Inside Marktlink’s €3.5B private markets machine with Jaap Vriesendorp

0:00Before we get into today's episode, take a look at your screen right now, because there is some amazing in which you're having right now. If you're an impact investor or working in corporate ventures, specifically in sustainability or climate, I want to flag something for you. Happening just before the famous Morrowland Festival on July 23rd in Belgium, we're curating the investor program for Love Tomorrow. And there's a separate program at the Impact Circle's Investor Lounge on Friday the 24th. It's curated, it's intimate. Conversations between impact fund managers, climate LPs, and corporate venture leads.

0:30We are hosting the program. If that sounds like a room that you want to be in, I suggest you go to the show notes. One thing that was always on the back of my mind, we should never run out of money, never run out of money, never run out of money. If you have a lot of happy LPs that you organize a lot of events for, and where they have basically pretty committed to doing a couple of funds with you in the future, asserting yourself of the fact that you also have not only have money today, but you also have money tomorrow. That makes the work upfront a little bit harder because instead of getting the 2 million at once, you get to get four people to do 500k, but it makes it easier in the long term.

1:00And I think that is the game we've been playing. There's always this belief in venture. And I think for the right reason that the bigger the fund, the less sort of a decent money multiple returns will be in. And therefore there's sort of this cringiness about AUM. For us, AUM is good. So AUM is certainly something we're not shy of sort of pursuing, but it's much more than that, right? It means being able to service people well. It means higher returns than you would get at other firms. It means better events. It means local offices where people speak the language. I think European VC in Europe gets a lot of shit and it is sometimes for the right reasons, but it's also because European people are just more self-critical than US people.

1:35And so it's also often for the wrong reasons. And I like this narrative that you're shaping that Europe has a lot to go for. Welcome to a special EUVC podcast episode. This is part of the series of episodes I love doing, which is me talking to LPs across Europe and beyond. And today we have a special guest. We have Yap. I will not dare to say your last name, Yap. I would make a fool out of myself. I'll let you say it next. Yap's with Marktlink. We're going to talk a bit about Yap's background, of course. We're going to talk a bit about the story behind the firm, actually. This is an interesting one because there was Welts.

2:11Now it's Marktlink. We're going to talk a bit about the whys and the hows and what that has enabled. So stay tuned if you're interested in learning from LP that's currently allocating in venture.

2:26This show is not investment advice and the hosts of this episode may be invested in the funds and companies featured. Yap, welcome to the show. How are you today? Thanks. I'm doing wonderfully well. We just got our third daughter. So sleepless nights with endless love. Yeah, you're happy with your sleepless nights. You're happy with that. Also, this will pause. No, I'm fine. Honestly, super happy. Amazing. Congrats. Three girls, you said. Three girls. They're a future. Amazing. Amazing. So, Jaap, before we start, give us a quick intro. Who's Jaap? And by the way, how do you pronounce your last name?

3:06Help me out here. So, it's Jaap Friesendorp. It's a very Dutch name, which in this context of this interview might be relevant because we're a very Dutch firm. We have one office which is in Amsterdam, but it's actually not true. We opened a second office in Belgium end of last year, but in the Dutch speaking part. So to some extent still true. And we have a very Dutch, I would say, culture. Very direct, open, transparent. And then my last name is Vriesendorp. We'll try and practice that after the show, David. Vriesendorp. Not too bad. Perfect. I speak a bit in the Netherlands. I know that actually sounds pretty good.

3:45There you go. I'll keep that one in depth just to show off of it. Yeah. So, yeah. Tell us a bit about your background. Something you and I were just chatting casually about was this idea of why are you in venture? There's a million other things you could have done. So, share with us a bit your background. Sure. And also, let's dive into that. Why venture? I think it's a good question. I don't know if I have the perfect answer to that question. I think life also happens to you. But in some extent, you are the creator of your own destiny. And that is also partly true for me. So someone said to me, if you don't know what to do, you should join McKinsey.

