Vicente Vento, founder of Germany-based fund manager DTCP, talks about data centers, optimism, and doing growth equity and digital infrastructure deals around the world
Vicente Vento, Founder and CEO, DTCP
Vicente Vento founded DTCP – Digital Transformation Capital Partners – in 2015, as a spinout from Deutsche Telekom. He previously worked at Morgan Stanley, Blackstone, and Royal Capital Management.
DTCP has $3bn AUM, spanning two strategies: DTCP Growth, which invests in enterprise and software companies; and DTCP Infra, which invests in mobile towers, fiber networks, and data centers. The firm has offices in Hamburg, Frankfurt, Berlin, London, Luxembourg, Tel Aviv, and San Francisco. It has backed more than 50 innovative companies.
Shaun Beaney, Editor, and Kerstin Weil, Assistant Editor of Preqin First Close, asked Vicente about data-driven innovation, high-growth ventures, and the outlook for Europe.
I joined Deutsche Telekom in 2010 as Senior Vice President for Mergers & Acquisitions. We had five wonderful years in this telecommunications player that had very interesting assets, including in the US, where I spent a lot of time. We realized, by doing a very interesting telecom-tower transaction in the US, that operators actually do not need to own their passive infrastructure. These assets can be owned more efficiently by publicly listed or private infrastructure companies. This hadn’t really arrived in Europe yet. I said: ‘Hey, you know, would you guys back me?’ So, Deutsche Telekom offered me that opportunity by providing the seed capital that I required to start the first-generation funds. Deutsche Telekom is still a great partner and investor in DTCP’s platform.
We wanted to be a specialist investment manager. We had a lot of operational expertise, and we understood the data supply chain extremely well, from passive infrastructure for data centers, to physical towers, ducts carrying fiber underground, all the way through to the application layer, including enterprise software.
The passive infrastructure and application layer were two areas where a corporation like Deutsche Telekom didn't have significant expertise. We saw this as an opportunity to position ourselves in these two fast-growing, novel markets.
These two worlds – physical infrastructure and software – have massively converged. In thinking about the supply chain and the future of telecoms and technology, there were two things. There was the actual physical passive infrastructure, and there was the software. So, we built an asset-heavy strategy focused on physical infrastructure, and an asset-light strategy, including infrastructure software, enterprise software, and cybersecurity.
We have two dedicated teams approaching these two opportunities. That means that the people who are doing real assets have a special competency. And the people looking at the asset-light have a lot of technology expertise. They’re our forward thinkers. We were early in SaaS. We were early in automation. We’ve been very early in cybersecurity. We’re now very early in dual-use.
I think there is still a massive opportunity in European growth. There is competition, but it’s still a part of the market where typically there is a lack of capital. This fund is focused mostly on enterprise software, cybersecurity, and automation.
We identified what we call the ‘early growth stage’, where a company is still loss-making and requires a lot of scale-up capital to grow. We had a lot to contribute because we had customer relationships, so once the product is there and the technology is proven, you can really push it into the market. We could help these businesses really reach into the enterprise segment, which is what we target, helping those management teams bring scale into businesses.
Quantum Systems is one of our more recent deals. It’s going phenomenally well. Our partner Thomas Preuss, who’s in charge of the growth equity strategy, was very early in identifying that there has been a 30-year gap in terms of building the defense capabilities in Europe. Quantum Systems is based in Munich, so it has a very strong heritage of German engineering. It’s a dual-use company. That means it serves civilian and defense markets. Its drones are equipped with advanced cameras and sensors that collect critical data. The company started in forestry and mining, border control and police, and has expanded into battlefield surveillance.
We do deals across the globe. We’ve invested in the West Coast, backing companies like Fastly, in content delivery networks, and like Auth0, in authentication. In Germany, we were behind a company called LeanIX, and another company called Signavio – both of which have been acquired by SAP.
We’re super excited and expectant. There has been a massive shift of gears, right? I think much of the newly approved funding is earmarked primarily for energy and digital infrastructure, which is very much needed in Europe.
Our portfolio company Maincubes operates data centers in Germany. Our portfolio company GreenScale has bought sites in Norway, where the price of electricity is much lower. It’s a massive price delta, if you think about it. So, from about €0.05 per kilowatt hour, on average, to €0.20 per kilowatt hour – that’s coming at the detriment of industrial competitiveness.
One of the fundamental problems that Germany has is that it has a lot of renewable power, but it cannot get that renewable power to the regions where that power is needed. Hopefully, that capital makes it into the grid and solidifies that infrastructure.
The demand is strong right now. We’ve made good progress in building up our brand over the last decade. We’ve just turned 10 years old in April, and that’s been a major milestone for us. We’re now managing six funds. It’s not easy to start an asset manager from scratch, because it’s a crowded world.
What resonates with our investors is that we have our specialist, digital focus in the mid-market. That means buying smaller mid-sized platforms, investing heavily in them, and growing them to a large scale. We’re offering our investors mid-teen returns, and they like that about us.
Ultimately, Europe has 450 million consumers and a significant base of large enterprises. From when we wake up to when we go to bed, we’re on digital devices pretty much all the time. We use them for our private lives, we use them for work, and they’ve become unavoidable. Because all that usage is happening here in Europe, the data center infrastructure and the networks must be here as well.
We feel very good about the traditional world of cloud, which has continued to grow very, very fast. We continue to see a lot of infrastructure deployment by hyperscalers, technology, telecommunications, and cybersecurity players. And we feel very good about things like the digitization of government services, which in Europe is at a relatively early stage. This is a tremendous opportunity.
The icing on the cake is AI. It’s primarily a US phenomenon at the moment. In Europe, we’re still living on the growth of traditional cloud. I’m a strong believer that we will see meaningful development in European AI infrastructure next year and in 2027. We’re working with technology partners to understand what’s required to build a full-stack solution to develop AI data centers. I think this is effectively what’s going to drive the next wave of European growth in data centers.
Shaun Beaney is Editor and Kerstin Weil is Assistant Editor of Preqin First Close. It’s quick, easy, and free to subscribe here.
Preqin, a part of BlackRock, offers one of the world's most extensive selections of alternatives benchmarks, including more than 150,000 available that span 50-plus years of performance data, helping investors make confident decisions when identifying and evaluating new opportunities.
Special thanks to the team at Kekst CNC, and to Jakob Schmitz at BlackRock.
The opinions and facts included in the above do not constitute investment advice. Professional advice should be sought before making any investment or other decisions. Preqin accepts no liability for any decisions taken in relation to the above.