Steve Brotman:
Hi, this is Steve Brotman, the managing partner of Alpha Partners, and we’re on Driving Alpha. Joining the show today is Ben Cukier, Partner and Co-Founder of Centana Growth Partners. Ben has been investing in companies across the financial services ecosystem for more than 25 years. He co-founded Centana in 2015 after nearly 16 years at FTV Capital, where he led the financial services practice and helped build some of the category’s leading companies. At Centana, he has been on the boards of companies including 401Go, Jumio, RunBuggy, Sayari Labs, Striveworks, and ZestyAI. He has also previously been involved with Alaia Capital and Quantitative Brokers.
Ben earned both a BA and a BS summa cum laude from the University of Pennsylvania and then went on to receive his MBA from Stanford. He is a great guest for Driving Alpha not only because we have known each other for our entire careers — about 25 years — but because he brings deep sector insight, long-term conviction, and a proven track record in some of the most demanding corners of the financial technology arena. Whenever we have a financial services question, Ben and his team are one of our go-to partners. So Ben, thank you so much for joining the pod.
Ben Cukier:
I am excited to be here today. We finally got around to it.
Steve Brotman:
We wanted to make sure we got some reps in before we started pulling in the big guns. So I was really glad you were able to make it. Interesting times in venture. If you had to pick one thing in financial services that has been on your mind a lot lately, what would it be? I figured I would start with a big question first.
Ben Cukier:
That is a big one. I am going to duck saying AI because I am sure that is what everybody is saying these days. But if you think about financial services outside of AI, the big thing that is always on people’s minds is regulation — how it is going to change, what it does to the market, and so on. Regulation is one of the most important factors driving spending, and it is closely tied to those other two letters we just mentioned.
Steve Brotman:
Regulation is going to be part of AI as well. What is interesting about what you mentioned is that one of the things people worry about in this AI era — this supercycle, if you will — is what the barriers and moats to entry actually are. Anthropic, for instance, is actively lobbying for more regulation. How do you feel about that? I met with another VC who specifically wrestles with regulation as part of their alpha generation process. They worked with Tesla to navigate state regulations around direct sales at a time when states banned car manufacturers from owning dealerships. They built an entire business out of that regulatory tension. How does that intersect with what you do today? Do you try to avoid regulated situations, or do you lean in?
Ben Cukier:
The reality is that regulation is just a fact of life in financial services. We may agree with it or disagree with it on any given issue, but on the whole, regulation in financial services is probably a good thing. You do not want a financial services world that is completely unregulated — it has done a lot for the economy and for consumer protection. Not every regulation is ideal, of course, but regulation also creates barriers to entry. And when you are investing, barriers to entry are actually your friend. They help ensure a level playing field where everyone is doing things the right way — and the definition of “the right way” evolves, but the principle holds.
We are very comfortable working within regulated environments. A lot of our companies do not sit on the balance sheet side of financial services, so we are not burdened by core banking regulations per se. But every company we deal with interacts with a large financial institution in some way. That means they have to be regulation-aware at a minimum, and they have to understand that their customers are heavily regulated. That understanding is one of the great barriers to entry — and one of the great value-adds that the companies we invest in provide to their clients.
Steve Brotman:
Can you give me a concrete example to illustrate what you are talking about? This is a little theoretical. Maybe walk me through a company or two that reflects some of this.
Ben Cukier:
When you are moving money or working with trade partners, you have to know your customer. You need to make sure they are not on terrorist watch lists, not politically exposed persons, and that the companies behind them are not connected to sanctions or other prohibited relationships. That is not just a financial services issue. Whole Foods, for example, needs to make sure it is not buying from a corrupted supply chain, not dealing with entities that violate sanctions. So it is a huge financial services problem, but it is also a very real problem for any company that operates internationally.
Steve Brotman:
Is there a portfolio company that highlights this issue?
Ben Cukier:
Coincidentally, there is — and I would not be a good investor if I did not lean into that. We have a portfolio company called Sayari. The core of what they do is identify the ultimate beneficial owner of various companies — not just US companies, but especially international trade counterparties. That is a huge problem for banks, but also for companies like Whole Foods that need to vet their global supply chains.
