How do companies get priced? What variables are involved in determining the true value of a firm, especially as it moves closer to leaving the private market and becoming a publicly traded entity?
We caught up with Isabelle Freidheim, founder of Athena Capital, to answer these and other questions about the current investment landscape, especially for fintech companies. In this extensive conversation Freidheim shares her insights into the challenge of helping profitable technology companies navigate the runway to an IPO or strategic sale.
We learn how the commoditization of the core technology layer is driving investment trends in fintech, the consequences of companies staying private longer, and how she leveraged talent “mispricings” to build a team of exceptional operating partners—sitting and former CEOs, Fortune 500 directors—that give Athena Capital a “sourcing and diligence advantage.”
“The stage is our thesis. At 12 to 36 months out, the diligence question changes character. I am not asking whether the market will materialize. I am reading retention cohorts, gross margin trajectory, net revenue retention, sales efficiency, customer concentration, working capital. Those are facts. Earlier-stage investing requires you to be right about the future; this stage requires you to be right about the present, which is a materially better risk-adjusted proposition and one where our operating experience compounds.”
Tell me about the thinking behind the founding of Athena Capital. What were your initial goals when you founded the firm?
Isabelle Freidheim: I spent fifteen years investing in private equity and venture capital, founded Magnifi and sold it to TIFIN in 2020, then chaired public companies and sponsored three SPACs. The investing years taught me how companies get priced. Building one taught me what actually determines the price, and those are different subjects.
The variables that moved my own outcome were invisible from the seat I had just left: whether the board had anyone who had sold a company before, whether the financials were built for a buyer’s accountants or a growth investor’s, whether two strategic acquirers already understood the business before a banker introduced them. None of that shows up in a diligence file. All of it moves the exit.
That’s the gap Athena was built for: the 18 months before liquidity, when growth investors have stepped back and bankers haven’t arrived. We take minority positions in profitable technology companies 12 to 36 months from an IPO or a strategic sale. We’re not buying control or fixing broken businesses. We’re underwriting companies that already work and helping them arrive prepared rather than improvising.
The second design decision was the team. Athena’s general partnership is from SoftBank, and our council of operating partners is composed of roughly 30 senior women: sitting and former CEOs, Fortune 500 directors, and operators who’ve run the functions our companies are building. That’s not a value statement; it’s a sourcing and diligence advantage. They see deals before the intermediated market does and open doors our portfolio companies can’t open alone. Execution capability at that level is systematically underpriced, and we built the firm to capture the discounts.
What companies are most attractive to you as investments? Why target businesses at this stage in their development?
Freidheim: Profitable or near-profitable, technology-enabled, and close enough to an exit that we are underwriting performance rather than a forecast. Fintech, AI infrastructure, enterprise software, cybersecurity, healthcare technology, deep tech—the sector matters less than whether the business is exit-ready and whether the exit has been engineered rather than assumed.
The stage is our thesis. At 12 to 36 months out, the diligence question changes character. I am not asking whether the market will materialize. I am reading retention cohorts, gross margin trajectory, net revenue retention, sales efficiency, customer concentration, working capital. Those are facts. Earlier-stage investing requires you to be right about the future; this stage requires you to be right about the present, which is a materially better risk-adjusted proposition and one where our operating experience compounds.
It is also the point at which we can change the outcome. What a company does in this window—who joins the board, how the financials get restated to public-company standards, whether it has done a tuck-in acquisition that broadens the story, whether it has cultivated two credible strategic acquirers alongside the IPO path—moves the exit valuation more than anything the business does operationally in the same period. Most management teams have never done it before. Our council members have done it repeatedly.
And we insist on optionality. A company that can only IPO is a company with one buyer, which is the market on a given Tuesday. We want every portfolio company positioned so that an IPO, a strategic sale and a sponsor transaction are all live, because the path you can take is determined by conditions you do not control, and the only protection against that is having more than one.
