Name: A New Women-Led Venture Capital Group Is Changing How The Money Is Used
Uploaded: 2019-12-11
Duration: 14 min 25 s
Description: Record dollars are flowing into venture capital. But how is the money being spent? And on which entrepreneurs?

Okay quick show of hands who here has invested in tech companies or a company not real estate, restaurants, whatever, show hands. Who here would like to invest to be an investor? Not that many. [ LAUGH ] Who here is already affiliated with operator collective. [ LAUGH ] All right, well, let's. Have you guys tell a little bit about what the new funding is? And what makes it new and different? So Malin, do you want to kick things off maybe? Sure, so maybe it helps to start as to why we put this together in the first place. Which is that, as you may be aware, the venture world tends to be very insular and exclusive. It's very hard to break into. and I thought, well, gosh, there's got to be a way to change that. And so having been an outsider for much of my life, when you're an outsider, you spend a lot of time observing. And so there was a number of things that I observed, which is the venture world revolves around VCs and founders with good reason because there would be no companies without them, but operators operating executives, the people who grow, build and scale companies Really not even on the radar. They don't know them. And when you look at VCs and founders VCs are over 90 % of them are male, and 85 % of founders are male as well. And when you look at the enterprise, which is the area that Layla and I focus on business to business, it's even higher. And so when you look at that There's a couple of other things, which is that they're largely male. They're largely VCs and founders, they don't know the operators, and you tend to know people like you. And then the second part of it is that most business to business startups want to eventually sell to the enterprise because those are the big companies and most VCs and founders I've actually never worked in the enterprise. And so when we looked at this problem, this is why the forces have kept a number of operators and a lot of diverse operators, which we'll talk about in a second, out of the picture. As I thought, gosh, if we could find a way to bring into Venture, the very people that Venture needs to be successful in a way that's natural, And when you sprinkle in there, by the way, if they can be underrepresented and represent other genders as well, then that's how we can disrupt the venture and actually make it more naturally inclusive in a way that actually reflects what our society looks like. So it's it's interesting because the sum of the numbers you now have amassed more than 100 LPs limited partners who have put money into this fund that your Launching officially today, and- [ APPLAUSE ] Hey, thanks. [ LAUGH ] And these are incredibly accomplished, mostly women, 90 % female. And I think 40 % of them people of color. And they're from the tech companies that you would all recognize and have heard of. But a very large percentage of them about three fourths have not invested in the past. And I'm not talking of course about becoming VCs but angel investing you know as a as a limited partner, whatever. Talk about why that is what's been your experience you this is your network, right? So I came at it from a slightly different angle. I was An executive vice president sales force just left there recently. And sometime back, it became really clear to me that there was, I was one of the women that went to Marc Benioff and said, you're not paying the women the same as the men. So equal pay has always been on the front of my mind. And something that became obvious to me was as we were buying companies, and the Founders would stay for a while and then they'd leave. Often they'd leave and become venture capitalist. And they'll call back the male executives and say, give me some money for my fund, invest in this, invest in that. And so a new income stream developed. For a lot of the male executives, that the women weren't being necessarily cut into. So Mellon came up with this and we started talking about this, it became a really natural extension to start to get more women, more under- represented minorities into venture, because venture is where the kings and the queens are made. Right the venture capitalists are the people who decide what companies are going to ultimately be super successful. So if we want different companies, then we need different venture capitalists sometimes [ APPLAUSE ] So you brought up Equal Pay and one of the interesting things about operator collective is that you have kind of a sliding scale of who can be involved and who can contribute into the into the fund. Can you talk about the decision to do that and sort of how this how the Equal Pay background kind of fed into how you approach this? So let me explain first, so because of venture funds, the way it works is actually not apparent to most people, if you're not in venture So, you have limited partners who are investors in the fund and then the fund decides which companies to invest in. And so for the typical venture funds, you often have institutions or large family offices who are investors in the fund. And then, but what we did is we have a large number of operating executives of which 90 % are women. 