One thing the government has not done in this crisis is shy away from their responsibility to help. I’ve been impressed by their swift action to improve lives of workers and employers through the CARES Act. Startups are eligible for the Payment Protection Plan, so I’ve gotten to watch first hand how this whole experience has gone for them. From navigating which banks to apply through, to receiving the cash in the door, it’s been really wild to observe just how quick this process went!
To share some context on why I was so skeptical, my background is in government! I worked alongside the NYC Department of Education during Hurricane Sandy and saw – first-hand – how immensely slow it took FEMA to invest in the repairs necessary for life to get back to normal for many schools and families across the city. For one school in Queens, it took over 2 years for them to finally receive a FEMA payout. Another example of the failures of government in time of disaster is its lack of response to Hurricane Katrina (if you’re interested in learning more here, check out Treme on HBO which documents the failed work of FEMA and its devastating impact in New Orleans).
So the fact that COVID-19 hit aggressively mid-May and businesses had checks in their bank account less than a month later is really unprecedented. Congress adopted the CARES Act and it was signed into law at the end of May. This created the Payment Protection Plan (PPP). With the PPP, the government essentially authorized forgivable loans of $349 billion to companies in order to allow them to continue employing their workforce despite economic uncertainty.
The CARES Act has an additional provision that allows for a work-share program where if companies have to reduce staff hours, the staff will still qualify for full unemployment benefits. It reminded me of this one article I recently read about Germany. They have a system called Kurzarbeit which essentially is a government subsidy for companies who are experiencing hardship. When companies declare Kurzarbeit, the government pays their employees a portion of their wages for them. So it seems like, with the CARES Act, the US is becoming more like its European neighbors.
This is no surprise for those who study history. It is in times of crisis that the government expands. According to the WSJ, “the pandemic may, like the Great Depression, foster structural policy change that outlasts the calamity itself.”
The PPP has left its mark on public policy for good given the strings it attached to the money it loaned to large corporations and small businesses. These institutions are all now forced to comply with additional regulations that hold them more accountable to the public. Below, I’ve outlined some of my favorites impacts the legislation has had on businesses.
Companies who accepted the PPP are prohibited from preventing their workers to unionize
According to the WSJ, “some companies seeking federal funds are facing restrictions on their ability to oppose attempts to unionize their workforce. One of the new laws states they should “remain neutral in any union organizing effort for the term of the loan.””
Companies who accepted the PPP are subject to audit
Large companies are now subject to audit by the government and all of the companies who accepted the PPP are now on a watchdog list that journalists have been keeping an extra close eye on.
Companies who accepted the PPP are restricted in executive pay
“Businesses receiving aid face government limits on how much they can pay their executives, and the new law says they shouldn’t “outsource or offshore jobs for the term of the loan and 2 years after completing repayment of the loan.””
The bottom line is, after experiencing such an extended period of “late stage capitalism” where it felt like business was an omnipotent agent, COVID-19 was the real test. It shifted the ground beneath our feet and tossed business off its 1st place trophy stand. I think it’s safe to say the fight is over. Business lost and the government won.
The government not only won, but they showed that they can continue to win. The fed chair recently quipped that “when it comes to this lending, we’re not going to run out of ammunition.” The government has started using its power and I’m looking forward to seeing what else they do with it. My hope is that next on the docket for government expansion is permanently strengthening our country’s safety net. We have already seen elements of this across the country as different government agencies have forgiven student loan payments and put a moratorium on evictions. NYC is leading the way with its essential workers bill of rights bill and I think as the crisis continues to stretch, more governments will adopt similar legislation. I look forward to watching government step up in this moment!
One of my goals is to use my voice more. That means owning things I’ve learned with hopes that it can help others. This feels very uncomfortable to me! Anyone who knows me knows that I am more of a show, not tell type of a person. But as I’ve grown more comfortable in my skin, I have realized that I must tell my own story. This gives me serious anxiety – but alas, every time you try something new, it feels unnatural and uncomfortable. So in the name of growth, I’m working through it. A few days ago, I listened to Brene Brown’s new podcast on FFTs (f*cking first times) and that gave me the extra bit of courage I needed to post this.
I hope this post is useful to any and everyone who is trying to figure out ways to demonstrate both to themselves and to others that they are great investors. Without further ado, here we go!
A few weeks ago, I was really excited to see Nate Maslak — co-founder of Ribbon Health — announce his Series A led by A16Z. I met him for the first time almost two years ago when I invited him on my podcast, “Be About It”
I created the podcast to show the world that the companies that fit my thesis could be successful.
My thesis has focused on companies that are building products that give real people more agency over their lives. This can be financial agency, time agency or mental/physical agency.
By demonstrating that my thesis worked, I would also be building my track record.
What is a track record? It is a scorecard of your investments. It is used by LPs (your investors) to determine whether or not you are a “good investor”. Generally, “good” means that your investments continue to grow in value.