One major theme about investing in technology companies in general and fintech companies in particular is the idea of fewer but bigger deals. Does this scan with what you are seeing right now? If so, what do you believe is driving this trend?
Freidheim: It scans, but I would describe the cause differently than most people do.
The standard explanation is discipline: investors got selective after a loose period, so capital concentrated in quality. That is true at the margin and it is not the main mechanism. The main mechanism is that price discovery has moved into private markets and stayed there. Companies that would once have listed to raise capital no longer need to. Sovereign funds, crossover investors, private credit and secondary vehicles will fund them at scale without the disclosure burden. So the round sizes that used to be IPOs are now Series E and F.
That produces exactly the pattern you are describing. A small number of companies can absorb capital in the size that large funds must deploy, and those companies raise repeatedly at escalating marks negotiated between a handful of counterparties whose incentives are correlated. Everyone else is starved. It looks like selectivity. It is closer to concentration of access.
In fintech specifically, there is a second driver. The core technology layer has commoditized: payment rails, KYC, ledger infrastructure, onboarding are all buyable. Differentiation has moved to distribution, regulatory position, and the ability to consolidate adjacent capabilities. That structurally favors larger, better-capitalized companies, because those are advantages you buy rather than build.
The investable consequence is the part I care about. If compounding is happening privately, the returns are being captured privately, and by the time a company reaches the public market the repricing has already occurred. That is not a reason to avoid technology. It is a reason to be positioned in the private vehicle before the event rather than in the listing after it.
I noticed that one of the companies Athena Capital has invested in is Paystand, a company that demoed at Finovate years ago. What most excites you right now about what is happening in fintech in particular?
Freidheim: The most interesting fintech is not the interface. It is the plumbing that changes the unit economics of a process that companies were treating as fixed cost.
Paystand is a clean illustration. Business-to-business payments are still routed through card networks and manual accounts receivable work, and the cost of that is absorbed as a permanent line item—transaction fees, days sales outstanding, headcount in collections, etc. Paystand attacks the cost structure itself rather than putting a better screen on top of it. When a company can compress its receivables cycle and take fees out of the payment, that shows up in working capital and cash conversion. That is a CFO-level outcome, not a product feature. And it produces the characteristics I underwrite: recurring usage, deep integration into the financial stack, high switching costs, and a value proposition you can compute rather than describe.
That is the general pattern I am watching: financial operations, embedded finance, compliance infrastructure, treasury and data. Boring categories where the return is measurable.
On AI in fintech, I hold a specific view. The model layer has been built and it has been repriced, and that repricing happened almost entirely in private markets. The value that remains available now sits in deployment: the infrastructure that lets a regulated financial institution actually put a model into production against its own data, with auditability, model risk governance and controls that survive an examination. Financial services is the hardest deployment environment there is, which is exactly why the companies that solve it will be durable. The question I ask is never whether a company uses AI. It is whether the model changes the loss rate, the margin, the cycle time or the compliance cost by an amount you can measure.
What are your thoughts on fintech valuations of late? Some see the hefty valuations for AI-native fintechs as appropriate given the potential for the sector. Others are calling for more modest valuations based on actual profitability as opposed to revenue growth. Where do you stand?
Freidheim: Both camps are arguing about the wrong variable. The question is not whether AI-native fintech valuations are high. It is who realizes the return at those valuations and where in the capital structure they sit when it happens.
A private mark is not a price. It is the outcome of a negotiation between a small number of parties, several of whom already hold the asset and benefit from the mark moving up. That is not price discovery, and treating it as though it were is how public investors end up buying at the top of a curve that was constructed elsewhere. So when I hear that an AI-native fintech is worth 20 times forward revenue, my first question is not whether the multiple is justified. It is who set it and what they own.
On the underlying debate: revenue growth without margin structure is not a business, and profitability as a single test would have disqualified most of the infrastructure companies worth owning. What I actually underwrite is whether the growth is being purchased or earned. Net revenue retention, gross margin by cohort, sales efficiency, the ratio of customer acquisition cost to lifetime value and the direction that ratio is moving. If a company is spending ahead of growth and the cohorts are improving, the spending is investment. If the cohorts are flat and the spending is what produces the growth, the spending is the business model, and that does not survive a funding environment change.