4:22There's lots of folks that don't know what to do. And that sort of stuck with me. And I spoke to the guys at McKinsey and I thought it was very interesting. And so I applied for that job and got that job. And contrary, at least to popular belief now, I actually really liked it. I think it's a phenomenal job. I don't know if I've added the most value, but I certainly enjoy doing the job. I did mostly tech companies in the beginning, working for sort of the big, big tier firms in technology, the hyperscalers. And then after my MBA, pivoted and set up the, which was called McKinsey Fuel, the practice for startups and venture firms, basically supporting them.

5:04And I did that together with Bauke Marshman, who is now also one of my partners. And at some point, we figured out that some of these firms were doing, some of these funds were doing really good returns and we tried to chip in a little bit of our own money and didn't want it because we weren't big enough. And slowly, this idea of a funder fund became to get to go on. I mean, that's what we've been doing for the last five, six years. As an outsider, not of the industry, but outsider to what you guys are doing on a day-to-day basis, wealth came on my radar as quite impressive, I must say. I was quite impressed, I'll be honest, because there was a lot of people in the market at the time raising.

5:472021 was a good market. Yeah, exactly. I was going to ask you, was it 21 or 22? There you go. 21 and then probably 22 was probably when I met you guys, I would guess. That was the real start. Yeah, exactly. But, you know, what I was impressed by was, well, here's a Dutch team. Could go Europe. Like, nothing against Dutch. Quite the opposite. My first boss was Dutch, and I loved working with Dutch people. But, like, here's a European team who kind of came out the gates running. Like, your first fund was quite sizable. Like, my mind might not be serving me right, but I kind of remember first time I engaged with you guys.

6:25You had already 50 raised, 50 million. And there was a lot of people trying to raise at the time that weren't really succeeding, at least at that level. So I'd love to hear you talk a bit about the early days of wealth. So at the time it was wealth. Like, how was that? And what allowed you to be, at least in my view, successful with that fundraiser for the first time I found the fund? Thanks for the question. It's fun to do these sort of episodes because I also have to think about it myself. which triggers a lot of thoughts. No, I think there's a couple of elements that feed into that. I think the first one was we had the idea for some time.

7:05And so when we came out, we had at least a good starting strategy. We had a first bunch of meetings lined up with prospective LPs. We had a couple of really good relationships from our years at McKinsey and before that in venture. And so I think it wasn't sort of starting from scratch. It was more sort of starting the engine while the car was already halfway downhill. So I think that helped. And the second thing is that whilst sort of starting this, I was reading the Dutch newspaper and I came across an article about two other guys who had started marketing investment parkers. And one of the guys I knew via via and we connected.

7:50And I think from a very early point decided that we should cooperate and eventually merge the whole thing. And I think the traction that we have been able to get, fortunately, has also been a for a big part, been part of that decision. And why is that the case? Because they were doing a private equity fund-to-fund, we were doing a venture capital fund of fund and we found that first of all lps don't want private equity or venture they just want good returns or they want a certain type of portfolio but but more likely than not they want both right as part of their sort of estate planning or part of their wealth management secondly when you're with four guys and soon someone else joined it was five guys it doesn't matter whether it's guys or girls, but in this case, we're all guys, you know a lot more than you know with two guys.

8:47So we're also smart guys or ex-albitvest people. And so I think that the level of diligence we did, the level of sort of decision-making became higher. And the third thing is when you were five people, you have a bigger investor base, you can make bigger investments. And so you can hire a CFO, you can build your own KYC team to make that transition smoothly. And so So you can make a little bit more deeper investments that go a long way that otherwise we would refrain from doing, as they're frankly quite expensive in these early days. And so I think those two things, so restarting it at McKinsey, don't let the folks there hear it, and then teaming up with Bastian and Pete Heijn at Project Investment Partners early on, I think that really made the change to sort of coming out the gates flying.

9:38Yeah. Yeah. Yeah. It's interesting because you're saying, you know, kind of what allowed you to do that was this ability to pitch something that wasn't just venture, right? It's just like good returns. I wonder like, well, the strategy that we believe will yield good returns, right? That question being like, do you want to put some words onto like your LP profile? Like, who are you catering to? Like, who's your client? Because I think that's insightful to understand as well. Sure. No, for sure. So I think we're unique. Unique is probably an over-exaggeration of a word for asset management, but let's say we're different.