As CEO/Founder of this podcast, I was in charge of sourcing companies, ensuring they fit my thesis, finding times to meet with these companies, coming up with thoughtful interview questions and also running all of the mechanics behind the scenes to make the podcast live. I purposefully chose founders who were Pre-Seed because that is Precursor’s focus and also because it holds the most risk. If I could demonstrate to myself and the world that I could pick Pre-Seed companies that would advance, then I must be pretty good at finding outstanding founders & companies.
After spending over a year and countless hours on the Be About It podcast, I was privileged to share time with 15 founders — all of whom I continue to be inspired by. Here is how their companies have grown:
Season 1 (2017) Companies
2017: 7 were Pre-Seed
2019: 3 were Pre-Seed and 4 were Seed
2020: 3 were Pre-Seed and 4 were Seed
Season 2 & 3 (2018) Companies:
2018: 4 were Pre-Seed and 4 were Seed
2019: 1 was Pre-Seed, 3 were Seed, 4 were Series A and 1 shut down
2020: 1 was Pre-Seed, 1 was Seed, 5 were Series A and 1 shut down
One thing I wasn’t expecting was my own growth between my first podcast and the second. In Season 1, I learned so much and brought that into Seasons 2 & 3. You can see it clearly in the numbers — Seasons 2&3 had a higher graduation rate than Season 1.
The portfolio continues to mature and I’m excited to add another to the Series A list with Ribbon!
The thesis behind my podcast — to find companies building meaningful businesses that provide mass markets access to what previously was held by only a few — is the same one I hold today as I enter into a full-fledged investing role at Precursor with the ability to make my own decisions and trust my gut.
It’s exciting to enter into this new role with this track record and I look forward to building upon it — with dollars this time — in the coming years.
The key things that I think are important to building up your track record without money are as follows:
Develop and publish a thesis on what types of companies you like and why
Publicly name companies that fit this thesis
Wait a few years… (I never promised this was going to be quick!)
Follow-up and see if those companies are doing well!
If they’re not doing well, write an article stating what you think went wrong and start at #2 on this list again.
I hope this inspires many of you — particularly those who might not have the accredited investor title or the VC job — an alternative way to create your own track record ❤
Have you also come up with a novel way to build a track record for yourself with limited resources? Or, do you have a company you’d like me to chat with that fits my thesis?
If so, I would love to hear from you!
You can always reach me on Twitter: @sydneypaige10 or via e-mail: firstname.lastname@example.org
Note #1: More inspiration to everyone building, striving and creating who are also worried about owning their own success 🙂
Note #2: More deep dives into the creation tools behind the Be About It podcast if you’re interested here.
Note #3: There were a few additional founders I chatted with and unfortunately their interviews never made it onto the podcast. I’m still a huge fan of them! I didn’t enter them into the calculations above since I never formally processed their interview.
Noted #4: Due to technical difficulties, currently, only Seasons 2 and 3 of Be About It are public.
Since COVID-19 took hold, I’ve been given the privilege of working from home. Now that I have a little more time (no more commute, no more travel between SOMA and Embarcadero and Union Square for meetings, no more “get ready for work” time), I’ve been able to reflect on what I’ve enjoyed in this moment.
That focus on enjoyment has helped curb my anxiety during a time when everything is changing even more rapidly than usual.
I decided to share a list of my favorites here with hopes that it helps some of you as well!
The inspiration behind this list is the amazing Mari Andrew who is able to capture life’s agonies, joys and reflective moments in a way that is viscerally relatable.
#1 Dancing all night to jams that remind me of childhood alongside Janet Jackson and Oprah
#2 Catching up with another person in VC who has decided that this is the time to invest in companies focused on doing good
#3 Scheduling calls with my best friends in Beirut, Los Angeles and NYC to really check-in on each other
#4 Checking my neighborhood facebook group and learning that my neighbor is offering to pick up and deliver groceries for the most vulnerable in our community
#5 Learning that my cat hates slack notifications just as much as I do
#6 Seeing the flood of announcements on Twitter that people are donating money to charities
#7 Being able to join my dance class with my favorite dance teacher from the comfort of my living room + not feel guilty for ducking out early!
#8 Taking an extra moment between e-mails to really understand the feelings behind my reactions instead of just reacting
Given that my inspiration is Mari Andrew, I felt like I had to end with one of my favorites by her from her book, “Am I There Yet?“
In 2017, I wrote out a “thesis” (I know, very VC of me).
In it, I wanted to record to both the world and to myself, a promise
that I was going to focus on founders building companies that give real
people more agency over their lives.
Since I wrote that thesis, I’ve: completed 2 seasons of my podcast,
had 1000s of discussions of entrepreneurs, made 394+ new investor
“friends”, and supported 120+ companies in the Precursor portfolio. I’ve
had all of my systems on overdrive to manage this growth both
personally and professionally so thought it was time for some
Update #1: The underlying premise of my focus on “real people” still holds true to me.
This is unsurprising as I’ve spent the last 10 years of my career on
this same beat. Whether it was advocating for low-income tax filers to
the federal government or building a better CSR practice at a mid-stage
company, I’ve always been interested in how to create systems that make
this economic project of capitalism work better for everyone.
