Click here for Part I, Part II & Part III

Ben Schapiro probably knows all there is to investment, and then some more. Last year, QuestMark Partners’ founder partner completed 50 years in a career that has spanned institutional, international and private clients, real estate, corporate finance, M&As and venture capital.

Armed with a degree in economics, Schapiro started his career in 1966 at Robert Garrett & Sons, which later merged into Alex.Brown & Sons. In 1998, he left Alex.Brown to cofound QuestMark, focusing on expansion-stage venture capital. Over the past nearly 20 years, the Baltimore firm has invested nearly a billion dollars in 61 companies, closed on six IPOs and 28 M&A events, and now plans a fifth fund later this year or early next year.

Typically, the Baltimore firm invests in young companies with revenues of between $5 million and $50 million, and a proven technology or product. It then gets closely involved with the product before wringing out juicy returns. It is extremely choosy in its investments and has a rigorous process that ends in a mere 2.5% of startups being offered a term sheet.

In an interview with citybizlist’s Edwin Warfield, Schapiro recounts his career, starting at $5,000 a year, what not working on Wall Street did to his integrity, and the QuestMark investment window. He also spoke about recent investments, one alongside Microsoft and Kleiner Perkins in InsideSales at a valuation of $1.5 billion, and the impending launch of QuestMark’s fifth fund.

EDWIN WARFIELD: Fund IV 2013, can you provide an overview of the eight investments to date?

BEN SCHAPIRO: In Fund Four, our most recent investment is in a company called InsideSales in Provo, Utah at a valuation higher than we ever thought we would pay. It is about a billion and half dollars. We had looked at that company twice before at a much lower valuation and turned it down partially on valuation and partially on stage. We continued to track the company over the three years that we have known it and there was an opportunity to invest alongside of Microsoft who was a prior investor and a couple of other investors and we just participated in that round and we invested $10 million.

Great group of investors, the original was US Venture Partners a firm we work with a lot who was originally in there, Kleiner Perkins came in on that round and on a later round and we just closed on that investment. Very recently most of our investments, I would say 65%, have been on the West Coast and that tracks generally venture capital dollars. It is also related to where our best relationships are but more recently I am pleased that we made an investment in KeyMe in New York City. That company was brought to us by Comcast Ventures and we know the people at Battery who were prior investors and it’s a very exciting company.

What KeyMe does is KeyMe has kiosks in retail stores, Bed Bath and Beyond, Rite-Aid, 7-Eleven and you can walk up to this kiosk and put your key in and it will duplicate a key in a matter of seconds and it is so sophisticated both in terms of artificial intelligence and optics and recognition that the key that they will reproduce for you is probably back to the original key that you received from the manufacturer. You can also take a photograph of your key on your smart phone and send it to them and they will overnight you a key and they can also do car fobs, so many of us who have lost our car fobs know that the dealers charge $300 to $400 to replace a car fob, they can replace your car fob for under $100. The big story to me in KeyMe is they will grow from 300 kiosks to about 1000 at the end of this year and may 3,000 in the end of next year.

What is really interesting to me is the key that you have copied is stored in the cloud in a very secure fashion and if you were to lose your key you could go to a KeyMe kiosk and with your fingerprint recognition get a copy of your key. This will be disruptive in my mind to the locksmith industries. Instead of having to call a locksmith to come to your house or your office for $100 to $200 you will be able to walk up to the KeyMe and produce your key for $6.

EDWIN WARFIELD: When do you expect to raise QuestMark V? How large a fund would that be?

BEN SCHAPIRO: We think about Fund Five but we have got to do a good job investing in Fund Four and, unusually in the business, we do not have overlapping fees. When we finish investing a fund our 2% management fee drops significantly. When we finished investing Fund Three, it declined by 75% which, of course, the investors like. So we have got to do a good job on Fund Four and if we do a good job I would guess we will start to launch Fund Five probably late in 2017 or early 2018. I think we will target $200 million fund.

For the last few funds, about 90% of our fund are institutional investors and 10% are individuals or families. They are generally in the United States but we do have investors in Hong Kong, in London and in Zurich and the interesting thing is just about all the institutional money or endowment funds are foundations or church endowment funds or otherwise and we like that. If we can do a good job for these people and make them money they do good things with that money. We really do not have any pension funds, we are not opposed to that, but it is generally foundation money and it is quality money as well.

If you look at the Baltimore environment, we are fortunate we have ABS Capital, which Don Hebb started. He came out of Alex.Brown. Don was my partner, we are good friends today, we like them. We have not co-invested as much as we would like to, we just have not found anything to co-invest in together but we do talk deals with them.

In the case of JMI again came out of Alex.Brown, Charlie Noell, Harry Gruner, friendly with both of those people, we did co-invest in a Fund One company, which we just exited, Harry and I were on the board of that company. We are looking at a company together today that they brought to our attention and sure we would love to co-invest with them.

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Edwin Warfield, CEO of citybizlist, conducts the CEO Interviews.

If you're interested in reaching CEOs, please contact edwin.warfield@citybuzz.co

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