In this interview, we talk to Joeri Van Cauteren ( – Growth Product Manager and Hederik Laloo – Growth Manager ( both working at the Belgian based startup Investsuite ( Investsuite is a wealthtech startup, which offers personalized advise for investments below the usual wealth management thresholds, often at 250.000 US$ or more The focus of Investsuite is more on safety than on return.

Learn more about their venture capital investment here:

We are media partners of Euro Finance Tech and we have been there to talk to some startups for you.

We really enjoyed Euro Finance Tech, you will find some outtakes during our 12 days of Christmas and you can also have a look at our Instagram profile

During this interview we talk about:
Markowitz Portfolio Theory: by Harry Markowitz
Normal distribution:
Value at risk:
Conditional value at risk:
Joern wanted to ask for the Power Ball numbers, not the Super Bowl numbers … sorry, but they would have been “Sat, Nov 17, 2018, 8, 6, 68, 20, 52,5”

We had even some funny takeouts during the recording:

00:06 Host: Welcome to, your podcast and YouTube blog covering the German startup scene with news, interviews and live events.

00:19 Joe: Hello and welcome everybody. This is Joe from, your startup podcast and YouTube blog from Germany. I’m still at Euro Finance Tech and I do have another startup here that is here for the Euro Finance Tech. Hey guys, welcome, can you briefly introduce yourself to our viewers?

00:38 Hederik: Of course, thank you. First, I would like to thank you for this wonderful opportunity, so I am Hederik Laloo, I’m from investsuite. We are a very young startup, four months old and we’ll dive into that quickly, but I want to first give the floor to Joeri.

00:54 Joeri: Hi, I’m Joeri, I’m the product manager with investsuite. I joined a couple of weeks ago and I have a regulatory compliance background and I made the switch to product management.

01:07 Joe: And we are talking about your startup, investsuite, so basically, it’s not a founding out of university but it’s a start-up, a FinTech founded out of your experience. What did you do before?

01:22 Hederik: So, myself and most of my colleagues have 15 years or more experience in the investment world. We all worked at banks or most of us did and, yeah, that’s my background. I also have a background in the exchange, I work for Euronext for quite a while and maybe you could elaborate your background as well Joeri.

01:42 Joeri: Yeah. So, I worked last five years at [01:45 inaudible]. Most of it I found that I was next to the innovation, I wasn’t really inside it. So, a couple of weeks ago I started talking with investsuite and they offered me the opportunity to actually step inside the innovation and start working on innovative products.

02:02 Joe: Actually, I have to admit, you guys are the first startup I have here for Belgium, so that’s the very first, very happy to have you here. We just talked about investsuite, what is it and how can we use it?

02:17 Hederik: So, to summarize investsuite, I would like to use the story if that’s okay for you?

02:21 Joe: Yeah, stories are fine.

02:23 Hederik: So, let’s imagine a young couple between 30 and 40 years old and let’s say that the wife is called Laura. Laura is an entrepreneur, she has an accounting firm and she has a hundred K on her savings account and she wants to do something with that. She’s really good at working out life balance, looking at the kids, keeping the husband happy, very important and also working really hard. But what she doesn’t want to do is waste her spare time on learning new things about investment because that’s not really her space. So, what Laura really wants is she wants to go to a banker and ask them, please can you advise me what to do with my hundred K?

Now, if she goes to a private bank, unfortunately, that private banker will say, well, I’d love to help you but with 100 K I just can’t, it’s just too little for us to be profitable. So, pretty quickly, Laura will end up with a one-shoe-fits-all solution and either they will promote her mutual funds, or they will promote her what often is called Robo advice but what I would call a model portfolio. She would be in one of seven buckets and a system, an intelligent onboarding system, will put her in one of the seven buckets and these will all have the same products for every profile.

So, we at investsuite, that’s where we come in. We really want to give Laura truly personalized advice, tailor-made on her profile, on her risk appetite, on her personal preferences and not just some bucket where everybody like Laura falls into after a selection procedure, that’s not what we want to do.

Second of all, investsuite truly believes that if you ask savings account people and we have 22 trillion euros in savings accounts in Europe, which is a huge amount if you think about it. If you ask Laura and people like her, don’t you want to change that money, that savings account money to an investment? Then Laura will say, yeah but I really don’t know it, I would like personalized advice, I’m not really familiar with it. I read a lot about mutual funds and how expensive they are and how much they underperform, I’m afraid to do it myself please advise me. What does she need to do and what does she want? What she wants, actually, is to look after her family and to have something really secure, something that enables her to sleep at night.

So, we think that promising Laura, let’s beat the MSCI world or some other benchmark doesn’t mean anything to Laura. It means a lot to us bankers, sure we love benchmarks.

04:54 Joe: It’s like the holy grail of asset management, you beat the index you’re compared to, right?