This is where I get the most energy, am most compassionate and think most creatively. In the words of Frida Kahlo:
Like Frida, I can get pretty insufferable — to others and myself — if
I spend too much time thinking about things that are generally in vogue
with cultivated people. Generally, I categorize these things in the
Lofty ideas that have no likelihood of implementation — ie any conversation had at burning man
Mediocre ideas that can squeeze more out of the “maker class” to make the “thinker class” richer
Update # 2: BUT, my thesis is too broad.
If I would have taken a look at the few companies I was really
excited about I would have seen the trend clearly, but alas here we
are. Better late than never. Both of the companies are focused not just
on helping real people access more agency, but on fundamentally altering
economic systems. Essentially, this is a version of the old adage:
Give Someone a Fish, and You Feed Them for a Day. Teach Someone To Fish, and You Feed Them for a Lifetime
How do these companies address economic systems change?
Red Bay Coffee: They source coffee directly from the communities
making it via direct trade. Their company is also a co-op where
employees have ownership.
Lacquerbar: They are focused on giving
nail technicians — a group of workers who have been historically
treated very unfairly — access to premier education that will help them
access new opportunities within their industry. This access also unlocks
a new more equitable way of building and operating nail salons.
My focus is here because my interest is here. I’m interested in
solutions that fundamentally alter our economic system for the better.
The incremental bores and frustrates me. Thinking in big picture gives
An additional piece to this is if you’re building an economic systems
change, you have to be targeting the long-tail, a harder to reach
population that has been negatively impacted by this system. I think
this is a competitive advantage and a huge moat because aggregating this
long tail is so difficult that others can’t figure it out and won’t be
able to copy you.
I have, I think, a good eye for how this can be done in asset-heavy
businesses; however, I think that this can be done in asset-light
businesses as well.
I am on the hunt to find them so that we, at Precursor Ventures, can
invest! If you are building one of these companies, please reach out.
Update #3: I’m realizing that my interests are different than most VCs which makes it even harder.
I’m trying to support the creation of something that is fundamentally
different and untapped. This means that there are few current proxies
for their success. When I was feeling down about this, it was really
helpful to read this from Paul Graham at YC.
…the average investor is, as I
mentioned, a pretty bad judge of startups. It’s harder to judge startups
than most other things, because great startup ideas tend to seem wrong.
A good startup idea has to be not just good but novel. And to be both
good and novel, an idea probably has to seem bad to most people, or
someone would already be doing it and it wouldn’t be novel. That makes
judging startups harder than most other things one judges. You have to
be an intellectual contrarian to be a good startup investor. That’s a
problem for VCs, most of whom are not particularly imaginative. — Paul Graham
One thing I didn’t realize though was how difficult it would be to
divert capital from a widely acceptable “good” investment to a very
polarizing “amazing/terrible” investment.
This is ironic because I think it is this polarizing nature of
companies that can become the bedrock of its success. Revolutionary
ideas are hated by some and loved by others. That’s how some of the
greats were made.
Google revolutionized access to information.
Apple revolutionized access to computers.
Square revolutionized access to banking.
Amazon revolutionized access to commerce.
Shopify revolutionized access to building online stores.
I’m looking to do something on the same scale and think that for it to be done, it can’t be left up to broad consensus.
So that’s where I am now… if this feels incomplete, it is because it
is. Still working through this and looking forward to reporting back on
more findings in the coming years 🤓
Back story: Many VCs end conversations with entrepreneurs who they
decide not to invest in with this phrase. It feels terrible to learn
that your startup isn’t going to get money from a potential investor.
But it can feel like salt in the wound where the person you just spent
1, 2 or 3+ hours with, gives you an open-ended phrase of “support”. The
more generalized the feedback, the less actionable — particularly for
first-time founders who don’t know what to ask of investors who have
passed on investing in their company.
To help entrepreneurs understand what they can come to me for, I hope in this article to outline exactly how I can be helpful.
I’m your girl if you’re looking for an investor who:
1 Is Obsessed with Customers — Particularly those at the Long-Tail. My
entire career has been spent trying to figure out how to serve the
“hard to reach”. I think figuring out how to communicate and serve this
population is one of the biggest challenges organizations face (the
government included) and I have gone through many rabbit holes
unsuccessfully trying to figure out how to do this well. I would love to
help you avoid some of those!
2 Has a Very Different Opinion than Most Investors. As
you might have guessed from my answer to the first point, I have spent
the majority of my career in the public sector. I’m also black. I also
identify as a woman. I also live in Oakland. I did not go to Stanford.
I’ve never worked at Google, Amazon, Uber or Facebook. Can I stop now?
Essentially, name one thing that you think most investors have in common
and I probably don’t have it. So I’m here for you if you are looking
for feedback from someone outside of the status quo.
3 Can Provide Feedback Based off of Employee Experience. I
have never started my own company. I have also never been a CEO. This I
think gives me tremendous empathy for the employee experience. As you
are building your company and have questions around employee
compensation, roles & responsibilities and want to think through
ways to push back against some of the “tried and true” methods and and
want to fundamentally re-think how you can organize your organization
that both empowers employees to do their best work and also creates a
safe environment, I’m your girl.
