That is not really five things, but it is how about 5 layers of a non-diverse system manifest into the problem we need to collectively put our heads together and solve. We can go further upstream in the whole investment ladder and make sure that each population better reflects the population of our country.
As part of my series about “the five things we need to do to close the VC gender and racial gap” I had the pleasure of interviewing (Your name here).
Jennifer Abele is a distinguished Venture Capitalist and Angel Investor, respected for her exceptional insights and strategic investment acumen. With a formidable track record in both private and public sectors, she has not only championed innovative startups to success but has also played a pivotal role as a public sector leader in fostering government innovation and economic advancement. Her multifaceted expertise creates an opportunity to reshape industries through a different lens, which is why she co-founded VC 414 a venture capital firm that empowers courageous entrepreneurs to advance socioeconomic prosperity.
Thank you so much for joining us! Can you tell us the “backstory” that brought you to this career path?
The backstory that brought me to this career path is that I’ve always worked in public service-type leadership roles, and in each of those roles, I’ve been in the position of having a high impact on individuals and their barriers and challenges in a very large urban community with many socioeconomic challenges. I came to the realization several years ago that my work was really reactive to problems and barriers that were already there and that I needed to go further upstream and give people the tools that would empower them to create generational wealth and upward mobility. A few years ago, I started putting money into angel investments, and in doing that, I realized what some of the barriers were that founders were facing and that those were things that I could help them overcome. After some success with my personal investments, and specifically with one company that had an early exit, I realized that I had a lot of value to add, so I decided to take it on full-time.
Can you share a story of your most successful Angel or VC investment? In your opinion, what was its main lesson?
Our firm invested in an exciting company called EVEN. The main thing that drew me in was that the founder, Mag Rodriguez, was on a mission to help up-and-coming music artists keep more of their earnings in their own pockets. We all know that the creativity of so many artists is taken advantage of by the current system of earnings for musicians. We thought if we could be part of the solution to this, it would create faster upward mobility for so many deserving creators. It is no surprise that artists are now flocking to EVEN because Mag is giving their future a fair shake to make it.
The main lesson here is that oftentimes people shy away from changing the status quo in a major industry, despite the market being unsatisfied. Mag saw this challenge as an opportunity and used his music industry connections to get a foothold. We love the progress thus far and can’t wait to see how Mag makes things EVEN for his clients.
Can you share a story of an Angel or VC funding “failure” of yours? Is there a lesson or takeaway that you took out of that that our readers can learn from?
I don’t want to name the specific company, but it is a later-stage tech company that was in the Web 3 space. The lesson that I took away from it is that I relied on somebody else’s due diligence in making my decision about the investment. I later learned they didn’t do a good job of customer reference checks and as a result, that investment has been marked down and that’s frustrating. The takeaway from that one is to always do my own research and diligence to make sure that I’m making an informed decision.
Was there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that?
There are no companies that I regret turning down, and there have not yet been any companies that I’ve turned down that have then taken off. The way that I think about that is there’s always going to be another company and there’s always going to be another opportunity or startup. Even if somebody had taken off, I probably wouldn’t feel regret about that because it wasn’t something where I felt I could add value. It is hard to know how things will land when you’re investing at a very early stage like I am.
Ok let’s jump to the main focus of our interview. According to this article in Fortune, only 2.2% of VC dollars went to women in 2018. A similar number went to minority-owned companies. Can you share with our readers what your firm is doing to help close the VC gender and racial gap?
My business partner, Raquel Madrid Filmanowicz, and I formed our firm with an inclusive thesis and with the goal in mind to make sure that we were fully considering founders and co-founders who come from different and diverse backgrounds such as women, people of color, and those who are otherwise undercapitalized.
As the data shows, women, people of color, the Indigenous community, the LGBTQ+ community, and individuals with disabilities do not receive as much funding. So far, this year’s data is abysmal, for example, TechCrunch recently reported that Black founders received only 0.13% of VC funding in Q3. At VC 414, we’ve been taking a look at the full picture of who the founders and co-founders are of a company to ensure that our portfolio is representative of that broader population of individuals who are typically under-capitalized in venture capital.
That doesn’t mean that we’re excluding individuals who typically are the recipients of venture capital funds, but we want to make sure that we’re looking at the ownership of companies and looking at the cap table to ensure that things are properly distributed to individuals who typically have a harder time raising funds, despite being just as capable. This year, two of the six CEOs we invested in are Black, two are LatinX, one is a South Asian woman and one is a white woman. We’ve also been able to pull together some angels to invest in a woman CEO in the LGBTQ+ community.