05:00 Hederik: In the end, if you ask my wife also, you’ll say, what do you like, and she knows nothing about banking and she hates banking. To be honest, she will say, I want to make a lot of money if I invest, sure, but if you ask and you take the time, what do you really want? What she really wants is she doesn’t want to lose money and she wants to be sure that what she’s doing is a proper and sound thing with little risk, that’s what she wants. And that’s what we discovered and we at investsuite believe in something that we call monotonous growth or a smooth ride.

What we want to offer Laura or people like my wife is a safe investment Robo that will offer a smooth ride with the little drawdown. So, we’re not about outperformance, we’re about safety first, less risk. So, to build on that story and I’m sorry I’m taking so long to explain this, is that we do think that even though there was a financial crisis in 2008, the hard-earned cash of people, they still want to put that at a bank. In the end, we love Deutsche Bank, Commerce Bank, and all the others, they generate a vote of confidence and we, investsuite, means nothing to them, we have zero reputation to a retail investor. I don’t believe that a retail investor will come up to us, Laura, and say, I heard you on some podcast, here is a hundred thousand K, Laura will never do that.

So, we think the cost of acquisition for a B2B Robo-advisor is just too high. It needs to be a bank; a bank needs to put this in the market. They already have the trust, the cost of acquisition is much lower for them, so we want to be there, we want to offer our solution and we think we have a great Robo. I’m sure every startup will say they have a great product, but we want to offer our Robo in a B2B fashion to the financial industry. Whether it be wealth managers, private bankers, retail bankers, that doesn’t matter for us or even independent advisors, we could work out a solution for them.

First, we have an algorithm, we have a method onboarding tool, we can translate the method onboarding of the bank, we can use our own if the bank doesn’t really have one. We have a front-end which is a white label, we did it in atomic design, that’s how we call it, so we can change overnight the look and feel of the front-end. It can be an app, you can choose as a bank, I just want the algo, I just want the app, I don’t want the algo, I want to use ours, so we’re very modular. So, this is a bit the story of investsuite, so we’re four months old and maybe Joeri, you can explain something about the press release we released yesterday.

07:31 Joeri: Yes, so yesterday we were very happy to announce that we closed our first two million years old seat round. We did that together with our business angels and together with PMV. PMV is one of the Belgian, it’s actually the Flemish venture capitalist funds so we were very happy that we could close this seat round.

07:53 Joe: For everybody who’s not familiar with it, Flaman and Velleman are two people building Belgium together, right?

08:01 Hederik: There’s even a small German-speaking part.

08:04 Joe: Yeah exactly. So, basically, Belgium is comprised of a Dutch, German and an English-speaking part, right? French, I’m sorry, I’m so sorry, speaking English French. Okay and Flaman, the Flemish part is which language?

08:24 Joeri: So, Flemish part is the Dutch-speaking part. We have a separate government that is competent for regional matters and that also includes investing in the local economy. So, they have a venture capital fund which they have separate treasures of it so they have one for local investments, small startups. Therefore, for the bigger startups like us. They also have one which is actually coated on the stock exchange for the really big investments and it’s called imph.

08:51 Joe: Ok, I see. You’ve been talking about method, we should tell our viewers that that’s a European regulation, lots of paper, lots of stuff but the important part for you here is the classification of the clients, the risk classification, how they can invest very, very much simplified. And you’ve been talking about investing when we talked before you said like ten thousand different instruments you have there for investing versus model portfolio, can you explain a little bit about what a model portfolio Robo does and what your Robo does to kind of differentiate it a little bit?

09:37 Hederik: That’s a really good question and thank you for asking that one by the way. So, many banks will have, or online brokers that have a Robo will have an investment committee which is seven very clever people. And once a year they come together, and they will decide that those seven mutual funds or those seven trackers ETFs are the best in the universe. So, each and every individual investor will invest in those seven ETFs and the big difference is that let’s say that we treat our customers at one of these banks we will all get the same portfolio but the difference is you will get from investment instrument a twenty-two percent, I will have fifteen percent and Joeri will get ten percent. So, the weight will differ, but we will have exactly the same.

The problem is that the investment committee comes together once every year and will redetermine whether or not these instruments are still suited. Well, we don’t do that, what we do is our algorithm will select out of the larger universe which is the best for you, for me, for Joeri and it will do so on a daily basis. We believe that this investment committee can never be as diligent as an algorithm that does this every day, that compares 10,000 instruments on a daily basis. As a human, you’re not capable of analyzing 10,000 instruments on a daily basis, it is just not possible.

10:55 Joe: That is actually a very interesting approach. The only question came to mind but you’re not shifting around the portfolio of your clients on a daily basis?

11:04 Hederik: No, we’re just benchmarking it daily to see whether or not it is still within the bandwidth of optimization because as I explained what we do want to offer Laura is a smooth ride. We want to make sure that it is as less bumpy as possibly can because we’ve seen from research that many retail investors will sell at the lowest point and buy at the highest point. So, that panic reaction, well that disappears if you take out a bumpy ride if you take down the drawdowns. So, that’s what we try to do and, okay this is really technical, and we could dive in but I would like to have my co-founder Laron here who is a quant. I’m not a quant I’m just the sales guy and I will present this way better than he does. He will be very scientific about it but that’s in a nutshell, what we do.