4 Has an Eye for Process Optimization. When I first
joined Precursor, I had to envision all the ways to create processes for
the firm that could scale not to 1–10 companies, but from 1–100+
companies. I love thinking through big-picture process design that helps
you identify and build towards the goals you seek. As I have been
involved with supporting founders at the Pre-Seed stage, what I’ve found
is that the beginning stage of beginning a company is a lot of
admin — so much admin. So I am happy and excited to help you brainstorm
best practices here.
5 Is Obsessed with Complex Partnership Strategies. I
have never worked in an industry where I had only one stakeholder. That
sounds like the good life! In one of my first roles, I was in charge of
preparing public schools over summer so they were ready to open in the
fall. I had to think about the Principals, the students, the parents,
the district office and many others. I’m used to making sense of,
organizing and processing these complex maps and am happy to help you
think through how best to do that for your company.
6 Has Relationships Across Diverse Talent & Investors. I
never sought out to be “the only” in venture. I know there are amazing
people of color investors, engineers, PMs and founders, and when I first
got to this industry I looked to build coalitions to meet and support
them. I’m happy to help bring these relationships to bear wherever it
can be beneficial for all parties involved.
7 Has Seen Over 100+ Fundraising Strategies. Precursor
has grown now to serve a lot of companies. Out of Funds I and II, we
have invested in over 100 companies. I have seen a lot of permutations
of startup growth — from fundraising strategies, decisions to grow to
profitability to shut-downs. From this bank of information, I think I’ve
developed a healthy amount of knowledge on how to explore any
combination of these steps. Always happy to chat through and guide
founders through the buffet of options available to them.
8 Listens a Lot More than She Talks. I love to
listen and try to come with an open mind to most conversations while
actively questioning opinions and ideas. Talking is less interesting to
me because I know there is so much that I have to learn.
9 Brings Her Full Self to Conversations. The
experience of building something new, asking for help and working with
investors puts founders in a deeply vulnerable position. I am still
figuring out my footing in service of founders, but one thing I try not
to ever do is to compartmentalize your experience or mine in a way that
makes things “easier”. I’m here for the messy, the random and the
real-life conversations that creep into the everyday life of trying to
do something revolutionary — build something from scratch.
10 Can Get You Some Sweet Software Discounts 🙂 I’m good at getting discounts.
Please don’t come to me for:
1 24-hour Support. I’m human, just like you and need
sleep so I can be my best self for you, my family, the Precursor team
and my community. I’m probably not the best person to support you if you
want to talk to me at 3 am, again at 6 am and then once more at noon.
To get the best out of me, expect extremely quick responses from 8am-8pm
and a delay outside of those times.
2 Immediate Feedback. I’m a deep thinker and
journaler! I pride myself in having thoughtful, well-researched feedback
for questions or concerns you might be facing as a founder. To that
end, to get the best out of meeting with me, send me a few questions in
advance that you’d like to discuss and I’ll come prepared.
3 Sunshine and Fairytales. I am very direct and
don’t like to pretend about anything. If you are very conflict-avoidant,
I might not be a great fit for you.
Ah‚ you’re part of something way bigger
Bigger than you‚ bigger than we
Bigger than the picture they framed us to see
But now we see it
And it ain’t no secret‚ no
— Beyoncé Knowles-Carter, “BIGGER”, The Gift Album
I recently realized that when I enter conversations with other VCs, I have a pretty complex background song playing. It’s not always Bigger by Beyoncé, but it usually has a similar tune. 🎶
To help people understand how to work with me and get the beat down of the song playing in my head, I decided to create a user guide. A “user guide” (or manifesto or first principles) is a list of your own values.
I decided to create a User Guide when I realized that I’m pretty complicated & putting my values down where everyone could reference them could be a useful resource to decrease stress & anxiety of interactions
Here is my first stab. I hope you’ll treat it as a living document that reflects the living, evolving person I am.
Let’s begin with a quick summation of my life story:
I grew up in San Diego, CA
I spent summers in West Virginia with my mom’s side of the family — that includes, but is not limited to 11 uncles, 1 aunt and 20+ cousins
I graduated from Duke University with a major in public policy, just 4 years after the lacrosse scandal
I drafted legislation for the City of New York + lobbied the federal government to pass it
I conducted tax preparation services for low-income New Yorkers, supported a multi-city roll-out of a city program & raised money from private sector organizations like Nike to invest in New York City’s public schools
Then my background starts to get boring…
I went to business school at Berkeley-Haas
Then it gets exciting again!
After business school, I helped Charles Hudson manage and operate Precursor VC
Cool cool cool, if you have read this far, thanks for getting up to speed – we are now the same page.
So let’s get into the question I really came here to answer: “what is my relationship to venture capital”.
Short answer: It’s complicated 🤷🏾♀️
1. Venture Capital has a transformational ability to support and finance companies that are building scalable solutions for people and places that have been systematically under-invested in. That excites me more than anything which is why I’m here. 🎉
c. There has been little action taken to decrease this inequality and instead, immense work has been done to reinforce a brand of meritocracy. As a result, the word “meritocracy” and the assumption that folks with power deserve it or earned it hurts me.
