AI and Technology Venture Growth Investing

Al Tarar: 

Hi, Elana. Thank you very, very much. You described our firm very, very well. I don't know what else to tell you, but I will add a few comments as we proceed. 

Elana Margulies-Snyderman: 

Yeah. So, Al, to kick off the conversation, tell us a little about the firm and how you got to where you are today. 

Al Tarar: 

Elana, happy to tell you a bit more about the firm. The firm has been around for about nine years under the name of Arcis Capital Partners. We recently went through a name and brand change under Quartus Capital Partners, that's our new name. So, this new name and brand reflects our significant evolution over the course of last nine years. From a multi-strategy firm to a single strategy, we are exclusively focused on AI and technology investment from now onward. We are raising and investing a $100 million flagship fund focused on AI and technology investments, particularly in early-growth middle-stage venture. We have raised about $20 million already and deployed it. We have $50+ million soft circled that we are trying to close. Plus, we have made eight initial exciting investments. Six of them happen to be in AI-based software, two are in technology. Very happy to elaborate on those portfolio companies if time allows. 

Elana Margulies-Snyderman: 

Great, Al. That segues nicely into the question I have for you about your investment thesis. Love to hear overall outlook for investing in growth-stage AI and technology ventures. 

Al Tarar: 

So, Elana, artificial intelligence or AI has been around for decades, although many of our peers and citizen, they are learning about AI more recently. And this new focus on AI has been brought on by ChatGPT and other innovations that have taken place in the marketplace. I studied AI in the mid '80s and early '90s. I know I'm aging myself by telling you and your audience, but nonetheless, that's the background. So, we are honing in on that decades-long knowledge and experience that we have in AI and technology. Our outlook for investing in growth-stage AI and technology company is great, perhaps the greatest we could have imagined over the last 9+ years. There are significant innovations happening across the board, particularly in health care, which we call healthtech, education and learning, people call it edtech, financial technology, fintech, security, logistics, and you name it. And we are very, very bullish on AI and technology investments for foreseeable future. 

Elana Margulies-Snyderman: 

Al, to elaborate, I'd love for you to touch on some of the greatest opportunities you see in the space and why. 

Al Tarar: 

Well, since you asked, we see the biggest AI and technology investment opportunities in health care, or more precisely, the AI-based applications in health care that some of us call healthtech. Health care happens to be one of the largest part of the GDP in the U.S. and other large economies. Health care is ripe for innovation brought on by AI and technology, particularly large data-based and multimodal AI. So complex problems. An example is the personalized care plans for people who are going through chronic diseases. So chronic disease and chronic disease management happens to be a single biggest complex problem within our health care system, and also perhaps the costliest for the U.S. federal government. For example is dementia, Alzheimer’s, how to reduce the growth of this chronic disease. The same could be said for other chronic diseases. So, this is the largest opportunity that we see in front of us. 

Elana Margulies-Snyderman: 

Al, on the other hand, what are some of the greatest challenges you face in your space and why? 

Al Tarar: 

I think most of the challenges that we face as a young firm are around fundraising. As a young firm raising our first fund for this strategy, fundraising has been a very big challenge for us. But nonetheless, over the last 6-to-9 months, we have had a great momentum and we expect that we'll be able to close this fund somewhere between $50-$100 million by June 30 next year, and we then expect to launch another fund within a year, a year and a half. 

Elana Margulies-Snyderman: 

Al, to shift gears a bit, ESG and DEI have been top of mind for the investment industry, and would love to hear how you are integrating these topics into your remit. 

Al Tarar: 

So, ESG is a core part of our DNA as people, as an organization. We come from very large corporate environments where ESG has shown to make a significant dent in the society and communities that we serve. We at a small firm have an ESG policy in place, but much of our focus is in investing in companies that will have significant positive impact to societies, and hence, back to health care, educational learning, and other areas within the community or society that can have lasting positive impact. 

Elana Margulies-Snyderman: 

Al, we've covered a lot of ground today and wanted to see if there are any final thoughts you would like to share with us. 

Al Tarar: 

The final thoughts are is that AI is not new. AI has been around for decades, and some of us have practiced this over the last three-plus decades. What has changed and what is changing is solving or beginning to solve some very, very complex problems in health care, education, learning and crime, security, safety, you name it. And so, AI is here to stay. I know a lot of people are afraid or fearful of what AI can do. Yes, if AI is not properly managed, it could also have significant negative effect. But I think we are focused on how to effectively, positively use AI in various part of our society. 

Elana Margulies-Snyderman: 

Al, I wanted to thank you so much for sharing your perspective with our listeners. 

Al Tarar: 

My pleasure. Thank you very, very much for having me on your program, and hopefully this will be beneficial to your audience. 

Elana Margulies-Snyderman: 

And thank you for listening to the EisnerAmper podcast series. Visit eisneramper.com for more information on this and a host of other topics. And join us for our next EisnerAmper podcast when we get down to business. 

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