please welcome back Ali Jackson jolly and panelists Bui ADBA Umano investment principal anthemus group Michael pran managing director and partner scrum Ventures and Derek Smith founder and CEO plug-in Ventures. Yeah, so the name of this panel is show me the money, and that's exactly what we're going to be asking these venture capitalists to do with us. Um, but Boi, I want to start with you. As a woman in this field, what do you see? And um, second part of that is what can what do you see that you think the rest of the VC industry isn't seeing in terms of how they can open up access for women and people of color? Yeah, so you kind of hit the nail on the head part open up access, and the reason why access needs to be opened up is that it's very closed right now, right? Um, so Venture is an industry that's very Network driven. Most people do deals because they know the person or they felt comfortable backing that founder. They believe in you, especially at the

earlier stages, so I invest at the pre-seed and the seed stage, so some of the first institutional money to come into the business. Sometimes there's not even that much business, right? It's just about the person, so you really are making a bet on the founder, and that's why it's super easy for the bias to come in because you're making a decision based on a person, um, and so it's easy to say, Well, I don't know if they're the right fit. I don't know if they have the exact right background. I don't know if they really... It just doesn't click for me, me and that founder. And so that's so... Of course, what typically ends up happening is that people just keep investing in people who look like them, people who feel familiar to them, people who have similar backgrounds to them, um, and so that... I think that's the underlying nature of the Venture Capital industry, um, and that's one of the things that I would like to see change, um, and how about, um, you know, there's been a lot

said that when you're investing as a venture capitalist, you're investing in the person as much as the idea. And so, um, when you see women pitching, is there anything that, um, knowing from research that we've looked at, that women tend to, um, be a little bit more, um, behind the scenes, as Ayanna Parsons was saying? Is there something that could be done differently in terms of um, black female founders, or is that just antiquated to expect the founders to change, and it's the industry that should change? So, I, it's the industry that needs to change, um, but I do think that founders can learn to beat the industry at their own game, right? So, if you know what they're looking for, it's easier for you to walk into that room and make sure you're ticking the boxes that are going to be in their head, 'cause one of the things that we talk about, all the very first question of venture cap is going to try and understand is, is this business big enough to return my fund? That's the first question they're going

to ask themselves, so if the VC firm has a $100 million fund, like for example, and they invest in your seed round, by the time your company exits, they're probably going to own like two, two and a half percent of your company. So that means in order for your company to return their fund, which is what they're looking for, right, because most of their businesses don't succeed, so they need a handful of companies to return the fund. In order for your company to return the fund, it has to have a $4 billion exit, right. If you know that when you walk into the room, if you know that math, and you know, okay, they're looking for a $4 billion exit every time they invest, when you present the revenue opportunity, you have to make sure that you're showing them an opportunity that could eventually lead your company to be valued at $4 billion, right. So that's how you beat them at their own game. If you don't present them with an opportunity of that magnitude, you won't even get a

second meeting. Yeah, so knowing that when you walk in the room, I think helps to build your confidence. Now, it doesn't mean that you can erase the fact that they have bias, right? But you can at least start to check some of the boxes that they could use to keep you out of coming into the room again. Yeah, I like it. Um, Mike, let's just address the elephant in the room. Um, so in sitting in your position as a white man in Venture Capital. Um, I want to talk to you about underfunded Founders. Um, what is the root of the problem? And I have a second one, but I'm going to let you start with just telling us from your position what you may see that we don't see. What's the root of the problem? Yeah, it's a great question. And thank you again for having me here. I think there's a direct correlation between underfunded and under-networked. Uh, and I mean that in kind of the context of Jabari.

hosted a panel up here earlier today where we talked about intellectual property in a world of AI and a world of commoditization. In some cases, what is the one thing that you can actually own? It's your network, right? That is the thing, for me personally, that I think about when I think about IP. People run circles around me, whether they be on my team, the founders I meet, probably everybody in this room for that matter, but the one way I feel I can kind of hold my own is the network. And so, that's something that's really powerful, I think, and it's really under-tapped, I think, in the fundraising process. It's that when I get on a call with a founder, even if it's a preliminary or kind of an initial stage conversation, it's a two-way street. I want them to pick my brain, my network, the experiences, the people who I've been fortunate enough to work with throughout my career. And then, even if we're not able to write a check or if it doesn't fit the fund thesis or something.

