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00:01Great. Thank you guys for joining us today. I wanted to first take the opportunity to say welcome to a panel that hopefully the discussion will take us to a place understanding a bit more about venture capital.
00:15We have the pleasure and privilege to have three women of color to participate in this panel. That's a very unique experience. As you'll learn, the industry is very candidly unkind to both women and people of color to manage capital, but I think we have three that will be very helpful in helping us understand more about the industry.
00:39So, I want to start first with a brief introduction of the panelists, as well as, more importantly, the things they do from a fund perspective. So, I'll start with you, Monique. Tell us a little bit about what you do at RAINN.
00:52Can you hear me? Yes. Good morning. I'm Monique Eidlid. I am the founder and general managing partner of RAINN Ventures. We're a seed stage investment fund specializing in consumer tech and enterprise SaaS with a lens on diversity
01:08diversity and people of women also.
01:13Dami?
01:14Good morning, everyone. Can you guys hear me? Okay. I'm Dami Osunsonia. I'm the co-head of the SoftBank Opportunity Fund, a fund focused on black and Latino founders in the U.S.
01:25We do early stage and growth stage, and we focus on tech-enabled companies that we think will change the future. Good to meet you.
01:32Hi. I'm Lenore Champagne-Byrne. I'm the founding managing partner of Bright Ventures. We make pre-seed and seed stage investments in companies in fintech, digital health, and the future of work through the lens of inclusion.
01:46Thank you very much. And as I said before, this is a unique opportunity. We don't often have the opportunity to have women and women of color venture capitalists. So, Monique, I want to start with you. Why did you become a venture capitalist? You obviously have done an awful lot. You could do an awful lot of things. But why did you settle here?
02:06To change the world. Being an entrepreneur, being a successful entrepreneur, I saw myself in this perspective of what can we do to change our future as black people, not just locally, but globally.
02:27And our nation's GDP is almost 70% of venture-backed companies, but less than 1% goes to people of color for funding. So, therefore, we can only change and close that racial wealth gap through funding to create more billion-dollar companies for us, so we can have more rich loos in the world.
02:53Thank you. Domi, one of the things that seems to happen, and I think you guys have probably experienced across the board, I know we certainly do at New Voices, when you have the opportunity to raise capital, the question often is whether or not you're doing it for almost charitable purposes, or are you looking for opportunities to generate superior market returns?
03:16Is there alpha in what you do? From your description, I know you focus on diverse founders as well. How do you address that question of whether or not there's a real market opportunity here, and is there a special sauce in generating returns?
03:33It's an excellent question because oftentimes when people hear diversity, they think impact or they think nonprofit. And the way we've taken it is thinking of this as an undervalued asset class.
03:47So just like a few years ago, people were ignoring AI and you should have gotten early because it's a new technology and it's going to change the world. We believe that overlooked founders are undervalued asset class, specifically black and Latino founders who often generate more returns for their companies have higher impact and are able to create more successful companies.
04:08So our mantra is we want to show that there's no trade-off between diversity and excellence. So the goal is generating outsized returns by betting on black and Latino founders.
04:20As a culture, we need to understand that we are for profit, not just charity. And the sooner we as entrepreneurs understand that we're for profit, the sooner it translates in the way that we do business as well.
04:35Thank you both.
04:37Lenore, let me ask you this question. One of the things that has certainly occurred over the last 18 months, we've seen a very different economic climate.
04:48Things are different both for founders and funders in terms of how they look at opportunities.
04:54How has that changed for you? How do you look at the impact of that on both diverse founders and funders?
05:03And in thinking about solutions, how do you think about changing the impact disproportionately candidly to people of color, both from a funding perspective and founders?
05:15Yeah, this is a multilayered challenge, right? We are already in a super minority in terms of who's managing capital.
05:22So when diverse fund managers have a harder time raising capital, that is going to create additional fractures in the market.
05:29And that's already laid over the fact that we don't live in a world where products and services and systems are really designed for us to thrive.
05:38As Monique just alluded to, venture capital has the potential to change that, but not if we can't get funded at the fund manager level and at the entrepreneur level.
05:48So in this moment, it is critically important that we're having these conversations, that we're coming together, that we're creating networks of both capital and access that will pave the way for more diverse innovators.
05:58You know, I think that we also have to help entrepreneurs understand the art of collaboration.
06:05We need billion-dollar companies. That requires $100 million in revenue. Like, we have to start understanding that concept.
06:14It's not okay to just think of, I want to have a million dollars in sales.