So that’s part of the thesis of our firm and we look hard at how we can add value for them and make sure that they’re getting contracts and gaining customers and other ways that we can help them because we’ve worked in that space before. This is really important and is at the core of the work that we’re doing. And, we are posting photos of our CEOs on our website to be transparent about this, to make sure they are seen as entrepreneurs backed by VCs.
Can you recommend 5 things that need to be done on a broader societal level to close the VC gender and racial gap? Please share a story or example for each.
Now the VC gender, and racial gap, I would call it a self-fulfilling prophecy. You have investors who are coming from non-diverse backgrounds who are investing in general partners of firms who are primarily non-diverse, who are investing in startup founders who are primarily non-diverse, and who are then hiring people who are primarily non-diverse.
From my perspective, we have to go all the way upstream on that and start with the institutional and other investors and what comprises that group of individuals because it’ll trickle all the way down through these other layers. So, for instance, if you have most investment bankers who are male, that’s going to trickle down to who they’re investing in, so we have to start at that layer and make sure that the institutional investors or fund-of-fund investors are looking more like the demographics that we want to see at the bottom of the funnel. Similarly, if you have investment bankers who primarily fit one demographic, they’re going to be looking at the general partners of venture capital firms through that lens. Broadening the lens of investment decision-making in general partners of venture capital firms is going to thereby broaden the lens of what those partners are looking at in the startup founders that they’re investing in.
Most general partners of venture capital firms are either former tech founders or investment bankers and if you look at the demographics graphics of those occupations, of course, that’s going to trickle down to who’s getting invested in. You can trace that back to who is getting accepted into prestigious universities and degree programs. From my perspective, a big thing that needs to happen is to look at the general partners of venture capital firms and try to draw from different types of life experiences other than these two typical categories. There are many women and people of color from other occupations who can also make savvy investment decisions.
My way of getting there was through angel investment and again, that’s because I’m a high-net-worth individual, and of course, that’s probably not the most diverse population that we’re looking at either. But you look at my business partner, who came from banking, government, and healthcare. Different people from different perspectives can look at startups through a different lens and make a decision about the value of that startup and the potential for growth of that startup. That might not always come from sort of the norm that the vast majority of investors are looking through right now.
That is not really five things, but it is how about 5 layers of a non-diverse system manifest into the problem we need to collectively put our heads together and solve. We can go further upstream in the whole investment ladder and make sure that each population better reflects the population of our country.
You are a person of great 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. 🙂
It’s not a new idea, but if you think about things like individuals who commit 10% or so of their income to give to tithing; if all of us were to kind of use this 10% rule across the board, think about 10% of what we have, 10% of what we’re investing, 10% of what we’re giving, making sure that we’re taking a piece of what we have and giving it back, and of course, you have to take care of yourself. There’s always a piece of the pie that you can share with others and as we look at our investment portfolios in particular, if you take 10% of that and put it into diverse founders or diverse investors or something that creates a social or environmental impact, you’re going to feel really good about that. In all likelihood, those investments are going to return well because the data shows that diverse teams perform better. Companies led by women perform better. You’re going to have a strong return, and you’re going to feel better about it. I would encourage this 10% rule in how we think about where we put our money because getting started that way will likely lead the percentage to rise after you see the results.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
When I was starting this firm with Raquel, the quote that most resonated with me was, “If you have some power, then your job is to empower somebody else,” which was said by Toni Morrison. The reason that resonated with me is that I had influence and a great network and then came into wealth about five years ago. I had to search deep down about what I was going to do about that, and with that.
I realized it wouldn’t lead me to any happiness or satisfaction if I wasn’t imparting it in a way that wasn’t going to help other people. I think that is very applicable in the venture capital industry. Those of us who have the privilege of being able to put money into startups should use it to empower others, create upward mobility and generational wealth, and not pass along the same outdated, systemic barriers that have been around for a long time. There is nothing innovative or disruptive about that.
Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this, especially if we tag them. 🙂
I would like to have lunch with Melinda French Gates, or perhaps Mackenzie Scott. I would love the opportunity to share my thoughts on how they can further their impact.
This was really meaningful! Thank you so much for your time.
Jennifer Abele of zant On 5 Things We Need To Do To Close The VC Gender and Racial Gap was originally published in Authority Magazine on Medium, where people are continuing the conversation by highlighting and responding to this story.