of that sort. They need to be able to walk away with better connections, potentially connections that are going to help them raise capital, but maybe also connections that are going to help them commercially be successful. And so, again, I think as a venture capitalist, somebody who wants to see more inclusivity in the space, it's not just about writing a check. We oftentimes get typecasted as just the bank, so to speak, but as a former founder myself, as an operator, as somebody who's worked in places like Coca-Cola, here the National Basketball Association, and other ways, there's so many different ways I feel I can add value to this ecosystem. Yeah, and is there anything else that you think isn't really being talked about that should be talked about in terms of underfunded founders and communities of color? Absolutely. I mean, I think we just need to have more social curiosity and more awareness. We need to go out of our way. I mean, it's very easy to stay in your lane and be hyper-focused on a

certain you know spec or kind of what are the the folks that we're looking to fund. We need to be open to new ideas. We need to invite people into the conversation and into the room that have different perspectives. A good example of this is we just added Kyle Kosma as an advisor within my fund. Kyle brings a network and he brings, I would say, an acumen that nobody around the table has, right? And so when I think about the types of companies we go after, I always ask myself, Who's missing? right? I think that's the question we all have to ask ourselves is Whose perspective is missing here today? and How can I be better as an investor to surround myself with the right people around the table? Yeah, I like it. Derek, I'm going to go to you. So as the founder of Ventures, I was hoping you could describe to us in as few words as possible the mission and thesis of your firm. Thank you for that. Yeah, Plugin Ventures is focused on supporting early-stage

black and brown entrepreneurs bring into the market solutions that impact, you know, consumers and really the world. So, what does that mean? Um, you're specifically looking at um, founders who have a solution that will impact the world. What are you looking for? Yeah, we focus on a few sectors that plugin Ventures, fintech, climate sustainability, uh, digital media, and digital health. These are sectors that we think if we can sort of find founders with big ideas addressing big problems, we can transform not just sort of like markets but also impact communities along the way. Yeah, um, and so um, Muki, I want to go back to you and ask you also the same thing. Could you explain the thesis um, and the mission of your company? Yeah, so Anthemist Group is focused on investing in businesses from pre-seed through growth that touch the world of financial services in some way. So, typically, that means it's a fintech business, an insure tech business, an embedded finance business, and by embedded finance, I just mean that it's some other type of

software or tech platform that can embed financial services down the road and make money off of those financial services. So, anything that touches financial services or any adjacent industries fits within our thesis, and we're multi-stage. And what makes you the most excited? Like, looking... It's been a hard economy, right? Inflation's up, as are rates. But what makes you... Before I ask you what makes you scared, I'm going to ask you what makes you excited looking forward. So, where... I mean, the last 6 months or so, I feel like quality deal flow has picked up. So, we're seeing a lot of enthusiasm from founders. We're seeing a lot of entrepreneurs who, for one reason or another, a lot of them actually came out of layoffs, all the tech layoffs that happened. People are in a position where they're like, You know what? Why not go out on my own and start my own business? So, we're seeing a lot of talent in the early-stage space right now. So, I'm pretty excited about

that and then when it comes to financial services specifically, I'll double-click on one of our thesis areas that I'm pretty excited about. So, moving forward, yes, you have your financial institutions that you're going to go to. So, you'll go to your bank if you want to start a checking account. You'll go to an insurance company if you need an insurance policy. But increasingly, we're going to see Financial Services meeting people where they are. So, instead of you having to step out and actually go to a financial institution or engage with a financial platform, you'll be served up the financial product in your social media platform or in your ride-sharing app or in your, you know, you name it. And so, the idea of financial services kind of meeting people where they are, that's the concept of embedded finance. And I think that as you layer generative AI on top of that and it becomes a little bit smarter and more intuitive, you're going to start seeing people interact with Financial Services in a way that they never had before, and that's going

to make it more personalized and more effective. So, that's probably the space that excites me most. Okay, so now that I got everyone excited, let's talk about what you find, what you think is scary. Again, the raids, you know, it's a turbulent economy. What makes, what do you think is the hard thing for your industry and specifically for Founders in looking for VC right now? Yeah, um, I'd love to hear if my, my agree, but I, I think the capital is still scarce, right? Um, people talk about the fact that there's unprecedented amounts of VC dry powder, so a lot of VCs have cash. Um, and I don't think it's enough just to have the cash, right? Because a lot of them, they're reinvesting that money into their existing portfolio companies that are struggling. They're writing checks at a slower pace because they're anxious, right? Their portfolio took a hit over the last couple of years. Their LPs aren't happy. So, I think the thing that scares me most is that capital is still

scarce people are not quick to write checks, and so if you're going out in the market to fundraise, make sure you give yourself a lot of buffer. We're encouraging our founders to increase their runway, go to market when you have 10-12 months of cash left, not when you have five months of cash left. So that's probably the scariest thing right now, is it's still hard to actually get the capital on the door. Yeah, and Mike, how about your firm focuses on sports tech? What are you looking for? What are you seeking in 2025? Let us know so we can try to get it in front of you. Yeah, you know, we're very fortunate that we're in a pretty high-profile space when you talk about sports and entertainment. It certainly brings a lot of people to the conversation in that regard, but at the end of the day, sports and entertainment is a relatively small industry. And I think when you look at it from a venture

