Alpha Venture Partners: “VCs don’t magically spring forth with cash”

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Steve Brotman has been a venture capitalist for 20 years, but, like many other VCs, he started out as an entrepreneur.

“As an entrepreneur, you become a pretty good investor, investing in people and relationships,” explains Steve, “which is why I started a little fund. People laughed at me. It was 4 million bucks.”

The first company they invested in, LivePerson, went public

in 18 months. They got more interest, and then raised a 15 million dollar fund.

The New York-based fund, now known as Alpha Venture Partners, has $100M under management. Steve runs the fund with operating partner Brian Smiga, founder of TedX Asbury Park and a serial entrepreneur in his own right.

“I think entrepreneurs don’t really see venture capitalists as entrepreneurs,” said Brotman. “They think we magically spring forth with cash. But no, we’re entrepreneurs too.”

Steve founded Ad One, one of the first startups in New York to make money on the internet. Back when he started the company, they competed with another company called Zip2. At one point they talked about merging, but his board didn’t want to. It turns out the other company’s founder was Elon Musk.

“The things he’s overcome are a huge inspiration,” explained Steve. “Persistence is an undervalued trait.”

When they were a small VC, Alpha couldn’t do the B, C, or D rounds. Around 2011, Steve became obsessed with the question of how to help smaller VCs and accelerators leverage their better opportunities and put more money to work in them.

So Alpha turned to focus on helping other VCs. They now work with over 150 micro- and mid-size VCs to help them capture their best opportunities. With essentially 150 virtual partners in their venture scouting network, Alpha can participate in rounds directly, or in the other VC’s name. It depends on what the startup and the VC desire.

“In some ways we’re a VC, but in some ways we’re an LP. We’re helping the whole ecosystem,” explains Steve. Steve says Alpha Ventures wants to be a bridge to the community.

Alpha invests in 3 to 5 deals per year, mostly with a $1–5M check size, and occasionally will participate in a mega-round where they invest $10–20M. Even in the largest rounds, they share the returns with their venture source. The model is relatively unique in the industry.

To see the full interview between Steve Brotman of Alpha Venture Partners and Sean O’Sullivan of SOSVclick here.