06:19No, we need billion-dollar companies, and we are capable of it because we spend trillions of dollars.
06:25That's a great point, and I'm going to pick up on that.
06:28And Dami, on that point, how do we think about scalability of diverse businesses?
06:34Because Monique mentioned it's important for us to not just be able to fund the seed round or the A round,
06:41but to really be able to scale businesses so that we have opportunities to have less than, I'll say, episodic moments,
06:50like a Rich Lou Dennis or a Reg Lewis or anyone else like that.
06:54How do we make that more consistent?
06:56What are the scalability elements that are going to be important here?
07:01We look at it from a few different lenses.
07:03I think the unique thing about our fund is we've now spinned out.
07:07We've now called the Open Opportunity Fund and taking LPs, et cetera.
07:11But SoftBank being that first LP really helped us think about scalability very early.
07:16So what happened is we would have early-stage founders who raised their seed round, and we said,
07:21okay, how do you become a unicorn?
07:23And the response to my shock, again, some of the most amazing Black and Latino founders that you guys know,
07:28no one's ever asked me that.
07:29I said, well, how do you think about IPO-ing?
07:31I know you raised your A, but the goal is to get you public.
07:34And I think as fund managers on this stage, we can do a great job of pushing our founders to think outside the box,
07:40as Monique just talked about.
07:42I also think it's important for there to be more funds that focused on not only early-stage but growth.
07:48So our fund is really unique in which we were a $100 million fund.
07:52Half of it went to seed and Series A companies, but a lot of it also went to Series B+.
07:58So our goal with those founders were for them to, one, mentor the early-stage but also push them
08:04to become actual vision fund portfolio companies, which is more Series C+, and then also go public.
08:11So I think funding more fund managers that focus on growth-stage investments and pushing our founders to scalability is the way to go.
08:18And Lenore, and I'm going to ask all of you this question.
08:22We've been talking about, in part, impact on funding diverse companies and founders.
08:31As I think about, really, in part, the reason we're here is you guys also run businesses.
08:40You are also dealing with the same challenges, candidly, that the portfolio companies that you invest in are dealing with.
08:48You have challenges in raising capital.
08:50You have to manage your infrastructure.
08:52You have to deal with a lot of externality, some of which in your control most not.
08:58How has the current climate changed the way that you are approaching your business?
09:04So I start with you, Lenore.
09:07To be candid, in my business, I think I've always had a really deep focus on collaboration
09:12and having people around me who I deeply trust.
09:15Also knowing what I'm really good at and making sure that we have coverage on my blind spots.
09:20And so that hasn't, I would say, changed at all, given the market environment.
09:25However, it has become more important.
09:27So in a moment where there were bank failures, I was on the phone with trusted other solo GPs
09:32with similar fund sizes comparing notes and talking about how we would support our collective portfolios.
09:37And that's the kind of collaboration that I think is going to be really critical.
09:41Sharing information, sharing resources for our founders, I think, is the absolute best approach in a moment like this.
09:49Dami?
09:50So one thing that we've done with our founders is focus on profitability.
09:57I think that we all got extremely comfortable and excited for the past 10 years where there were essentially no downturns.
10:04And it was growth at any cost.
10:06Well, now there's a cost.
10:07You will run out of cash.
10:08And there might not be someone on the other side to come get you.
10:11So we've been pushing our founders to focus on profitability.
10:15Also, we've also seen this as an opportunity.
10:18We know, based on 2008 and the other tech bubble of the internet bubble, that this is when the best companies are going to be made.
10:28So we also, on the other side, encouraging people who are thinking about entrepreneurship to truly consider it.
10:33Because when resources are strapped and there's not a lot of cash in the market, you have to think more creatively.
10:39You have to think more prudentially and be more responsible with the cash.
10:43So we've been excited for what's to come in the coming years.
10:49I think adversity is not new to us.
10:52And I think that the way Rain Ventures has always approached venture and investment is from a perspective of get to cash flow as quickly.
11:03Get break even.
11:04Let's get to profitability.
11:05Because at the end of the day, we've always had to operate with that.
11:09And, you know, taking venture money is not for proving your concept.
11:14It's for scaling.
11:15And when you help founders understand that, you help them tighten up early and get to what their business model is and prove that it's actually something that you can have a profit around.
11:26And so, as they both said, it's about the access of all of us supporting each other, which we do that really well.
11:32We collaborate a lot.
11:33Places like this, the Global Black Economic Forum, this is where our conversations matter.