In fintech, there is an additional test that generalist investors underweight. Regulated financial activity carries capital, compliance and operational obligations that arrive with scale, not before it. A company that has not built for that is carrying a liability that is not in the model.
Discipline here does not mean paying less. It means being clear-eyed about whether you are buying an asset or providing someone else’s exit.
I recently spoke with a VC investor who expressed concern about companies staying private longer and timing mismatches between fund deployment cycles and return periods trapping wealth in illiquid portfolios for 15 years or more. Given Athena Capital’s interest in companies nearing exits or considering IPOs, do you share this concern?
Freidheim: I share it, and I would put it more bluntly. The consequence of companies staying private is not merely that returns are delayed. It is that the compounding happens where public investors cannot reach it, and by the time they can, it has already happened.
Look at what an IPO now is. A company that stayed private for twelve or fifteen years, funded by investors who marked it up across a dozen rounds, lists a small percentage of its equity. The listing is not a capital-raising event; the company usually did not need the money. It is a liquidity event for the people who already own it. Public investors are being offered the opportunity to underwrite someone else’s exit and are frequently doing so at a valuation set by parties on the other side of the trade. That is a structural transfer, and it is not being described as one.
The fund-life mismatch your VC identified is the other half of the same problem, and it is real. A ten-year fund holding a company that will not resolve for fifteen years forces bad choices—continuation vehicles, secondaries at negotiated prices, extensions that convert an investment decision into a liquidity management problem. Founders and employees carry it too. Paper wealth that cannot be converted is a retention problem and eventually a governance problem.
Athena is structured as a response to this. If we invest in profitable companies 12 to 36 months from a transaction, the mismatch does not arise; our holding period and our fund life are the same problem. And by working on exit-readiness inside the company, we shorten the distance between value creation and value realization rather than waiting for market conditions to do it for us.
What I would not accept is the framing that companies should simply list earlier. That is asking founders to solve an investor problem. The honest answer is that the public markets have become the wrong place to source technology exposure at the point of compounding, and investors who want that exposure need to be in the private vehicle before the repricing. That is the business we are in. The corollary is that the genuinely interesting public-market opportunity right now is not the model layer, which has already been priced privately; it is the infrastructure and enabling companies that AI deployment runs on, many of which are already public and are not being valued as beneficiaries.
You made history when you became the youngest female chair of a publicly traded company in the US in 2021. What did this achievement mean to you?
Freidheim: Honestly, the number itself is a trivial fact. What it indicated was not.
I chaired a public company because I had a company and sold it, and because I could structure a transaction. Those are the qualifications. The reason the milestone was notable is that the pipeline into public-company chairmanships had been narrow enough that the intersection of “has operated,” “has transacted” and “is a woman” was nearly empty; not because the talent was absent, but because the selection process was not looking there.
That observation became a business. I have sponsored multiple all-women SPACs and raised over $1.2 billion across vehicles, and the operative fact is not the composition of those teams. It is that the composition let me recruit boards and management benches other sponsors could not access, because I was hiring from a pool everyone else had priced at a discount. Athena’s council is the same trade at scale: senior women operators whose track records are documented and whose availability, sourcing reach and enterprise relationships are worth considerably more than the market pays for them. That is a mispricing, and mispricings are what investors are supposed to find.
What the chairmanship actually taught me was operational, and it shows up in our work now. Public-company governance is a discipline. (It is) the cadence of a board, what an audit committee needs to see and when, how a material disclosure gets made, what happens to a stock when guidance is missed by a small amount, how a register of shareholders behaves under pressure. Most private companies discover all of that in the first year after listing, badly and expensively. Our portfolio companies get it beforehand, from people who have done it.
Photo by Airam Dato-on