Steve Brotman:
What would you say is the company at Centana that best epitomizes your approach — the one that really sums up what you do and why?
Ben Cukier:
You just asked a parent to pick their favorite child. I have got a great portfolio company to talk about called ZestyAI — and that does not mean I love the others any less. ZestyAI is a company in the InsurTech space. They originally started selling to solar companies, using AI and machine learning to figure out which roofs would be best to put solar panels on. Wonderful idea, but it did not get the traction they needed. The management team then took the underlying technology — which was genuinely impressive image analysis capability, built before the era of large language models — and asked themselves what else it could be used for.
They figured out that this kind of property analysis would be incredibly useful to insurance companies trying to underwrite risk. They spent a lot of time working with insurers and actually got some of the largest carriers to contribute data. The first product they launched was a wildfire model — not just determining whether a home is in a wildfire-prone area, but assessing how likely that specific home is to survive a wildfire. It turns out there are some straightforward factors and some very nuanced ones: how close is the brush to the house, what is the roof made of, where on a slope is the property situated, how recent are repairs. They built all of that into the model and convinced some of the largest insurance companies in the world to update their filings and underwriting practices based on it.
Given what has been happening with wildfires in California and elsewhere, the timing turned out to be very significant. They have since expanded the model to cover hail, wind, and other modern hazards — underwriting at the individual property level rather than by zip code. That is the kind of thing technology enables in a regulated industry. They have spent enormous time working with state departments of insurance across all 50 states to demonstrate that their models are not only accurate but also beneficial to consumers, who can receive feedback on how to improve their properties to reduce risk.
Steve Brotman:
Would that include flood as well?
Ben Cukier:
It includes certain types of flood — specifically non-weather-related flooding, pulling data from plumbing filings and running it through the AI model. Weather-related flooding is a different and more complex challenge.
Steve Brotman:
Is there a commercial building application as well?
Ben Cukier:
There is. They have work in that area, though I will leave it at that for now.
Steve Brotman:
Ben, I should mention — we are actually an investor in Honeycomb, which is an Israeli commercial property insurance company. We should probably connect on that.
Ben Cukier:
I love it when synergies come together, especially on air.
Steve Brotman:
Have you guys done anything in Israel, or are you mostly focused on the US?
Ben Cukier:
We have done a little bit in Israel. A few of our companies have significant Israeli backend operations. We do not have an Israel-headquartered company in the portfolio to date, but we would love to. You and I have talked about organizing a trip out there for growth equity and venture firms to see what is happening firsthand.
Steve Brotman:
There is a lot of FinTech out there, and we just did a deal recently. When we organize the next trip, I will loop you in.
Ben Cukier:
Congratulations on that. Israel is an amazing place. The entrepreneurship out there is spectacular.
Steve Brotman:
It really is. Incredible what is happening there. So if you are an entrepreneur and you want to get in touch with Centana — what should they do? What should they cover in that first 30 to 60 seconds?
Ben Cukier:
Getting in touch is easy: bennett@centana.com. I try to get back to everyone quickly. What we care about first is whether we can actually be helpful to you — whether our network, our experience in financial services, and our pattern recognition add something differentiated beyond just capital. Figuring that out upfront is good for both sides.
The other thing we focus on heavily as growth-stage investors is unit economics. We are fine with companies that are burning cash to invest in growth, but we want to see a tangible and positive NPV from that investment. Put money in, grow faster — as long as the growth is economical.
Steve Brotman:
Very fundamental driven.
Ben Cukier:
Very fundamental. About a third of our companies have never had any institutional investment before we come in. Two thirds have raised venture capital previously but were smaller companies with less due diligence behind them. Fundamentals become more important the larger a company gets. We are the stage just before the mega growth equity firms, and part of what we offer — beyond the financial services expertise and institutionalization — is preparing companies for that later-stage diligence process. That process is rigorous, and we can help founders get ready for it.
Steve Brotman:
What does growth stage mean to you? There are a lot of definitions these days, especially now that we have trillion-dollar companies. Is there an upper limit where things get uncomfortable for you? What is the earliest stage you will go?