3. This informs my own imposter syndrome as a black woman in VC — I know that 1M+ black or brown people could be great at this job and yet somehow because of my own luck, I have ended up here. So I take great care to try and call in those left outside of the room & make their voices heard.
a. My imposter syndrome has nothing to do with a lack of pride and confidence in my own work. I work very hard. I produce high-quality work. I am really proud of it. I am very quick to anger when I am around people who don’t have high integrity around their own work product.
b. You can read more thoughts on my ideas of imposter syndrome here.
4. I struggle with the evangelization of technology and startups. Startups/tech/entrepreneurship is hard, but it is not the hardest job. Having family across the country with many different socioeconomic status’ keeps me grounded. A harder job to me is trying to making ends meet while working for less than minimum wage in the only job available to me in the small town where I live. I’m not in venture capital because it’s the hardest work available, I’m doing it because it has the widest impact.
5. We are all complicit in an economic system that has caused significant trauma on people, communities and countries across the world.
6. In order to be a productive member of society, being a thoughtful investor is not enough. The work starts with you. The arc of the universe does not bend towards justice if nobody does the work to make it so. How are you building a pattern of reflection and growth? How are you living your values? Do you wonder how what you say/do impacts others? What are you hoping to accomplish in this lifetime? How are you actively working to raise your own consciousness so you don’t become a reactive pawn in a greater system created by other people? These are questions I struggle with daily. One of the ways I work towards addressing them is by building a full life outside of my day job. I am an active supporter of Beyond Emancipation, the North Carolina Bail Fund, Esq Apprentice and am getting more and more involved in my own community of Longfellow, Oakland.
a. One of the best places to start is with your own language. How are you talking about people who are different than you? I was just introduced to this quote by Toni Morrison that says: “Oppressive language does more than represent violence; it is violence.” It is so true.
7. I think that listening to people different from you, and changing your opinion accordingly, is the biggest act of courage you can take. This is based on my love for humility. It is my favorite trait (right above gratitude) and one I try to practice often. Humility isn’t a widely appreciated trait in VC because it is at odds with industry standards of conviction, assertiveness and self-righteousness which makes this work hard sometimes.
a. One of my other favorite traits is kindness. I just don’t know why people chose to be mean. I just don’t have it in me and it makes me sad when people chose meanness over kindness and compassion.
b. My third favorite trait is thoughtfulness. I am not one to make decisions in the moment. I need time to think and reflect before making decisions.
8. The hustle culture of entrepreneurship and tech is problematic. It is particularly problematic for communities of color where the old adage that “you must work twice as hard to get half as much” rings true. That isn’t a life I wish to cultivate or to exhault. It leads to burnout and breeds exhaustion which can create even more anger amongst underrepresented communities. I recognize the privilege in this lifestyle choice and also believe that my ancestors wouldn’t want me to live in a way that hurts me if I don’t have to. I approach my life and my work within VC with this lense and work hard to build boundaries so that I can have a full work and home life. Please don’t try to e-mail me on weekends and please please please don’t follow me on instagram 🙃
a. That being said, one of the values that I hold deeply is that in order to be successful, you must be proactive. If you are reaching out to me cold and would like to speak with me, I expect that you have your questions prepared. If I have invested in your company, I expect that you will treat me as a valuable resource who can help guide you. One of the most frustrating experiences I have had, and would like to prevent, is feeling like the person I’m talking to isn’t taking full advantage of my time and and/or isn’t taking responsibility to make their situation better. One of the quotes I try to live by is: we all have agency over our own lives and I have continually developed a practice of proactiveness. In order to work together effectively, I need to see you model proactiveness as well. I try really hard and work best with people who are also trying really hard.
10. Being a black woman doesn’t mean I have all the answers to inequality within this industry or outside of it. Please read a book (or an article) before asking me any questions pertaining to inequality, white supremacy, racism, etc.
Long Story, Short: I love venture capital and technology, but my relationship to it is complicated. This industry was not created in 1976 with the invention of Apple. Books are important, history is important and without those two things you can become an actor in a greater narrative that you didn’t know existed — I try my hardest not to be that actor, but mess up sometimes. When I could do better, I expect you to call me out and I promise to listen. To earn my respect, I expect you to try hard too. I also expect you to mess up sometimes — at which point, I will call you out on it and expect for you to listen. We’re all human.
First, you might be wondering, what is scarcity mindset?
When you are living in a scarcity mindest, you believe that there will never be enough . So you hoard.
You hoard power, money, ideas.
VC is living in a scarcity mindset because it has become addicted to
hoarding despite operating in an ecosystem of abundance. There is more
capital and more entrepreneurs than ever and yet what we’ve seen is that
funds have raised more money, hired fewer people and forced more money
into fewer companies.
Something has to change.
But before we get into what should change, let’s get into how we got here.
The VC Industry has grown significantly over the last 10 years
VC investing reached an all-time high last year. $130.9 billion was invested into US-based startups.
That is more than the entire GDP of Ukraine, Morocco or Ecuador.
Plus there were more firms created last year than ever before over the last 10 years.
But more money is chasing fewer deals 🤔
More money is chasing fewer deals and as a result, fewer deals are able to IPO.