10:18I think that might be a better word in a number of ways at Marguerite Capital. And one of the ways is RLP days. And it is different in the way that I would say 90 % plus of RLPs are Dutch entrepreneurs. We have over 2 ,500. We have over almost$3.5 billion in AUM. And all of that comes from Dutch entrepreneurs. I don't think that is sort of similar to other funder funds in Europe, but you cater more to maybe institutionals or single value offices. That's a big number, right? That's a big number. You skim through it, but that's a big number, right? That's a very big number coming from individuals.

10:58So it's not coming from a pension fund or it's not coming from an endowment. And truly that defines also the whole DNA of this company. So the way we set it up is we started, for instance, outsourcing everything. So we did fund admin with a trusted party and we used an investment platform of another party. And we did KYC with an agency. And little by little, we found that those platforms or those fund admins or those KYC agents, they don't scale with 2 ,500 LPs. So over the course of the last five years, we have started doing everything in-house. And so we've built our own machine. I like to say that, especially being a venture, we never set out to be a tech company.

11:40And somehow we end up being some sort of tech company ourselves because we need to build the backbone to process all these people. And that's one thing. But the other thing is, for instance, we do 50 events a year. So we do an event every week almost, which sometimes are like very content heavy on secondaries or on the venture space or on the liquidity profile, cash flow management, tax related topics, but also sometimes just fun, right? Our flagship event is our Formula One Zontfort event, which attracts over 2 ,000 people. So it's the fact that we've raised capital from Dutch entrepreneurs has determined very much the DNA of this company.

12:29Yeah. And I guess, you know, if we go back to this topic of Welton Martlink, right, which now is Martlink, you know, I guess someone looking at it surface level would kind of look at it as a merger and then come up with all the questions that you'd have around a merger. It's a bit different, right? Because as you said, you guys were partners from the get-go. It was more like, how close are we as partners? And you just kind of deepen that partnership. But that means that from the get-go, you were catering to the same ICP in a way, right? So the Dutch entrepreneur, right? In a way. Can you kind of share a bit of what was going through your mind as you were going through these hoops of okay partnering with them getting closer with them and then eventually that leading up to this merging right what was going through your mind what what were some of the things that you you kind of had to make sure to be comfortable fully kind of merging uh whatever that means right but just kind of operating under the same brand so there's the there's the obvious and the non-obvious stuff right the obvious stuff is that it needs to click between people.

13:37The obvious stuff is that there needs to be synergies in business model. The obvious stuff is that you can make these sort of deeper investments together and that will create sort of a better company. I think what is maybe less obvious is that we, from a very, very, very early beginning, believed and still believe that skill matters. Skill matters massively in this business. If you can write big tickets and small tickets, If you're flexible, we believe you're a winner in this space. For the simple fact that you can get the better sort of deals with the funds that you want to invest in. And so we thought that skill mattered because it would improve our business model and would improve sort of the returns we could yield for investors.

14:23But we also believed skill matters because of the sort of underlying reason why we're doing this. And the underlying reason why we're doing this, and mind you, this is 2021 or 2022, depending on how you look at it. So pre-Mario Draghi report and stuff. But we already saw at McKinsey that many of these U.S. tech companies were taking a head start over these European tech companies because there was just more money. And the returns in Europe look a little bit better, right? Because if you have less money to deploy, the prices become better. But still, these companies were winning and all of the companies in Europe that set out to do great were being sold.

15:06And so I don't know if we're as European minded as you are, David, but I mean, you named your company after it. But I do think it is one of the things that we truly care about. We also set up an office in Belgium. We're opening up maybe two, three more offices across Europe this year. the reason why we're doing that is we want to enable Dutch entrepreneurs and also Belgian entrepreneurs and there will be other countries joining to invest in other European entrepreneurs instead of sort of being skewed into the public market where you end up investing in a magnificent seven. And I think that and Mario Draghi has done a marvelous sort of way of putting that into report, but I think we saw that pretty early on.