Ben Cukier:
Our quick heuristic is that the average company we invest in has about $15 to $20 million in ARR when we come in. We will go as low as $7 million. There is no theoretical upper limit, but practically we write checks up to $50 million and we want to be a meaningful partner. So at the upper end, it depends more on the round size than the size of the company.
Steve Brotman:
Where are you in your fund lifecycle?
Ben Cukier:
We are on Fund III. We raised it and started investing about a year and a half ago.
Steve Brotman:
How big is that fund?
Ben Cukier:
$615 million.
Steve Brotman:
And how long does it typically take you to deploy?
Ben Cukier:
We target three to three and a half years, plus or minus. We believe in time diversification. Markets go up and down, and putting all your capital to work in 2021 produced much worse outcomes than spreading it across a full cycle. We could raise two $300 million funds and deploy each in two years, but this approach means we spend less time fundraising and more time helping our companies grow.
Steve Brotman:
At $600 million, I assume it is mostly institutional capital.
Ben Cukier:
Mostly institutional investors, yes.
Steve Brotman:
I am curious — how do you guys think about decision-making at the investment committee level? Does one partner champion a deal and that is enough? Is there a formal vote?
Ben Cukier:
We do have an investment committee and a formal vote process. But what makes ours different is that everybody in the firm gets a vote — from the most senior partner down to an associate. The only exception is if you are in your first week. And that is intentional. We are in the business of making decisions. Even if you are one or two years into the industry, you should have a voice in what we do. And frankly, our associates are doing a lot of the actual work — rolling up their sleeves on diligence — and they should have an opinion.
Steve Brotman:
So majority vote, including associates?
Ben Cukier:
As you might imagine, not all votes carry equal weight. But it is important that everyone has the ability to express their view — and is actually required to.
Steve Brotman:
One thing we wrestle with internally is that we see roughly two thirds of all growth deals, and we are trying to pick the top one percent. We have found that the most divided investment committee debates often correspond to the best outcomes. The contrarian bets. How do you think about that at Centana?
Ben Cukier:
Are you talking about internal consensus or industry consensus?
Steve Brotman:
Internal. We have found the more divided the committee, the better the outcomes have been. When Benchmark did Uber, it was very controversial internally. I am wondering if that pattern holds in growth investing.
Ben Cukier:
Honestly, we are more consensus driven than that. We give a lot of leeway and agency to the deal team leading a deal, but we would not move forward if four out of five partners were strongly opposed. There are different levels of opposition, though. Some deals we have done have turned out very well even when one partner was not sure. That is very different from someone saying, “This is a fundamentally bad idea.” We cut those off early.
Steve Brotman:
It is great that you give agency to your team. Over time, that is how you grow partners.
Ben Cukier:
Exactly. The deal team — the partner and the rest of the people in the weeds — knows the company better than anyone else in the room. They have to abstract and bring the key issues to the full committee, but they are not going to know every nuance of what the deal team knows. That is how it should work. Agency reflects trust.
Steve Brotman:
If you could go back to 1999 and give your former self advice — knowing what you know now — what would it be?
Ben Cukier:
I have to confess I am one of the best hindsight investors you will ever meet. But a few lessons stand out. The most important one: trust your gut, and do not do business with people you do not think are genuinely good people. I have been burned more times by great businesses with problematic partners around the table than by almost anything else. Ultimately, when you are investing in a business, you are investing in the team — the people more than the idea.
I have had the privilege of working with some truly wonderful people over nearly 30 years in this business, and occasionally I have misjudged on that front. I would tell my younger self: do not get fixated on the business plan, because that always changes. Eisenhower said it well — and I quote this often — “Plans are useless. Planning is useful.”
Steve Brotman:
Or as the hybrid of Patton and Mike Tyson goes: the best plans last until you get punched in the nose.
Ben Cukier:
That is a good blend. They all point to the same truth: nobody can predict the future. The value of planning is not in the output — the spreadsheet is almost never right — but in the thought process. If this happens, what do we do? If that channel fails, which one do we pivot to? When you have thought through those scenarios in advance, you can react more quickly. It is like basketball practice. You drill moves so that in the game, you can put them together instinctively. Business works the same way.