The decreasing number of IPOs can be due to a number of factors. One
of them is that VCs believe that fewer deals are great and “deserve to
IPO”. I think this is a misnomer and self-fulling prophecy because if
all VCs think that only a few deals are great, then only a few deals
will be great. Luckily there is a growing trend of voices who don’t
believe this — like Greenspring Associates who recently wrote that: “the
market is expansive and filled with opportunities, when approached with
an open mind.” 
Another, more tactical factor is that IPOs are expensive and large
banks only want to do the biggest ones with the biggest market cap
because these have the most potential to impact their bottom line.
However, this same song has been played before and the chorus goes: “bigger is not better”
As VC firms and investment banks opt for larger market capitalizations, the growth of these companies after IPO has decreased.
Which makes intuitive sense — if you wait to invest into a company
until after it’s worth $3B, the likelihood of it growing to become worth
$10B is low, because they’ve already squeezed so much juice out of the
As a result, the IPO market has been described as: “a holding pen for massive, sleepy corporations” [2.5].
How do we prevent this from happening to VC?
If VC wants to continue generating the returns it has in the past, it needs to get out of its scarcity mindset. How?
1. Build a bigger tent
This scarcity mindset impacts how VCs are investing in companies and their own teams.
I recently read that having a scarcity mindset makes people more racist .
If this is true, we are seeing it play out in venture both in the
types of teams VCs back and the types of people VCs hire/promote.
Only 2% of venture capital funding goes to women entrepreneurs, and
less than 5% of entrepreneurs backed by venture capital firms are black
or Latinx .
Venture Capital teams aren’t doing much better. The number of female
partners only increased from 2017 to 2018 by 2% and the number of black
and latino investors decreased .
But does this have to be true? The data shows that there is enough
capital to spread around and that if firms were creative, there are
enough venture capital jobs to go around as well.
2. Enable Public Access to Early Stage Funds
“The pre-IPO market has become the
IPO market of the past, but it’s only available to investors such as
venture capital firms, mutual funds and hedge funds able to put up large
amounts of money that once were only available through public markets.”
If a pension fund is able to invest a person’s pension into a VC
fund, why can’t that person decide to invest into another entity that
invests into a VC fund?
Let’s be clear, I am not advocating that individuals should be
investing their own retirement dollars into investment firms directly.
Instead, I’m thinking of something more in line with Fundrise,
but for VC funds. Something that allows the public market to have
diversified access to early stage investment firms. Especially as the
availability of pensions continue to wade, giving fewer and fewer
everyday people access to these early investment opportunities which are
driving the largest returns.
3. Act Like We’re the Longest Assetholders (because we are)
Back in its heyday, one of Kleiner Perkins’ biggest investments was a
$100K check into Genentech. It turned into $47 billion three decades
As we continue to invest in the future of a world we can’t even
imagine, we are going to have to take risks on ecosystems, people and
ideas that are out of this world crazy. We can’t invest in what would
work right now, because the point is that just because it works now,
doesn’t mean it will work later. Instead, we are choosing to invest in
the unknown — into something that might work in the future.
This lens towards investing in weird, crazy ideas has always been a
nomenclature of VC, but this hasn’t actually played out. Instead, the
industry has decided to rally around big buzzwords every few years. Big
data! AI! Cannabis! Instead of taking a longer and more humble view on
the fact that the future is unpredictable. And instead of trying to move
it in our favor, by overcapitalizing a few “winners”, perhaps we should
be open to a world where more people were given a chance at bat and in
return we had a more comprehensive stake in an unpredictable world.
“In the United States, for
example, “trickle down” economic policies that support tax cuts for the
rich with the aim of boosting economic growth and jobs have led to a $2
trillion annual redistribution of wealth from the bottom 99 percent of
earners to the top 1 percent over the last 30 years, said Nick Hanauer, a
former venture capitalist and now head of Civic Ventures, which aims to
drive social change.
If the trend continues, by 2030,
the top 1 percent of Americans will earn 37 to 40 percent of the
country’s income, with the bottom 50 percent getting just 6 percent, he
“That’s not a capitalist market economy anymore,” he warned. “That’s a feudalist system and it scares … me.”” 
 “7 Habits of Highly Effective People”, Stephen R. Covey
A few weeks ago, I had the privilege of attending DEMO Africa in
Casablanca, Morocco. DEMO Africa is a yearly event that brings together
entrepreneurs and investors from across the continent of Africa. This
was my first time attending and it was a great primer into the African
My favorite session was the infrastructure summit which was hosted by the US State Department.
In it, we discussed some of the core systems underlying the African
tech ecosystem and an overview into what infrastructure projects have
succeeded (and failed).
I came away from the conference with the following insights that I’m
planning to keep in mind when evaluating investments across the
continent of Africa.
Many Telecos Don’t Connect to Google/App Stores
I talked with an entrepreneur who built a coworking space and
accelerator in Morocco. He exclaimed that while Morocco has a number of
trained engineers, it was difficult to advise them to build apps when
many consumers don’t have app stores. I was so surprised — how does
someone get a phone without one of these app stores built in? Through
research, I realized that the only reason our phones can operate app
stores is because we provide them with financial information. App stores
don’t work without credit cards.