15:53And in order to be more than just, as we say in Dutch, a triple of the gluiende plaats, more than just like a tiny bit of impact, we thought it made sense to create scale. And what was fundamentally behind the reason of Marklink investment partners and Wealth Ventures merging into what is now called Marklink Capital was the fact that we all agreed that together we could create something where one plus one was more than two. And I think that is until this day been the driving force and that is what has led us I think to grow faster than our competitors hopefully we welcome all kinds of competition keeps us sharp but yeah I think that is what has been sort of the guiding principle Are there are there any fundamental tensions that result from the fact that you're focusing on different asset classes so like venture, private equity growth.

16:52So an example, right? Recently, we're having a conversation. I can't remember the exact contest, but it was an LP asking a fund of funds a question about asset development. And the conversation revolved around a lot like, well, with venture, you're really focusing on getting these assets financed. Whilst with private equity, you're focused on getting a slice of the pie, right? So there's some small details around the operating models that are different. Does it come with any downsides? Because we've talked about the upsides of you guys working together. Does it come with any downsides or with any challenges or with any nuances that maybe aren't evident?

17:29I think it's a good question. I think where I see sort of most conflict of interest is not between people who have multiple products versus people who have one product, but between people who have products and give advice or people who have products or give advice. And so when we are competing for entrepreneurs here in the Netherlands, for instance, we don't give advice. We have a product. We invest heavily into our own product. So if this product fails, it will be our money on the line as well. But we don't advise you to take the product. We will pitch to you as best as we can on the merits of the product and the merits of the team and the merits of the strategy.

18:13But it's up to you to decide whether you want to participate in that or not. And the question of whether you want to do private equity or venture or a call investment fund, we've recently launched private credit. That is up to you. We will tell you the difference in risk, in return, in timelines, in liquidity. And that is for you and or your advisor to decide. I think where more problems arise is if you have the big investment banks with your private wealth departments who are advising the client on their ideal asset allocation, say, yeah, you should do 10 % in venture and 20 % in buyout, 40 % public markets and 30 % of bonds.

18:52Then it becomes tricky because they're basically not saying you should do 20 % of venture, but they say you should do 20 % of venture in our venture product. And then a conflict of interest starts to emerge, right? And so I think one of the other reasons we have been successful at what we do is that we keep a very sort of strict tension in that. And we say, we don't give advice. We're not a family office. We're not here to advise you on how to spend your money or invest your money. That is, there is hundreds of good advisors out there. There's even more band advisors out there. And we're happy to refer you, but that's not our job.

19:34Yeah. There's two things I really want to ask you about, and I'm battling which one first. Let's do product first. So you spoke a lot about product now, and you kind of dropped in there. we recently launched the private credit. How do you think about your product and how it evolves over time, right? And this is a topic we don't really cover much on our podcast because most of our guests, well, most of our guests are VCs first. And then secondly, most of our LP guests are either family offices or a kind of a dedicated VC only kind of strategy. So this is actually a new topic for our audience and for myself.

20:08So how do you think about product as you grow? And I guess it's an LP informed thing, but I'd love to hear you kind of explain that a bit. I think we've always seen ourselves as private market specialists. Even if you look at sort of the early innings of this firm, and we never set out to do just venture. We always set out to do sort of a broader array of products, but always within a private market space. And I think there's a couple of sort of elements to further explore there. One is private markets is an alpha generating industry, right? you can actually have an impact, both positively and negatively.

20:45If you look at public markets, it's like everyone knows that it's better to invest passively. You can buy Vanguard and you will be better off. And not just fees-wise, also just performance-wise. And so why do we pick private markets? Because we believe there's sort of alpha to be made there. There's manager selection that needs to be happening. There's liquidity management. There's a whole bunch of sort of value levers you can pull. And secondly, it's always determined by the appetite of the clients. So we saw that there was appetite for venture. We saw that there was appetite for private equity.

21:17We now see that there's appetite for co-investment, a little bit higher risk, but also potentially higher return profile. And there is appetite to do private credit in the right way. And so that's all within the spectrum of private markets. And as you know, there are still some other stuff to discover in private markets as well. You have infrastructure, you have real estate. I don't know if we will touch upon many of those very soon, but we always set out to be sort of a private market specialist. And I think that is still, right, if you look at the Goldman Sachs family, I think it's called Eyes on the Horizon report.