Steve Brotman:
That is a big lesson for me as well. If you back good people you respect and admire, even when things go badly and you lose money — and you do lose money in this business — you do not feel nearly as bad as when you backed someone you had doubts about. The regret is in the judgment, not just the outcome. What was the big deal that got away for you? The one you look back on and wish you had pulled the trigger?
Ben Cukier:
The list is long. But probably the most instructive one is that I had the privilege of passing on PayPal five times. And I think I was right the first time. When I first saw it, it was a pre-revenue company with a plan to beam money between Palm Pilots. I told them that was not a real market. To their enormous credit, they heard that feedback — from me and probably from many others — and they completely evolved the business. They became a payments platform for eBay. It was brilliant. But I was stuck in that first meeting for the next four passes.
Steve Brotman:
It is hard to come at a situation fresh when you have already made a judgment. Human bias at its finest. So what is the one opinion about FinTech that you think most people in the market still get wrong?
Ben Cukier:
People underestimate the sheer scale of financial services. Outside of government, financial services is the largest sector of the US economy — bigger than tech, bigger than healthcare. And yet I still regularly get asked whether investing in financial services is a little niche. There was a brief period in 2021 where everything was FinTech and I felt cool adjacent. But we are back to people treating it as a niche. They are wrong.
Steve Brotman:
Was 2021 a good time to invest, or a bad time?
Ben Cukier:
It was an awful time to invest. Everyone thought they were a FinTech expert overnight, and valuations went to absurd levels. That 2020 to 2021 vintage of private market FinTech investments will probably be remembered as one of the worst performing periods in decades.
Steve Brotman:
If you had to make one prediction about the next five years in financial services, what would it be?
Ben Cukier:
This might sound contrarian, but I think when you look back five years from now, the big banks are still going to be the big banks. The big insurance companies are still going to be the big insurance companies. Regulation makes it extremely difficult to displace incumbents quickly, and they have something else: regulatory credibility, capital, brand, and balance sheet. That part of the market stays relatively stable.
What will change radically is the service providers that sit around those institutions. AI is enabling transformations that were not previously feasible. A lot of these large companies are still running on COBOL-based core operating systems. AI makes the modernization of that code much more realistic — it is not perfect today, but fast forward a few years and AI’s ability to work across languages and modernize legacy systems becomes genuinely powerful. The amount of tech spending and transformation that large financial players will undertake is going to dwarf what we have seen in the last five years. Not just because of AI, but because AI enables the rip and replace of core infrastructure that has been locked in place for decades.
Steve Brotman:
You finally looped back to AI. At our shop we are cautious about non-native AI companies. How are you guys thinking about that risk?
Ben Cukier:
We are approaching it cautiously, but I think back to 1999. Back then, the narrative was that non-native internet companies were going to be destroyed. There was a lot of churn and change. But many companies that were not internet native are still around today and thriving. Walmart is the obvious example — Amazon was a massive winner, but so was Walmart, which was a store-based company headquartered in Bentonville, Arkansas, not Silicon Valley. They adapted.
The same pattern played out in mobile. Prognosticators said that if you were not mobile-native, you would not survive. Some did not. But many companies with real market share, real customers, and real barriers to entry found ways to evolve. AI is a more intense version of that cycle, and some incumbents will not make it. But the SaaS apocalypse narrative is both real and overblown at the same time. You absolutely have to adopt the technology. You cannot stand still. But having existing customers, scale, and switching costs is not worthless — it is a platform to evolve from.
Steve Brotman:
There are a lot of people predicting that SaaS companies are going to be destroyed. I am not so sure. I think some will thrive and some will not. But those that are not paying attention to the moment are probably in trouble.
Ben Cukier:
Absolutely right. You have to adopt the new technologies. Doing nothing is not an option. But I think the SaaS apocalypse is both coming and overblown simultaneously.
Steve Brotman:
Amazing. Ben, thank you so much for your time today. This has been a fantastic conversation, as I expected. Really appreciate your perspective and look forward to staying in touch. Thanks for joining the pod.
Ben Cukier:
A true pleasure. And we found a deal we might be able to work on together — which is something we have been looking for for a while. Looking forward to it.
Steve Brotman:
Amazing. Thanks a lot, Ben.