Most telecos that operate across Africa have different financial
payment plans to fit their users more effectively. These innovative
systems don’t yet cooperate with Google Play and the App Store.
This is slowly changing though. Orange just launched direct billing
in Egypt allowing the market to access the app store. We’ll see how this
continues to evolve.
Why this matters: The “traditional” application ecosystem is stifled
across the continent. This is a huge opportunity to invest in an
Data Storage For Most Consumers is Extremely Limited
Unlike in the US where unlimited data plans are the de facto option for
many cell phone owners, large data plans in many African countries are
still relatively abnormal. This has made consumption of entertainment
(especially in Nollywood!) difficult. Many of Nigerian soap operas
uploaded onto YouTube went unseen by Nigerians due to their data plan
constraints. To combat this, Google created YouTubeGo which allows users
to download videos when connected to wifi to consume later.
But first, the phone has to come equipped with the YouTubeGo app
because (as I mentioned before), many phones do not have Google Play or
Why this matters: Investing in high-data usage tech companies will likely shrink your market size significantly.
Getting from One African Country to Another is Hard
DEMO Africa featured entrepreneurs based in Togo, Coitivoire, Ghana and
others. I learned that their travels into Morocco were really difficult!
Multiple shared that it was cheaper for them to fly to the US/Europe
than across Africa.
When digging into this, I learned:
“The continent is home to roughly 12 percent of the world’s
population and will be responsible for most of the global population
growth over the next three decades. But it accounts for just 1 percent
of the world’s air travel market. The flights that do exist are often
more expensive than routes of similar duration elsewhere in the world.”
Many African countries are mired in protectionist policies that make traveling across the continue extremely difficult.
Why this matters: If you are hoping your company will expand across
the African continent, take into account that each country operates very
No Great Customer Acquisition Channel
One of the most common concerns that I heard from African investors was:
access to market. The word on the street is that Jumia, despite it’s
critical acclaim online, is not experiencing great traction. There is
still a lot of distrust in ecommerce. So a focus from investors has
turned to B2B. Many consumers are excited about working with large
African enterprises to improve experiences.
Why this matters: If you are investing in a consumer company, go really deep with the entrepreneur on their G2M strategy.
Repatrition Just Getting Started — Long Way to Go
Another common concern I heard from investors was: there are not enough
African entrepreneurs are investing in Africa. On the other hand though,
I was surprised by (and excited to see) that many of the startups at
DEMO Africa were launched by Africans who have recently returned to the
continent after living, studying and working abroad. But there is still a
long way to go.
Why this matters: The lack of investment in African startups by
African entrepreneurs is felt mostly on the angel/Pre-Seed side. This
has ripple effects across the ecosystem.
I hope this helps others get more information on the African
ecosystem. I’m extremely bullish on investing in this fascinating and
rich continent. Precursor has made two investments here
already — Tastemakers and Buycoins!
I’m plotting my next trip to the continent soon. This time to Lagos!
If you are hosting a tech conference in Nigeria, let me know. I’d love
to make it!
I recently got the opportunity to speak at THE Grace Hopper Conference
🎉. It was my first time attending and I didn’t quite know what I was in
I was blown away by the brilliant women I met there and the
investment poured into the 3-day affair to make sure that they were
supported. Parties, panels, job offers… You name it, Grace Hopper had
And to top it off, the programming featured legends like like Anita Hill, Emily Chang, Priscilla Chan and Gwynne Shotwell.
I joined a mix of investors and entrepreneurs to talk about Female
Founders. We focused on the structural barriers facing female founders.
We were pretty divided on this issue which made for a really juicy
Some of the investors argued that the venture capital firms are
beyond repair and that we need to start from scratch. Some of the
entrepreneurs argued that if we don’t improve the cultural realities
that many entrepreneurs have to face, we won’t improve the outcomes for
I thought everyone on the panel had a point. The journey ahead is going to require a unique way of thinking.
Which reminded me of the importance of exploring how other
historically underrepresented groups have addressed similar barriers.
Being an African-American woman, the one that resonated most quickly to
me was that of black people entering into higher education.
Learning from the Journey of Others
While I was at the conference I couldn’t help but getting struck with a little deja vu (twice!).
1. Grace Hopper felt like the National Black MBAA. The National Black
MBAA was founded in the 70s to black MBA graduates access positions at
top companies. I attended one NBMAA conference when in business school. I
received a job-offer from Kimberly-Clark on the spot!
Grace Hopper encouraged the same behavior. There is a resume database
set up in advance and it is common practice for recruiters to seek out
female talent. I saw recruiters from Google, PayPal, Slack, etc. giving
offers on site to women who they found to be qualified candidates.
2. Governor Jerry Brown signed an affirmative action policy. He
passed legislation in California that mandates every board of a public
company to have at least one woman. This sounded really familiar. Almost
like affirmative action.
Affirmative action is intended to promote the opportunities of
minority groups within a society to give them equal access to that of
the majority population*.