lens. It becomes more challenging if you're only looking for endemic solutions, right? If you're only selling into teams, leagues, and properties, it's probably not venture-backed; it's probably too industry-endemic. As Buie said, we're looking for that 10, 20-plus X type of exit, and to be able to get that, you need to really democratize the technology. And so, a lot of the focus, not just now but looking ahead to 2025 as well, is looking at adjacencies, looking at bigger markets that speak to elite athletes but also speak to everybody on this panel or everybody in this room who's not an elite athlete, right? So, we've invested in a sleep health company, we've invested in a company that is in the volumetric video space, we've invested in a display technology, and you could argue none of those are sports tech companies. I really like the idea of saying we are a kind of more of a tech investor playing in the sports and entertainment space, looking at adjacencies, looking at things that

transcend the vertical than we are hyperfocused in the vertical itself. Yeah, and um, Derek, one more question for you before I go to the speed round and ask everyone the same question, and that is um, you know, like, let's go beyond check writing, right um. What do you say to Founders um, when is the right time to actually look for that check, and when is it time, and I think you spoke a bit to this, but I want to hear your view on it, to take some time and not, not, you know, necessarily look to be Venture funded right at the moment. Yeah, this is a very important sort of um, you know, point that I think we're um, having a lot of conversations with Founders at the present moment, right, you know, in this market. What we're telling companies is that you need to make sure that you've validated a product-market fit in the marketplace and that you can move the business forward with cash flow coming in the door. This is where all founders need to be focused right now in this

current market. If you have a software-based, you know, sort of venture-backed business, the markets have shifted. Five years ago, it would have been the opposite, you know. That would, this would not have mattered as much, but in this current market, you really have to demonstrate that there are customers out there who care about the problem that you're solving and find this product or technology or service relevant to them at scale. Yeah, with the sense of urgency, it's really important. That's another important piece that I called out, that the problem is urgent and that customers are showing that you have the secret sauce to solve their problem. That is the most important pie to really navigate in the current market at the present moment so that you can then dial into Venture Andor investors that really believe in this vision and can see it through how the business is operating and winning customers. Yeah, and so speaking of Secret Sauce, we, we with three minutes left to go, one minute per panelist, sure. What is the secret sauce? What makes you the most

excited in a Founder like when you there's someone who's coming to you and looking for funding and you say you know that's it they have the secret sauce because they've done X Y and Z or they bring you know one two and three oh okay there's a lot of no no pressure there's a lot of things that can make a Founder really compelling but I'm using I have recency bias so I'm thinking of Founders I talked to last week so one you know your space intimately and you have a connection to the space in which you're building so either you have worked in that space before right so you have real Hands-On experiences or you have a personal experience in that space that makes it really important to you so it doesn't just have to be professional but you're connected to the space in a meaningful way you challenge me and bring me bring me a new insight my favorite meetings the meetings where I'm like wow I I had a completely different Viewpoint when I walked in and this

founder helped to shift my perspective or expose me to something I'd never thought about before. So, that's a huge piece of it. Um, the fact that you've done your homework on your customer base. Like, do you know your customers intimately? And I don't just mean from like data. Don't just know the C, the numbers, right? Like the percentage of people who do this or that. But have you spoken to them? Have you met with them? Do you understand their needs in a meaningful way? I would say those are the three big things I look for in a Founder. Wow, well done. Can I just like take that and drop it here? You took the words out of my mouth, Bie. I mean it. The level of thoughtfulness that Founders need to have is really critical. But I think again, it's a two-way street. I work well when I'm being challenged by Founders in a respectful way. And I'll, you know, challenge the founders too. We need to develop chemistry and rapport with the companies.

that we invest in is, as we talked about before, just a good product or a good piece of technology. It's really the jockey too, and it's somebody that you can get behind, and that you can collaborate with, and you can partner with, and there's got to be that chemistry there. You know, what's super kind of ironic is it's not too dissimilar from kind of the dating process in some ways, right? Is that unless there's kind of that complimentary feel in which you're really adding value and that you know you share kind of the same values and there's good align, that's going to make things really challenging in the future. And I think really understanding your space is super critical. What is the value we can bring as an investor that nobody else can? And that goes back to kind of that Network IP and kind of the residual effect there, right? And Derek, same question. Yeah, just double-clicking on what these two have said. I think it

really is about the founder having a clear vision. Vision is not I want to exit this company. Vision is I see this industry and space changing and evolving as a result of this technology that I'm bringing to market. Also, experience. How much experience do you have in the sector? Um, and if you don't have experience, that's okay too, but you must be aware, right? Founders who are aware that they lack subject matter expertise to solve this problem but know that they have specific people that they need to bring into the team to solve it is also another sort of secret, you know, sort of ingredient that the founder, um, you know, sort of has in their toolkit that gets me excited when you can see that come out of them in your conversations with them. Yeah, well, thank you, thank three of you for giving us some transparency into this. Um, we could, I could keep going on, but we're out of time. Um, but I do look forward to, let's keep the conversation going, get more access to VC. Awesome, thanks for having.

How To Get The Attention Of Investors To Raise Capital | ForbesBLK Summit 2024

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