40 % are people of color. Who are investors in the fund. As so we knew when we were raising money to put together this fun, we wanted to make this accessible to a wide group of people for whom venture was not accessible before. And so, we put together a sliding scale at the lower end depending on Number of factors which Layla can explain in a second, it's actually $ 10, 000, which is almost unheard of in the venture world. Of course, at the high end, we've got, million plus contributors as well. But we intentionally wanted to have a sliding scale because if you don't do that, you end up with the same people. Maybe we're going to disrupt. Right the the existing homogenous group with a little other homogenous group of white and Asian people, right. And so we wanted to be able to say, okay, can we bring people from different backgrounds and this is what they're able to contribute. And see this guy. I mean, clearly equal pay is a big part of my life It will forever be but we had someone in particular that I really wanted to fund Malin really wanted fun. She just couldn't enter she had not been given the opportunities throughout her career. And because of that, we came up with the scale which has given us a lot of flexibility and allowed us to really diversify the fund which was the main objective Okay, the size of the fund, at least as it stands, I realize it's still open. But is that 45 million that is not a drop in the bucket for most people in the world, but in Silicon Valley it is with all these mega funds going on and money elsewhere as well of course, talk about how you plan to compete for deals in that climate Great [ LAUGH ] so much trouble competing for deals right? And I don't mean to sound sort of crass and I'm Alan can give you the more appropriate answers [ LAUGH ] but. We're different. They complement each other. We're very good complements. [ CROSSTALK ] She gets to be funny and charasmatic. And she's very detail oriented. [ INAUDIBLE ] say things all the time. It works really well, we're a good pair. But when we started thinking through this, we definitely were thinking about how we The fund is actually much different because we have this group of 100 plus operators, they are engaged in the fund. Now they all have jobs and they're doing different stuff. But they do diligence with us. They join companies on boards they advise. So what we came up with and Malin really came up with this initially was this idea that we would leverage the people that are operating the most successful companies in the world to build the next generation. And so we're operators- This is the malon version now. Yeah. [ LAUGH ] And it's looking like more pro, yeah. [ LAUGH ] So we're operators, and one of the things we do as operators, we know how to build products, we know how to build businesses, we know how to build immediate product market fit. And so we actually did that exactly here too. Which is, we looked at what the gap is in the Venture ecosystem, which is Operators, women and people of color. And so we thought, look, if we could bring together the best operators around, that actually the founders of VCs want to bring them into venture. There's just not a natural way to bring them in because forced diversity doesn't work. You have to figure out a way to bring these networks of people in that typically don't intersect and make it natural to work. So we knew that if we could do that, that we would have immediate product- market fit and that founders would want us to fund their companies. And VCs would want us to co- invest with them because you don't do it alone. Even a VC does not take an entire round by themselves. And so we did that intentionally. And we did that the way that we would build any product. In fact, the very DNA of this venture fund is not the way you would approach a typical venture fund. But literally the way you would build a company, what's the gap? What's the product market fit? How do you make it easy or attractive for founders to take in your case take your money, how do you make it easy for current Active operators now to be able to participate, and that's what we did. Okay, questions from the audience. Raise your hand and we'll bring you a microphone. Anybody who has a question or a comment? We have one over there, if you could introduce yourself, please. Hi, I'm Deirdre from TIA Can you tell us a little bit I mean, we have a sense of who your investor base is. Where can we sign up? [ LAUGH ] You can go to our website [ UNKNOWN ] tell us more about your ideal investor. So you saw how many people in this room did not raise their hand as having invested or even thinking about investing. And I don't think that necessarily means that they wouldn't be interested. So I'm curious as to how you are trying to reach that group of operators. So we'll answer that question in a second. But it is very typical. Because as busy operators and a lot of us in the fund and otherwise and maybe in this room, have small kids at home. And so, as women, we are so conditioned to be perfect at everything. And so perfect at your job, you give 150 % to your day job. You're condition to be perfect at home with your family or your friends. And so, it's not even on the radar. To even say Can I even have the capacity to start