11:38And this is where we see each other.
11:40And this is where we solution.
11:41We talk about these things that create the solutions.
11:44And so I think this is a collaborative effort.
11:46But for any founder, get to profitability so that the cycles are, we go up and down all the time.
11:54It's, you know, you can't predict that.
11:57But what we can predict is that we always have adversity.
12:00And we have to problem solve in advance and be preventative.
12:05Let me ask you all a question.
12:07Another thing I'm sure you're all dealing with, we certainly are at New Voices.
12:12Given the current climate, many companies are experiencing different types of economics, to your point around profitability.
12:21If you weren't kind of on that trajectory for profitability prior to what's going on right now, it's a challenging moment right now.
12:30How do you look at your portfolio in terms of managing the companies that you will continue to support?
12:38And maybe some very difficult decisions to make about companies you cannot support because your business, you have metrics, your capital providers want to see returns.
12:51So how is that process working for you?
12:54And I'm always curious to know how you execute the no's.
13:00How do you tell a company no, and how do you tell a company you already had a relationship with that you can't go for it?
13:07So, you know, when I built my label in the music industry, I had a different perspective.
13:15Fewer artists, all platinum.
13:17So we didn't approach Rain Ventures from a perspective, well, two will win.
13:22We approached it from the exceptional founders, build with the best, and we all need to be successful.
13:29So we don't go into it with one of them is going to lose.
13:32We go into it, we're all going to win.
13:34And I think when you have that perspective, that does create an environment for your founders to think successfully.
13:42And, yes, are there times where we have to say no to follow on capital?
13:46Yes.
13:47But they understand why.
13:49And we still have to do our mandates and our thesis.
13:52So when you allow founders to understand what your thesis is, they have to continue to work under that, even after you invest in them.
13:59And that is the mandate.
14:01And so when you keep that integrity between founder and funder, then it's really a win-win.
14:06You still help them.
14:07We still help them, right, ladies?
14:09Yeah, I would totally agree with that.
14:11I think it's really not about having the conversation in the moment that you're saying no.
14:16It's about having all the conversations prior to that.
14:19And so we have never arrived at a no that wasn't transparent and clear.
14:23It's also about having the groundedness as a fund manager to communicate your own business model and your own priorities to your portfolio.
14:31And that's an absolute priority for us, especially because we highly disproportionately back founders who have been overlooked to be over-communicative about expectations, to be supportive in education, and to make sure that they have the resources they need to navigate whether we follow on with capital or not.
14:49So for new companies, it is an interesting dynamic because we have a form where everyone can fill out.
14:59We don't believe you need to have a special relationship or have a special intro.
15:03We know sometimes VC seems very mysterious and it's like, how do I get to that fund manager?
15:10So we get a lot of incoming.
15:12And I think a lot of founders think it's still 2021 that they're going to have the, I call it two guys or two girls and a dog and a deck.
15:20And they're like, this is a $25 million valuation.
15:23So we have to sometimes get people to reality on why that's a no.
15:29But to these ladies' points, we're being very transparent on the fact that we also are looking to generate outside returns and that we're looking for outstanding founders.
15:38On the portfolio side, it is really unique because while we can't invest in every follow on, we're transparent that every follow on investment is viewed to us as if it's a new investment.
15:49So you're constantly competing.
15:51So just because we invested in you a year ago does not mean that we'll invest in the next follow on because it depends on how you did versus your metrics versus what you said you would.
16:00So being transparent with founders in that first onboarding call is extremely important.
16:06And then besides that, we have a value creation team, which I lead.
16:10And while we may not be able to give you capital, we'll give you customer intros.
16:14We'll connect you with our amazing Sky Blue Media team who's like rocked the house for our founders and getting connections and being able to be amplified.
16:25And then we'll help you even bring in angels, right?
16:28So sometimes you may not be ready for a next round.
16:32You may need a bridge round.
16:33So we have Miami Angels.
16:35We have Black Angels Miami, other angel groups that I connect them to who have a higher risk threshold that might not, that will be likely to invest in these founders.
16:45And I think the last thing I would add is that we have to get comfortable and teach people the word no is not harmful to you.
16:54What it does is the word no comes with the reason why.
16:57And for me personally, what we teach our founders and the philosophy I live on with is it's on.
17:03Like it's a mindset.
17:04Everything is a perspective and a mindset.
17:06You have to flip that no.
17:07It's on.
17:08Challenge yourself.
17:09That's what the no means.
17:10Do better.
