Member Spotlight: Alpha Partners

For this deep dive, we spoke to Steve Brotman, founder and managing partner of Alpha Partners.

Founded in 2013, Alpha Partners was built on a bold and unconventional venture capital strategy: partnering with VCs instead of competing against them. Nearly four out of five (78%) of all tech companies have VCs with less than $100 million in AUM on their capitalization table. 95% of the time, these VCs don’t pursue follow-on investment rounds beyond the early stage — even though they have a legal right to invest by contract law, state law, and case law. This is mostly due to a lack of capital. By sharing a portion of profits with partner VCs to co-invest in their most promising portfolio companies, Alpha gains access to these growth-stage opportunities, while our more than 1,000 VC partners get carry in those investments that they otherwise would not have received.

 I transitioned from early-stage VC to founding Alpha to address this gap in the system. As a 15-year early-stage veteran at Silicon Alley Venture Partners, I frequently encountered situations where the firm was unable to exercise its pro rata rights on follow-on investments. Like many early-stage investors, I found myself unable to continue backing his winners because I had limited capital reserves for growth rounds, which meant having to leave massive upside on the table.

Many of my VC peers faced the same challenge, and there wasn’t a dedicated institutional player addressing this critical need. That’s when Alpha Partners was born. Our mission is to be the friendliest large institutional pro rata right coinvestment partner for VCs, empowering them to stay in the game with their top growth companies.

What defines your portfolio?

At Alpha Partners, we have one guiding mission: invest in top-tier growth companies primed to dominate their categories while safeguarding against downside risks.

Our approach is rooted in a top grading methodology. We score companies numerically on a transparent four point scale. This disciplined evaluation process ensures we identify only the most scalable, rapidly growing companies with strong gross margins, solid competitive moats, and market-leading potential. We are also sector agnostic. 

Recent investments exemplify this strategy. We partnered with Santa Barbara Venture Partners to invest in Rad AI’s Series B round, a company that is transforming radiology through AI. In the cybersecurity space, we co-invested alongside Mantis VC in Chainguard’s $140 million Series C round to help the company reach unicorn status while advancing software security solutions. Similarly, we reaffirmed our confidence in Second Front Systems by participating in a second investment round, alongside Artis Ventures, to support their efforts in streamlining the Authority to Operate process for government software vendors.

At Alpha Partners, we don’t just invest—we collaborate with top VCs to amplify our portfolio companies’ success.

Tell us about the current VC landscape in your geography/region.

Through our network of more than 1,000 VC partners, we have extensive reach across major U.S. tech hubs like San Francisco, New York, and Boston, as well as selected regions like Miami, Austin, and Chicago and select international geographies with tech opportunities. We currently see around 25% of all growth-stage deal flow.

The post-pandemic funding rollercoaster — from the funding frenzy of 2020-2021 to the market contraction of 2022-2023 — has now settled, with growth markets showing a more measured return to form.

That said, it’s not without its quirks. There’s a clear “barbell effect” in the current growth-stage market. On one end, we see new market disruptors and AI darlings commanding sky-high valuations, despite some having little user traction or revenue. At the other end, you have a majority of companies experiencing sluggish or modest growth, which are struggling to attract investor interest.

While overall capital deployment at the growth stage has recovered, it’s laser-focused on a select group of high-quality — or at least perceived high-quality — opportunities.

What are the benefits of being an NVCA member?

NVCA offers an exceptional community for investors to connect, collaborate, and shape the future of our industry. And NVCA events consistently gather top-tier VCs, providing the opportunity to strengthen existing relationships and forge new ones.

We also deeply value NVCA’s influence on policy, which directly impacts the health and progress of venture capital and the tech ecosystem as a whole. With 40% of GDP and the stock market driven by tech innovation, up from 2% 40 years ago, tech innovation is now the one area our policy makers have to get right. We strongly believe that whatever one’s political perspective is, having a strong dynamic tech economy where the bulk of economic growth comes from is critical to global growth and addressing massive societal problems where venture- backed companies are often the solution. Venture capital also democratizes opportunity in a way that other sectors of the economy and government do not. Entrepreneurs have few natural advocates, and we are proud to support the NVCA’s efforts.

What’s ahead for your firm?

Alpha Partners is uniquely positioned to thrive in today’s VC landscape.

In recent years, small, early-stage fund managers have faced significant fundraising challenges. These managers make up the backbone of the venture ecosystem, and Alpha Partners has spent over a decade offering them a solution: the ability to further capitalize on their winners, adding an essential revenue stream that returns capital to LPs.

In essence, we make it more lucrative to be an early-stage venture capital fund.

This is particularly important to those firms that often start out relatively small and sub-scale to cover their operating costs. In this way, our efforts support the entire tech ecosystem as early-stage VC underpins almost every material tech opportunity. 

Having recently closed an oversubscribed $150 million Fund III and doubled our investment team, we’re now better equipped than ever to tap into more opportunities and support even more early-stage VCs.

Looking ahead, we see Alpha evolving into a larger, full-service fund providing an array of capital and liquidity solutions for early-stage VCs. We also have big plans for a global expansion that we plan to announce soon. But for now, we remain laser-focused on adding the highest quality growth companies to Fund III and continuing to be a trusted partner for VCs’ co-investment opportunities across the ecosystem.

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