1Mby1M Virtual Accelerator AI Investor Forum: Alex Benik, Encoded Ventures (Part 1)

Alex Benik, Partner/Founder at Encoded Ventures, discusses the fund’s investment thesis. Great discussion on how we each view the disruptions AI is causing on multiple fronts. VCs investing today have to think about the next 5-7 year window and what changes are likely to come.

Sramana Mitra: We are gonna do today’s session with a conversation with Alex Benik from Encoded Ventures. Alex, welcome to the show.

Alex Benik: Thanks for having me.

Sramana Mitra: This is the first time we’re meeting. Why don’t you introduce yourself and Encoded Ventures, and then we’ll talk more about your investment thesis, trends, AI, and so on.

Alex Benik: Great. Encoded is a solo GP fund that I run. It’s a little over $18 million, and I invest at the earliest stages—seed, pre-seed, inception, and infrastructure. Mostly software, such as cloud infrastructure, data and AI infrastructure, and cybersecurity. No software for marketers, dentists, or crypto.

I made my first investment out of Encoded last May, so a little over a year ago. Before starting Encoded, I spent 22 years both on the West Coast in the Bay Area and in Boston at Battery Ventures, where I essentially grew up. It was my second job, and before that, I was in telecom and networking.

Sramana Mitra: What’s the geographical preference for the venture fund? Are you investing in Boston, all over the U.S., internationally? What’s the plan?

Alex Benik: It’s very geography agnostic. I’m based in Boston. I’ve made almost eight, investments. Half are in Israel, where I did a lot of work at Battery. The rest are in the U.S.—New York and the Bay Area. I have one CEO in London who works with a West Coast team, and I’m about to do my first deal fully based in Europe. They’ll be setting up go-to-market in the States. So fundamentally, I’m stage focused – early-stage and infrastructure software focused, but geography agnostic.

Sramana Mitra: What are the check sizes? If you’re doing pre-seed, what do you consider pre-seed? Let’s dive into that and the check sizes.

Alex Benik: All of my investments so far have been the first money in round. The labels—seed, pre-seed, inception—are just semantics. My typical check size is around $500K. I’ve participated in rounds ranging from $3 million to $10 million. Usually, there’s another institutional seed investor involved. Sometimes I help pull the round together, sometimes not. But $500K is a good benchmark for an Encoded investment.

Sramana Mitra: When you’re doing a pre-seed, first-check-in deal, what do you want to see in the deal?What needs to exist?

Alex Benik: Not much exists. These are definitely pre-revenue, pre-product companies. You’re spending time with the founders to figure out exactly what the focus of business should even be. Sometimes there’s a working code demo, but you’re betting on the founding team, the market, and the intersection of those two.

You know very well that the product they describe might not be the one the customer ends up buying.

Sramana Mitra: Are you expecting them to do the validation work before coming to you?

Alex Benik: A bit of both. Founders should have spent time with potential customers to gather feedback and market insights. I’m also happy to help with that—introducing them to people in my network during ideation and as part of my diligence. Ideally, it’s mutually beneficial: they talk to someone who resembles a customer, and I get to hear the feedback. So they definitely should have done some of that unless it’s an inception pre-product thing; then we can do that together.

Sramana Mitra: Are you open to first-time entrepreneurs?

Alex Benik: Absolutely. I’ve worked with a broad range. Among the eight, I have some first-time founders; some repeat founders, including ones I worked with at Battery; solo founders, teams—I’m not very dogmatic about that.

This segment is part 1 in the series : 1Mby1M Virtual Accelerator AI Investor Forum: Alex Benik, Encoded Ventures
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