holding potential investors back from starting the journey you’ve already made right now?

People have established habits and relationships. Starting a new habit, even one that is very beneficial for you is hard for everyone. Whenever I talk to people about my fascination for startups, they tell me that they find this topic super interesting and would like to get involved as well. Then they get back to their normal work day and are confronted with a dozen issues that require their immediate attention. People do what is urgent first. Investing in startups is one of the most exciting things but it isn’t urgent from an investor’s perspective. This is why Verve’s team needs to be persistent. There are countless people out there that have an asset management mandate with their bank but would like to do something with their money that has a real impact. Convincing them to make the first step is hard work, but work that is crucial for Verve’s development.

How do you see Verve’s development in the future?

The core of Verve’s offering has always been tailored for private investors that want to make their own decisions in which startups to invest. The potential that lies in private banking-type clients is enormous, with 300 million of assets under management, Verve has barely started to scratch the surface here. Recently, Verve has also launched different investment products to cater to different types of investors, those that want rapid diversification and also larger and institutional investors. This product offering will grow. Verve’s claim is to enable private and institutional investors access to venture capital in a simple, fast and safe way.

What differentiates Verve from other venture capital firms and is an important asset for the startups working with Verve is the strength of its investor network. As this network grows in size and international reach through different types of partnerships, it also increases the value Verve can provide to make its portfolio companies more successful.

You personally know quite a few private investors in Verve’s network. Who are they?

They are a pretty diverse group, but their common denominator is their professional experience and their entrepreneurial approach to investing. Some of them have sold their company, be it an SME or a startup, and want to stay involved. Many others are C-level executives who are by their personality drawn to a more active form of investing. Then there are also many who come from other backgrounds and make small investments, but they are still pioneers and equally important in helping us increase the momentum of this movement that has been gathering steam for years now.

Some banks have realized that their clients want more than just the standard repertoire of asset management. Recently, Swiss private bank Bergos announced its partnership with Verve to offer its clients access to venture capital. Other banks have started their own investor circles. Do they have the competence necessary to access this asset class, which is still quite different from what they do otherwise?

I will not comment on the competence of others, but I can talk about the level of sophistication that Verve has attained over the years. Verve has employees from all over the world, and they’re absolute brains. You can tell this not only in discussions with them but also from the feedback received from deep tech startups that say these people really understand what we do. When you listen to Verve’s investment managers elaborating during an investor call on why they believe in a startup they selected, you can see their professionalism. But what is even more important, from an investor’s point of view, is their ability to say no to countless cases. The investment team spends hours and days on research and analysis just to come to the conclusion that this particular startup isn’t attractive enough to be put on the platform. This takes a lot of rigor. This, for me, underscores that Verve does have the competence necessary to succeed in this field.

And as an investor with a big portfolio, I also appreciate the quality of the centralized reporting about what is going on in my startups which is only possible thanks to the years of development of Verve’s proprietary IT infrastructure. These competencies are quite different from the ones classical banks have. Therefore, it is quite obvious that partnerships with Verve are the way to go to create a triple-win situation: for the banks’ clients, the banks themselves, and of course for Verve.

What role will pension funds and family offices play in the future as part of Verve’s investor network?

There is a very good reason for pension funds to invest in venture capital, namely the performance contribution they could achieve with this asset class. However, Swiss pension funds, in particular, tend to be, due to the composition of their board of trustees, quite risk-averse and therefore favor mainstream investments. This worked well enough in the past in an environment of ever-rising stock prices, but now they should maybe take a closer look at the returns VC can provide. For the future viability of a country’s economy, a strong venture capital ecosystem is of strategic importance. Other countries have realized this, and their pension funds have shown a very large appetite for VC investments.

As for family offices, they are uniquely positioned to invest in VC as their source of wealth is based on entrepreneurial family members, and they are accountable only to the principals and no one else. However, the question is the role the family officers play. Many of them come from a traditional banking background without exposure to VC. Are they comfortable with this asset class, and does the family trust them to make a choice? I think the key to having more family offices investing in startups is the inherent motivation of the principals to make entrepreneurial investments.

“We need to bring wealth to life”, a family officer said in an interview with Verve Ventures. Could investing in startups, like philanthropy, be a topic that creates a discussion of family members from different generations?

While many young people are very interested in startups, the reality is that you need to be a qualified investor and have a certain amount of wealth to invest in startups via Verve. As a result, many of our investors are at the peak or a later stage of their careers. However, for this generation, it is often also a question of how they should go about teaching their adult children about investing, and how to make prudent decisions about their money. I’d say it’s not a bad idea to talk with the next generation about topics that they might find interesting, be that technology to fight climate change or the future of health.

In 2022, Verve’s network invested around 60 million Francs, which is comparable with what a 300 million Franc fund would deploy in a year. How big can Verve become in size in the long term?

With its unique platform model, Verve could become orders of magnitude bigger. Venture capital isn’t an exotic hobby for a select few business angels anymore. But there is still a lot to do for Verve’s team to foster the understanding of this asset class and hammer home the message: it is of strategic importance for Europe that courageous investors provide young companies with capital, so that they can flourish and create the jobs of the future here. When I think of the scientific excellence and innovation that comes out of ETH, EPFL and other European universities, why would we leave it to US-based investors to reap all the economic benefits of investing in them, which often comes with the strings attached that a startup needs to relocate to the US? This makes no sense at all to me. But we also need to realize that the EU is still behind the US in terms of venture capital, and that it takes time to catch up. In this business, you need to take small steps if you want to go far, and Verve is strengthening its network, and hence its financial firepower day by day, week by week. I’m confident that we’ll convince several thousand private investors to join Verve’s network in the coming years.