investing, especially when your circles don't intersect with the VCs and founders who don't look like you and don't run around in the same networks as you do? And so it's very typical. But once you start thinking about it, you're like, Well, why am I not doing this because you have so many skills that are valuable. You have pattern recognition as to what's going to be the next great company and then we're missing out on that. And so one example is one individual who's at Fortune MPW who I met and had the first conversation. When she first started, she's grown revenue from zero to 500 million in the enterprise. Very rare. Took her company public [ UNKNOWN ] Until we started talking about operator collective and this idea at Fortune and PW, actually, thanks for all the plug. [ LAUGH ] It was literally at the chef dinner that we had last night, but a couple years ago, and when they asked you she had never invested, she was sort of interested. But now that she's invested, she's made five other investments on her own too, and she's phenomenal. And so that's sort of the tip but the way to get involved is. Fund run is largely closed. But there will be a fun to in the future. And we hope that you become part of the community. So even if you haven't invested, we hope that every single one of you logs onto the website fills in the information so we have access to you. And so when we have events because it's about education, it's very important to us. That we educate these people who it's not even on the radar either way, and start that way. And please come to our events and be a part of this. I mean, Mia had also mentioned this, but over 70 % of the people in our fund have never invested before, and when we asked them why, they said, because no one ever asked. So we are asking you To think about investing and you can join our community and when we raise another fund, perhaps that will be it but at the very least we will help educate you on what that means cuz there's a lot of money to be made out there that we should all be getting a cut of. And that's a big part of our mission. So there's one point I also want to make because before I started venture investing, I was like you I hadn't really thought about it. And sometimes when I talk about being an outsider, sometimes when you're an outsider, and you're looking in adventure seems so like glitzy, right? It's the Midas list in this list and this list, it seems so hard to access. In fact, I helped take the company public and grew it from zero to 100 million in less than three years from founding. We eventually grew up to 300 million in revenue, all in the enterprise. But when I started to dip my toe into venture, I was actually a little surprised that I actually had skills that people thought were valuable because in some ways, it's so innate to what you do that you're like, Well, how do they not know this but then when you dip your toe in this case into enterprise investing, I'm like, Never worked in a big company. never actually built Anything and so so as I found that I was like, Okay, okay, I know a lot of people like me because you tend to know people like you. And so I said, What if we could bring in all these amazing operators, all this amazing talent and Because you tend to know people like you, they're mostly women, people of color. By the way, just to go back to some of the numbers, over 70 % have not invested of the limited partners in the fund. But nearly 50 % of these, mostly women have worked for companies that Helped start companies that have been acquired 41 % of [ UNKNOWN ] have them have worked at startups that have gone public and 44 % have scaled their respective companies to 1 billion. So it's a good group deal ownership. [ UNKNOWN ] I mean, they've managed over 150, 000 people, they've managed over $ 60 billion in revenue like it's a it's the people running the valley. You just don't know. Day to day, Yeap. Okay, so we do need to wrap up in just a few seconds here but very, very quickly. You've made five investments. What are you most excited about? I know you're focusing mostly enterprise but very, very quick. Let her first. So I am super excited about being able to bring together this great talent that wants to be a part of it, but maybe it wasn't accessible. I didn't know about it. But on the founder and VC side, they are so excited about this too, right? It was not like anyone was trying to keep everyone separate. And one other point there is that is the first time venture fund. It is very unusual to get what is called institutional money from foundations and endowments. We have universities and foundations who have invested in funding one. This the climate is changing is to a lot of work that everyone has done what what fortunate is done that has allowed us to be able to get to this point to say, okay, we're ready and we're going to do this and the people have embraced it. Okay, we do need to wrap up very quickly. Show of hands, who knows Who now wants to invest? Yay! [ APPLAUSE ] [ LAUGH ] You deserve- Thank you so much. Thank you very much. See you guys over there. [ APPLAUSE ] [ BLANK_AUDIO ]

A New Women-Led Venture Capital Group Is Changing How The Money Is Used

Finance

Record dollars are flowing into venture capital. But how is the money being spent? And on which entrepreneurs?