…We support entrepreneurs in sectors that impact people’s ability to live healthy and productive lives, improve the chance for small businesses to succeed, and create a more sustainable environment.
As a part of our series about “Social Impact Investors”, I had the pleasure of interviewing Allie Burns, CEO of Village Capital, one of the largest supporters and investors of impact-driven, seed stage entrepreneurs around the world. Allie oversees the organization that over the past decade has supported more than 1000 entrepreneurs in more than two dozen countries, who have gone on to raise more than $4B in follow on capital.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
Like many in the impact investing space, my path here was certainly not linear. After spending the first decade of my career in corporate communications, I landed in the philanthropic world following a bit of a self-reckoning and realization that I wanted to focus my career on having a positive impact on some of the big problems that plague us as a society. I was lucky to end up working for the Case Foundation, led by early AOL executive Jean Case, who is a pioneer in the impact investing space, and was (and still is!) fiercely passionate about the intersection of entrepreneurship and social good.
Over time, my role expanded to working at Revolution, the venture capital firm created by AOL co-founder Steve Case, and I found myself at this fascinating intersection of traditional VC, impact investing, and championing entrepreneurship. One of the major initiatives I helped to launch at the Case Foundation was the Startup America Partnership, an effort to reignite American entrepreneurship around the country. That work ultimately led to the launch of Steve Case’s Rise of the Rest initiative, focused on spotlighting and investing in entrepreneurs who are outside of the three US states that receive more than three quarters of venture capital.
Through Startup America and Rise of the Rest, I had the opportunity to visit dozens of burgeoning entrepreneurial ecosystems around the country: Detroit, Des Moines, Pittsburgh, Nashville, Atlanta, Charlotte and many more — and it was truly inspiring to be near the tireless energy of founders and the people focused on building local communities to support and help them thrive. However, I also became increasingly aware that while much of the talk was around rebuilding local communities, the faces I saw in pitch competitions and huddled around coworking conference spaces didn’t reflect WHO was in these communities. And many of the entrepreneurs were building solutions to what we at Village Capital call “my world” problems, and not nearly enough building solutions to “real world” problems in sectors like food, housing, health and more. I found myself wanting to understand more about the disparities that exist in early stage investing — a system where not only a majority of capital goes to just a few geographic hotbeds, but one in which less than 10% of funding goes to female founded companies, and less than 2% to Black and Latinx founded companies.
That work led me to join Village Capital in 2016, inspired by the organization’s mission to support and invest in impact-driven entrepreneurs that have traditionally been in investor blindspots (and backed early on by my previous bosses, Jean and Steve Case). I feel so fortunate to have found this bullseye of opportunity to be around inspiring and mission-driven founders, investors and partners.
Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?
Well, I’m definitely a Type A person so I am fairly certain that I didn’t find any of my early mistakes — whether accidentally copying a client on an internal email or not being able to explain to a reporter what one of my client’s business models was — humorous at the time! But what I’ve learned about mistakes is inspired by work we did at the Case Foundation to better understand how innovation happens — making mistakes, and most importantly, learning from them is a MUST for any kind of innovation, whether it’s personal or professional growth or bringing a new idea or product to the market. In her book, “Be Fearless”, Jean Case talks about the concept of “failing forward,” noting that “not all failures have a happy ending, most happy endings have a failure story.” That’s something I really take to heart.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
I can’t pinpoint an exact moment, per se, but I certainly felt my career started to take off about 10 years ago, as I was navigating both the worlds of venture capital and philanthropy — I often say that prior to that, I let my chosen career guide me, rather than the other way around. As I moved into a world where I felt more connected to, and passionate about the work of the organizations I was part of, I could be my best self. It also helped that I had incredible managers, mentors and champions in my life.
None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?
I’ve mentioned Jean Case a few times, who certainly has been an incredible mentor and champion for my career, and has always encouraged me to step outside of my comfort zone. Another person who I’m incredibly grateful to for setting my career on a new trajectory was my previous boss in my last “corporate” job before moving into VC and social impact, Dori Salcido. We were working in a company that was going through some tough times, and she encouraged me to follow my passion — and even connected me to the job I ultimately left for at the Case Foundation, something that is not always common in a boss.
More broadly I was once advised of the importance of building your own “personal board of directors” and I have taken that to heart — and I have been beyond fortunate to have colleagues who have become invested in my growth both personally and professionally… way too many to name!
You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?
I’ll reiterate what I said before about making mistakes — failing, and learning from it, is part of the journey. It is important to remember that what is holding you back is only the fear that you MIGHT fail… and what if the best outcome is if you do? It might inspire you to find a new pathway into the career you want, or to create something entirely different.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
A famous line that has been going around on the Internet as the VC industry grapples with its role in exacerbating inequality is “make the hires and send the wires”. And as you note, this work must be intersectional — we can’t just think about the gender gap for example… we have to understand where experiences, geographies, race, gender and more intersect.
But not enough people are talking about the changes that have to be made when it comes to the allocation of capital. Right now, one of the big reasons we see a majority of VC funding go to white men, is because most of the decision makers in VC are white men. We need more BIPOC and women in decision making roles in venture capital — but there are huge barriers. The economics of VC mean that you generally have to be independently wealthy to start a fund — creating a never ending cycle that keeps out people who have different perspectives (and untapped opportunities) to bring to the table. LPs and other asset holders, along with the philanthropic community, need to ask what role they can play in changing that.
You are a VC who is focused on investments that are making a positive social impact. Can you share with us a bit about the projects and companies you have focused on, and look to focus on in the future?
