Venture capital (VC) mogul Marc Andreessen recently said on an a16z podcast that VC investing is the only job artificial intelligence (AI) won’t automate. The notion sparked conversation on social media, but mainly ridicule.
“Canadian GPs need to equip themselves to be able to fundraise globally. There’s really a muscle that we need to develop.”
Thomas Terrats
Vessel
Thomas Terrats, CEO and co-founder of Montréal-based Vessel, thinks there’s a nugget of wisdom inside that sentiment that could unlock success for VCs: focusing on what humans excel at—relationships—while automating the grunt work.
Vessel has raised $7.5 million USD ($10.3 million CAD) in seed financing for an AI-powered fund and investor management platform that it says allows general partners (GPs) and limited partners (LPs) to focus on relationship building.
The all-equity, all-primary round closed in the last week of May. It was co-led by Inovia Capital, co-founder and CEO Thomas Terrats’s alma mater, and San Francisco-based Afore Capital, with participation from BY Venture Partners, FJ Labs, Golden Ventures, Telegraph Hill Capital, and Four Cities Capital. Terrats declined to share Vessel’s valuation.
Vessel’s platform offers tools for GPs at every stage of fund management, from scouting LPs to onboarding to reporting returns. There’s also a portal for LPs that lets them manage co-investment opportunities and monitor fund performance.
As an LP at Teralys Capital alongside his co-founder Thierry Ajaltouni, and then a GP at Inovia Capital, Terrats has been on both sides of many deals. He said that a lack of access to data and manual workflows were two impediments to VC success that Vessel is trying to solve.
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Automation through artificial intelligence (AI) represents a key piece of Vessel’s offering, Terrats told BetaKit. Generative AI tools automate reporting processes, preparation work for investor calls, and compliance procedures. Vessel operates on a subscription model, with different pricing tiers depending on the required products.
Vessel sells globally and has investors from the US, Europe, and the Middle East. However, Terrats sees the platform as a key lever for Canadian investors. Reports have shown domestic VCs notching weak returns and dwindling investment activity, amid a difficult fundraising environment marked by a chilly exit market and limited liquidity.
Terrats said that Canadian VCs with less capital available are at a disadvantage as they can’t invest as many resources into investor relations.
“That’s why Vessel is coming to help the Canadian GPs, because it’s coming to automate,” Terrats said.
Fundraising has been particularly tough on emerging managers, leading some to shutter operations because they could not raise a first fund. Terrats said he envisions both established and emerging managers benefitting from Vessel. The executive claims veterans get easier data access for LPs, while newer GPs appear more “polished” and professional.
Terrats hopes Canadian VCs will use the platform, which includes an investor outreach tool, to find LPs internationally.
“Canadian GPs need to equip themselves to be able to fundraise globally,” he said. “There’s really a muscle that we need to develop.”
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Terrats says Vessel has more than 30 client firms, including the CEO’s own investors. In a press release, Inovia Capital managing partner Chris Arsenault said the platform sets “a new bar,” while Afore Capital co-founder Gaurav Jain said Vessel “10x’d our productivity.”
But it’s not the only venture playing in the VC software space. Montréal-based Brio, a spinout of Brightspark Ventures, recently raised a seed round to grow its LP management platform. Companies such as Allvue and The Coterie also offer similar services to a global customer base.
Terrats said tools such as Allvue represent legacy software “not built for the AI era.” “These tools will disappear,” he said. He expects Vessel to dramatically alter the proportion of manual work to in-person relationship building.
Vessel currently has 13 employees, with plans to only hire one or two more in sales and marketing, Terrats said. The startup plans to use the capital to invest in more automation tools for its GP platform. Currently, it uses AI models from OpenAI and other open sources.
Feature image courtesy Vessel.