Ideas on being the victor… and raising venture capital no matter who you are.
A journalist reached out to me to talk about the challenges facing POC (people of color) and women in raising capital for their startups. It was a nice, lovely, and straightforward ask; the type of which I am usually thrilled to get… except sadly, I am a semi-principled sadist that has to overcomplicate things.
Nice interview Request:
This email triggered me. Let me caveat upfront by saying – I’m a VC; I love a good interview that gets me more deal flow and more LPs. Also, I’m a former journalist so I (capital L) Love chatting with journalists. And I am a POC and a woman. Yet, I just couldn’t reply with a one-word answer of Yes on this. Why? Because an interview on why POC and women face innumerable challenges in fundraising isn’t helpful for us, the POC and women that is.
My response when instead I should just shut-up and say THANKS:
Here’s my rub.
Me talking about the challenges and problems in raising funds when you have a different chromosome or more melanin in your skin WITHOUT talking about the ways to overcome those or the opportunities inherent is sort of like me writing an article of all the things that annoy me. It’s like writing an article about the problems in the world with no solutions.
More than that, We are collectively hurtling towards a “who is the biggest victim world,” in which to the victim goes the spoils.
It’s wholly unhelpful in my own personal mission of, challenging the status quo to help as many as possible achieve what most think is impossible, in business, investing and wealth building.
I want to create more victors not more victims.
I’m here to empower people, not disempower them. We should all want people to win because they are growing, learning and contributing more; not because they have been labeled lesser and thus need the good ole patriarchal hand up. Thankfully this journalist agreed with me, she’s a “uniter”, not a divider.
Don’t get me wrong, I’d like empowerment to start with some people who look like me; ladies, minorities in race and thought, and humans who give a damn.
The problem with the line of questioning proposed by the world at large is that by following this logic they are declaring people like me a victim. I don’t give them that right to apply that label to me.
Yes, my family came from immigrants.
Yes, they were pushed to white only schools in Arizona where Latinos were segregated.
Yes, we didn’t come from money.
Yes, I’ve had my fair share of issues being a woman in finance.
Yes, being a loud speaking, red lip wearing Latina in a world of blue and grey suits can have downsides.
BUT I’ve also had massive opportunities because I look a little different.
Let me posit something to you, you are told your otherness means you are less than, that you’ll have more challenges, that you are separated, different. Do you feel like you can accomplish more?
I’ll just speak for me and say I sure don’t.
If you are in a position fortunate enough to be able to pitch Venture Capitalists your business, here’s the truth; We, by and large don’t care about your race, creed, color, or whether you wear stilettos or loafers. We care about your idea, if we believe in it and your ability to execute it. Is there bias? ABSOLUTELY (only 2.8% of VC money goes to women, 1% to black founders). But can you also use that as opportunity? YES!
So, I say let’s flip the script. What if it is actually INCREDIBLY powerful to be a POC, a woman, or anyone who doesn’t look like the insiders of any industry. Why?
First of all, have you ever been to a VC/IB/PE/Investing office? Here’s a real life visual of what you’ll find. Can you tell the difference between these people?
But wait Codie that’s a herd of Zebra.
Ok my bad, here’s more like it:
Notice the similarity? The formula goes like this: white dude, Patagonia or other puffy vest, middle aged or higher and because they’re billionaires they’re not crazy they’re “eccentric.”
I think they sell this starter kit after you get your acceptance letter to Sequoia.
Jokes aside, in investing and startup land you can choose to see the fact that there is most certainly a predominance of a certain profile of people in the business as a challenge or as an opportunity.
Famous marketer Seth Godin wrote an entire best-selling book on the idea that standing out was the key. That book got him on every bestseller list, 43,000 reviews on Amazon and a million+ copies sold.
STAND OUT BY NOT FITTING IN.
So why can standing out as a business be a huge win, but standing out as a human not be the same?
I’d challenge you to flip the script and think about this question:
How can you take whatever unique trait you have and make it your biggest strength? How can you look at the challenges that are real and say I think there is an opportunity here?
How I’d do it fundraising:
The saying is, Niche down to go wide. If you are a POC/woman what affinity groups or specialty VC’s can you go raise from? Find those who already get what you are selling. Think about this, for any difference you have, whether you are an athlete, a veteran, a POC, a woman, that is your strength. Find others who support you and believe in the mission, they don't have to look like you. If a fund doesn’t invest in you a little trick is to go to all their partners connections on LinkedIn and try to pick off their LP’s, or individual partners as investors in your startup. Here are some resources for you:
Show a world full of black and white zebras what a purple zebra wants.
One of the biggest reasons IMHO there isn’t enough diversity in VC funding is NOT that VC’s are racist. It is that we all have a bias towards people that are like us, and so we need to diversify our funding source. Secondly, it’s hard for anyone to imagine a use case for a product they (or their close confidants or family members) would never use. Which is why people missed out on Stitch Fix for instance. So if there are inherently a lot of white men investing in VC and someone pitches them a product for Black hair care products – they might not realize it’s a $2.5B industry. They may pass. Just like they did on Bevel (razor for Black men which sold to P&G). But guess what, THAT is your opportunity as someone different. See the purple zebra where everyone else thinks Pantene Pro-V and Gillette are totally sufficient.
Latino’s are 18.3% of the US Population, they account for 60MM Americans, and they have a purchasing power of about $1.7T.
Blacks are 13% of the population and account for $1.3T and 50MM Americans.
Minorities overall account for $3.9T in buying power.
I’d be pitching the economics of tapping into that market to show investors why in my culture X is underserved and I’m the human to do the job.
Find your Advocate.
Fundraising is a lonely, frustrating and tiring grind. You need someone to help you through the process; an advocate for you in other investor meetings and someone who not only knows the game but believes in your ability to play it. Before you fundraise at all get that core member down, ideally, it’ll be someone who has invested in you already. For outsiders it's much easier to build a relationship with one person deeply, who can introduce you to many broadly.
Having one person who really believes in you is worth 10 quasi-engaged investors.
Even better if they have a different background than you. Always remember people at their core want one of a few things relevance, mastery, power, money etc. Play to people's desire to feel relevant, important and on the right side of history.
If you can’t find this person, you are probably too early to be VC fundraising. Get your people to believe in you first and then fundraise.
Don’t let anyone label you a victim, without your permission. I’m convinced we are all more powerful than we imagine. We just have to step into the fact that sometimes fitting in, ain’t so great. That despite the pain that being different can bring, there’s a beautiful benefit to it.
A quote I turn to every now and again is this one:
“Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that most frightens us. You playing small does not serve the world.” – Marianne Williamson
I think she’s right – about all of us.
Happy questioning and happy raising,
DISCLAIMER: This is the be an adult section, not advice, just what I did. Said otherwise: This article is presented for informational purposes only, is an opinion, and is not intended to recommend any investment, and is not an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Entourage Effect Capital, LLC, Codie Ventures, LLC or its affiliates. All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. Day trading and investing does involve risk, so caution must always be utilized. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk. You are solely responsible for making your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. Reading and using this newsletter or using our content on the web/server, you are indicating your consent and agreement to our disclaimer.