21:54And you see how much is private markets. It's only still 30 % of sort of wealth of people, right? It's not cash. It's not cash equivalents. It's not publics. It's not bonds. So I think it still is a relatively small subset of the whole pie, but a subset we like to specialize in. But this informs the other question I wanted to ask, and you've also inferred to it a bit, which is firm development, right? You just said we're planning on launching, we just launched Belgium, an office in Belgium. Probably going to launch a couple others during this year, right? We're already in Q2, right? That's very exciting, very ambitious.

22:29So what is in store for the firm's development and what is the, is there any kind of fundamental belief behind it of how you build the firm as well, right? Recently in a podcast I did with a founder, so opposite end of the spectrum here, right? Suddenly, he was talking like, we believe in building our firm with small hubs internally, our companies are small hubs internally within specific subsets of clients of ICPs. how do you think about your own company's development like you are an entrepreneur it's a different type of company you are an entrepreneur so how do you think about building your company well first first and foremost we think skill matters so we don't want to build incrementally we want to we want to build very quickly and two we set out to define what our goal was about two years ago and we said we want to be the biggest private market specialist in Europe in the next three years.

23:25But that's a bold ambition. What does that mean, though? Do you know? I don't know if you know this, but what would that mean? Is that an AUM thing? What is the metric that you chase as a result of that, if any? I think it's a combination of many metrics, of which one for sure is AUM, right? I mean, there's always this belief in venture, and I think for the right reason, that the bigger the fund, the less sort of at least our money multiple returns will be in. And that is true, right? Just by mathematical statement. And therefore, there's sort of this cringiness about AUM. For us, AUM is good.

24:02So AUM is certainly something we're not shy of sort of pursuing, but it's much more than that, right? It means being able to service people well. It means higher returns than you would get at other firms. It means better events. It means local offices where people speak the language it's different in a number of ways. And so to come back to your original question, what does it mean to become the biggest private market specialist in Europe? It probably means that you will have to be active in 20 plus countries, that you have to have over 50 billion of AOM, that you would have to have over 10 ,000 entrepreneurs on the platform, that you would have to have multiple strategies, multiple products.

24:46It could mean a lot of things. That's maybe the answer. But maybe it's good that it's fake in a way, because we don't know what the future looks like. It's more of a north star than a detailed plan. Yeah. Sorry, but I interrupted you with that follow-up question. You're answering my original question of like, what's your view around firm building? And you mentioned this goal and I interrupted you, but let's go back to that. What is your view to achieve that? How do you as an entrepreneur who's building an asset management company, how do you think about growing your firm? Like what, what are the core levers that you, you, you focus on?

25:22What are the core beliefs that you have even? I think the one, if we have one core belief is that you can do a lot with very few people. I think hiring the absolute best people in the industry is critical to what we believe to be our success. If we take an example, like, I think this is three years back now, we try to hire an investment manager for our VC. Now, you know, as well as I know, as we're both insiders to this industry, that there's not a lot of VC allocators out there, right? Especially not in Europe. There might be four or five. And they're well sold after because you have other fund of funds and other institutional investors.

26:04I did a big screening of those five. I found what I believe was the very best. His name is Walter Saren. He was at Wilshire, which was also a fund of funds, investing in funds like index and the likes. But when we set our eyes on Walter, everyone else seemed to just be mediocre. And so instead of hiring hands for the sake of hands, we tried to hire Walter and it took us a year. But then we got Walter. And with Walter, it's much easier to scale our commitments, to scale the team members that work under him, to scale our impact. And so I think one of the things we fundamentally believe and still believe is that you can achieve great things with few people.

26:49I mean, look at WhatsApp, right? Being acquired for, I don't know how many billions with 40 people working there. I think that should be a role model archetype company. Let's build on that because obviously, you know, I wasn't planning on talking about this, but you kind of prepared it. I like you playing it, like talking about stuff you didn't plan. But at least we have sort of an original conversation. Exactly. This idea of doing a lot with very little people, focusing on talent, focusing on high performers, focusing on people who really know their stuff because that creates leverage, right?