11:50 Joe: Once again, you could ask a follow-up question but actually, admittedly, I like to interview partners who do their own interview.

11:59 Hederik: I’m sorry. I just wanted to point out, why not select 10 best trackers and leave it at that or 10 best mutual funds and why always go back to the larger universe because, the universe changes on a daily basis. And to optimize for each and every one, if we make it truly personalized portfolio and to make it smooth and to make the risk-return curve optimal for you, we need to have a bigger playground than just seven instruments. We need to have a larger universe, larger selection, let’s say and that allows the algorithm to optimize for each and every one this smooth ride.

12:38 Joe: And with the curve, you’re talking about, what is still called Modern Portfolio Theory by Markowitz and we’ll have a link down here because I do believe it fills libraries over libraries in materials.

12:52 Hederik: Yes, it is based somewhat on Modern Portfolio Theory and thank you very much to Harry Markowitz who invented it in the 1950s, 1952. And every Robo in Europe and in the US will shout, wow we have an MPT Modern Portfolio Theory solution.

13:08 Joe: And the interesting thing is we are in 2018, it was invented in the 50s and it’s still modern.

13:14 Hederik: No, it’s not modern that’s the problem. I mean, you have to imagine that he didn’t have a computer at the time, Harry Markowitz. He had to find a suitable way of calculating risk in a very elegant way that was possible on paper. He didn’t have a computer like us.

13:29 Joe: Actually, at this time they had people who’ve been task manually to work out with pen and paper and they were called computers because they calculated all day, right?

13:40 Hederik: Yes exactly. And let me just give you one technical example and please bear with me for a second. Let’s say we use volatility what Markowitz used as a benchmark to measure risk.

13:52 Joe: The movement up and down of the share price to measure.

13:55 Hederik: The movement up and down to measure whether or not a portfolio is stable in the end, you could also say it like that. Let’s say you have a portfolio and I give you one and you will kill me for it. I give you a portfolio that does minus 20% the first year, minus 20% the second, minus 20% the third year, from a Modern Portfolio Theory perspective, this is a wonderful portfolio. Why? Because the volatility is zero, it doesn’t fluctuate, it remains minus 20. So, you immediately feel that volatility is not an adequate measure for risk or at least it has some flaws. It doesn’t say anything about the potential loss and it doesn’t make the difference normal distribution between negative returns and positive returns it just cannot do that with volatility.

14:39 Joe: No distribution is also from statistics, go down here there will be another link.

14:44 Hederik: I’m sorry but let’s say that from a risk perspective we go way beyond volatility, so the academic world then invented what they call Value at Risk. They said this is the best and they invented Sevar which is at academically regarded in the US, in Europe as being one of the best risks in the key indicators.

15:02 Joe: Again, links.

15:04 Hederik: And we go even beyond that but let’s not dive too deep in that. The only thing we claim is we don’t claim to be able to predict the world and what’s happening tomorrow. I don’t know who you will encounter tomorrow, I cannot predict that.

15:16 Joe: Too bad, I would want to ask you for the superball numbers for this week.

15:21 Hederik: Yeah, I wish I could give them to you but what we do claim is that we have a very solid mathematical backbone on which we can fall and that potentially gives more chances of taking less risk. That’s what we are all about, to have a very solid mathematical backbone and that’s what we claim. Of course, I’m pretty sure that every Robo will claim that, to put that into perspective.

15:48 Joe: Just a few more questions after we heard so much from you and power theory startup, how did you like Frankfurt?

15:56 Hederik: I love Frankfurt actually, to be honest. I really like it, I haven’t been here quite often yet and I should be. I love the country because if I go to France or Spain and I take a one-star hotel or if I go to Germany and I take a one-star hotel, I can promise you a hotel is spic and span, it’s really clean, it’s really nice food. Some people in Belgium have this prejudice that they say the food is only good in the south of Europe and that’s not true I really like German food. I like the German beer by the way and I think you guys do an awesome job. Also, this event, we have a great app here, I’ve been to so many events in Europe where the app doesn’t work, or you cannot fix appointments everything works here everything is perfect everything runs like a clock. So, yeah, I like Germany and yes, I like Frankfurt a lot. It’s personal but I’ll give the floor to Joeri.

16:49 Joeri: I like Frankfurt as well, we had a really nice stay and as Hederik said, we will be here more often, we are in the accelerator in Frankfurt here so that’s where you can find us, actually.

17:01 Joe: And for everybody who doesn’t know how to find accelerator Frankfurt because they are not from Frankfurt, go down here in the show notes and we link your website, actually the new website that was published I think today, right? You went live today, okay. Thank you very much, it was a pleasure having you guys here. It’s always a pleasure to have interview partners who do their own interview, it’s just amazing, thank you guys.

17:28 Joeri: Thank you, thank you were much.

17:34 Host: That’s all folks. Find more news, streams, events, and interviews at Remember sharing is caring.