All of this deja vu worries me because time hasn’t treated NMBAA and
affirmative action well. Attendees at the NMBAA are now about 25% white
and most growing industries like tech companies don’t make time for it.
Prop 209 was signed into place in 1996 to overturn affirmative action.
So, I think it is important to see this moment of focus on and
empowerment of women as fleeting – unless we take serious steps to
ensure it is sustained. Giving one woman a job in tech and another a
board seat will not save us. This was clear over this past week with the
Kavanaugh confirmation. Just because we had enough women in the Senate
to overturn Kavanaugh, didn’t mean we had enough votes to keep a sexual
predator out of the Supreme Court.
We need to take our action a step further. Increasing diversity is a
necessary, but not sufficient step to creating more equality.
What is it about government and corporate institutions that makes diversity so difficult, and how can we change that?**
I spent last week in Washington, DC getting to know their startup
scene. We, at Precursor, have yet to invest in a company based in the
nation’s capital so we don’t have much exposure to the area. I wanted to
get to know the scene to better understand the dynamics to prepare us
for future investment.
It was a fun and packed trip! Along the way, I met with founders at
the Pre-Seed stage all the way up to the Series D stage. I met with
ecosystem builders and investors. I traveled across the entire city from
U Street to Capitol Hill to Arlington.
Here are a few of the things I observed:
1. Tech looks different in a city that runs well.
In a city that has a higher population density than San Francisco with
only about 200K fewer people, it was remarkable to see how smoothly
things operated in Washington, DC. I saw this show up in almost every
technology I used.
When I got to my AirBnB in DC, two things were surprising to me. The
1st was that it was so large. I didn’t actually need to use a coworking
space at all because I had enough space to do work at home. (And the few
times that I ventured out to a coffee shop, I was able to find space to
charge my computer and could use the bathroom without a code (*gasp*).)
The 2nd was that it was a public housing unit. Compared to public
housing units in the bay that can immediately be recognized as tier 2,
this public housing unit treated its tenants with respect and dignity. I
felt like I was staying in a luxury high rise! Think of how different
AirBnB could look and feel if people from all income levels had
attractive homes to rent out on the platform.
When I pulled up google maps, it was almost always quicker for me to
take public transit to my destination instead of ride hailing. Over the
course of my week in DC, I took a Lyft twice and both times were
frustrating due to how slow they were. Between the bus and the metro, I
was able to get places quickly and conveniently. Consequently, the rides
on Lyft seemed to be steeply discounted. It cost me $13 to take a 30min
ride in DC, whereas in San Francisco, it costs $13 to take a 10min
When I saw people on Bird & Lime scooters pass me by, I saw young
black men riding them near Howard and old white women riding them near
Capitol Hill. The equal distribution of access to technology is
remarkable compared to what I see in San Francisco where Birds are wiped
with poop in the Tenderloin. Howard also is home to one of the few
accelerators called in3.
2. Tech is still “weird” here.
I got the sense that the folks who are building tech companies are still
seen as outsiders. The “cool kids” were able to secure the illusive
Legislative Assistant role for the Congressman of Georgia. I describe
these jobs as illusive because they really are. When I was an undergrad
at Duke, my dream job was to work as a Legislative Assistant for anyone!
I applied to over 100 jobs and didn’t get one.
For the folks who can’t secure these really competitive jobs, they
could always work for a startup. They are risky yes, but so is joining a
political campaign. In DC, the entrepreneurial spirit is alive and
well, it’s just dedicated to the political arena. The successful, DC
based later stage startups that I met with told me that many of their
recruits came from San Francisco and I assume it is to combat the
selection bias that can occur when your industry isn’t the hottest one
I get the sense that people in Washington, DC are still
traditionalists who look to change the world through the system that is
already in place. They do not yet see tech as a real system and if they
do, they don’t see it as a place to impact society in a positive manner.
3. Nobody cares about San Francisco.
This is actually my favorite trait of DC. Nobody there seems to know
about or care about what is happening in the valley. I know many folks
knew this already as is pertains to our Congresspeople (*insert Facebook
Congressional hearing here*). But this seemed to be true of a wider
variety of folks. For example, somebody asked me in earnest if I knew
what was Upwork.
For companies that are building in very competitive industries, this
naivete is terribly destructive. For companies that are building in
industries that are either 1) extremely revolutionary or 2) taking
advantage of DC’s unique traits, I think this mentality is invaluable.
Take FiscalNote for example. It might have been able to have started
in San Francisco, but it couldn’t have grown as fast and as large as it
has without its location. It sits 3 blocks away from the White House and
<10 from Capitol Hill. It is able to attract the best and brightest
who are committed to changing the world because it is building a tech
company that works within the legislative system. These are the types of
companies that will continue to succeed in DC. And I think the
country — especially right now — is ripe for them. With accelerators
like Higher Ground Labs, people are starting to build tech companies
that can change city, state and federal government and I’m excited to
see what comes next!
So can unicorns grow in DC?
Which gets me to my conclusion. Can the next Unicorn get started in DC. I
say yes. It is a city full of entrepreneurs looking to change the
world. They are just not sold that tech can fulfill that promise.