17:11Just to chime in to Monique's point, no could mean not right now.
17:24I think oftentimes founders get a no email and then they write a long.
17:29Why did you reject?
17:31Do not do that ever, ever, ever.
17:33Because people remember those emails.
17:34Because no could just mean not right now.
17:36You don't know what the fund is doing in their capital raising process as well.
17:39So to Monique's point, take it in in stride.
17:42Yeah.
17:43And you just said something there because I asked a question again from the founder perspective.
17:52Are the folks you raise money from equally transparent?
17:56Do you find that conversation as you just described it to me?
18:02When you've met one limited partner, you've met one limited partner.
18:06So I don't think there's a generalization to make there.
18:09I've certainly had beautiful, transparent, productive LP relationships.
18:13I've also had other ones.
18:15So I don't know that I could generalize.
18:17Oh, you answered that one so well.
18:19That's a great one.
18:20That's a great one.
18:21Go ahead, Dami.
18:23We're in the process of just launching our spin out.
18:28So we are in that process of finally talking to LPs and getting the feedback.
18:32For the most part, we're getting the transparent, you know, we're excited about this.
18:38We haven't had any no's yet, but we're still early in the process.
18:41So I'll come and get some advice when we come across that.
18:46You know, we take the same advice we give to our founders.
18:49When you take money from an LP, that is your permanent partner.
18:54They are your partner in business.
18:56And so for me, the same way that we, that founders, we do due diligence on them.
19:02We also do due diligence on our LPs.
19:05What type of investor are they?
19:06Are they involved?
19:07Are they more than just a check?
19:08Will they allow us and trust us to make the decisions that we're making because we understand
19:13what we're doing based on our thesis?
19:15And so the same way we get vetted, we vet as well.
19:19And we go into partnership with people that we know we can wake up every day, the good,
19:24the bad.
19:25When the bank collapse happened, all of our LPs immediately contacted us and said,
19:30what do you need help with?
19:32That's the type of partnerships that you want.
19:34And I think that that should always be across the board from founder to funder to LP in partnership,
19:40period.
19:42Thank you very much.
19:43I think we're running on time, but I just wanted to, before we close out, as we think
19:49about encouraging or providing insight to those who may have an interest in becoming an investor
19:56or venture capitalist, from your perspectives, you've had careers, you've done an awful lot across the board.
20:03What are some of the attributes, at least as you found the way that you do the business,
20:09what are some of the attributes you think would be important for people to keep in mind if they want to pursue an opportunity in venture capital?
20:17Sure.
20:18There are so many, but the ones that come to mind in this moment are creativity.
20:27You have to have a really strong clarity of purpose.
20:29You're going to hear so many no's.
20:31That's part of it.
20:32And so having the conviction in yourself and the clarity of your own vision to continue on in the face of all those are some of the ones that I can think of right now.
20:40Two messages.
20:43One, for investors or people considering venture capital, I have a lot of friends who are operators kind of like me.
20:52And basically an operator is anyone that's not a VC.
20:54I don't know why we say that term, but an operator.
20:57And when they came to venture, they didn't realize how much of it is it is a math game, right?
21:02Like it is finance.
21:03So I think just kind of remembering that while you can invest in friends or, you know, family members,
21:08the goal is to find the most outstanding companies that you think will really make your fund.
21:13So that's one last.
21:15And then for the founders, I think a message that I think a lot of black and Latino founders don't think about a lot is you are the light.
21:24You're the one building the business.
21:26We are excited to meet you.
21:27We are lucky to be on your cap table.
21:30So come in with that energy because that changes the dynamic between investor and portfolio company, et cetera.
21:37But you guys have all the magic, not us.
21:42And the thing I would add is that business models should not be trendy or, you know, trigger words.
21:50I started in venture because I wanted to solve a problem.
21:54And I would say that for 10 and a half years, my business partner and I used our own resources, money network to prove our thesis before we ever took a dollar from an LP.
22:07So we did not use other people's money to make our mistakes because we made a lot of them.
22:13And so know why you're starting a fund.
22:16Know what your thesis is.
22:18Prove it before you go to ask anyone for anything.
22:22And be okay with that, approving your business model first with your own resources, whatever that may be.
22:28Everything's not about cash.
22:31Thank you guys very much.
22:33Really appreciate the conversation today.
22:35Please help me thank Monique, Dami, and Lenore for a great conversation panel today.
22:42Thank you very much, guys.
22:45For all that you do.
22:47Thank you very much.
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