At Village Capital we’re interested in systems-level change to make impact investing more inclusive, by supporting and investing in entrepreneurs who have largely been overlooked and untapped by the early stage investment ecosystem.
We rolled out our first innovation in 2009, our unique peer-selected investment process, which flips the power dynamics in traditional investing by giving decision-making power to small groups of entrepreneurs, who collectively make final investment decisions. We’ve run this “peer-selection” process more than 50 times, resulting in more than 110 investments, and recent research by Emory University showed that the process not only mitigates bias against female entrepreneurs, but that it seems to be just about as effective at “picking winners” as processes led by expert investors.
We support entrepreneurs in sectors that impact people’s ability to live healthy and productive lives, improve the chance for small businesses to succeed, and create a more sustainable environment. As one example of our work, in 2019 we partnered with MetLife Foundation, PayPal, and local partners around the world to launch Finance Forward, a global coalition to support more than 100 early-stage entrepreneurs building tech-enabled solutions around financial health in the United States, Latin America, Europe, the Middle East and India.
As a part of this initiative, we have started to release a series of insight reports that highlight different themes we are seeing in each sector. For example, we just released a report titled Fintech for All, which highlights fintech startups that are designed first and foremost to support low- and-middle-income communities, small businesses, and Black, Indigenous, and People of Color (BIPOC) communities. There’s never been a more important time to bring a social justice lens to fintech.
Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?
One company that sticks in our portfolio is PiggyVest in Lagos, Nigeria. PiggyVest is an online savings and wealth management platform in West Africa, cofounded by a fearless female COO named Odunayo Eweniyi. Women entrepreneurs often struggle to get funding in sub-Saharan Africa; so do local entrepreneurs; a huge amount of VC funding goes to expats from the US or Europe who move to the continent to start a business.
Odunayo participated in one of our accelerator programs in 2017 and, despite the fact that she sat in traditional investor blind spots, she was able to make the case to her peer African entrepreneurs that her business showed the most potential. She was one of the peer selected winners and received seed investment from our fund.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
The point of the peer-selection process is that we don’t make the final decision over who gets funding. The entrepreneurs decide which of their peers deserves funding. Our survival rate is quite high, at 85%, which means that we’ve made some investments that have since gone out of business, and many more investments that are still thriving. For us, the process is the point — even for the entrepreneurs who don’t get “peer-selected” for funding, they have the opportunity to learn and connect with mentors, potential investors, potential customers and other stakeholders, create a peer community, and learn a valuable lesson about how to think like an investor.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why? Please share a story or example for each.
This is an important question, and one that all too many entrepreneurs don’t have a great understanding of.
Several years ago, Village Capital’s Co-Founder, Ross Baird, wrote “Why Most Entrepreneurs Hate Fundraising-And How To Fix It” about this problem. He wrote the lack of a common language between entrepreneurs and investors, and the frustration and wasted time rooted in mismatched expectations. This is something we hear from entrepreneurs in our program: they hear “no” from investors, but don’t understand why they’re hearing no.
We created our investment readiness framework (Venture Investment Readiness Awareness Levels — or VIRAL, for short) framework to help entrepreneurs get a better sense of where their business sits in the eyes of an investor. Entrepreneurs in our programs fill out the framework as a self-assessment on the very first day, and use it throughout the program to show their peers where they are strong and where they need to grow.
The framework has eight categories that represent the questions that an investor might have about any given early-stage startup. A few of them include:
- Team: does your team have senior members with lived experience of the problem you’re solving? Do they have proven sales and product development skills?
- Product: has your team built a fully functional product that solves the problem? Have you demonstrated evidence of customer delight?
- Market: do you have evidence that potential or pilot customers would refer the product to others? Do you have a clear strategy, rooted in evidence, to reach positive unit economics?
- Business Model: have you shown evidence that customers in your target segment will pay the target price? Have you validated your business model?
We’ve seen the VIRAL framework dramatically transform conversations between investors and entrepreneurs as they can collectively articulate how a startup’s investment readiness level corresponds — or doesn’t — with what that particular investor is looking for. Last year, we launched Abaca, a new platform that allows anyone to take an investment readiness self-assessment and match with investors who are interested in startups at their level of development: Abaca. Entrepreneurs can sign up for free at abaca.app.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-
Our stated mission at Village Capital is to reinvent the system to back the entrepreneurs of the future — and that mission starts with questioning traditional power dynamics (in our case, when it comes to how investment decisions are made). And with rising inequality, an important reckoning with systemic racism, and the dramatic impacts of climate change, we have seen what happens when decisions are in the hands of just a privileged few. So naturally, I’d focus on a movement that questions how to bring more voices, perspectives and experiences — particularly from those who are traditionally without power — across all of our public and private institutions.
If you could tell other young people one thing about why they should consider making a positive impact on our environment or society, like you, what would you tell them?
Honestly, I don’t believe there is another choice. During the COVID pandemic, we’ve seen what happens when not enough of us are working to address structural inequalities (from access to healthcare, education, quality jobs), or to reversing the impacts of climate change.
We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch with, and why? He or she might just see this. 🙂
Do I have to pick just one? 🙂 I’d love to spend time with Mellody Hobson, the President / co-CEO of Ariel Investments. Her remarkable career is awe inspiring — and I was so grateful to have seen her TED Talk, “Be color brave, not color blind,” which caused me to completely rethink how I had been taught from an early age to think, and talk, about race. I also love what Sallie Krawcheck is doing in building Ellevest, a platform to help women build financial wellness — she’s a fierce entrepreneur and advocate for helping women unleash their own financial power.
How can our readers follow you online?
Twitter: @villagecapital and @AllieB
Thank you so much for this. This was very inspirational, and we wish you only continued success!