#85: Isabelle Freidheim, Founder of Athena Capital — The benefits of being an only child, creatin...

If you knew you were going to die tomorrow, would you spend your day today taking the subway and going to work? Probably not. So you make assumptions about the future, and why would that not be true in investment? So you do have to make market bets. You know, I have seen catastrophes because of macro factors that were overlooked that were predictable in many cases. Some were not like COVID, but they can still affect the growth of a company. Take a biotech company, they have this new flu vaccine and money's, you know, pouring in, and then here comes COVID. Nobody cares about the flu anymore and everybody's investing in vaccines, or, you know, then that's true across so many industries. So you do have to think actively, proactively about the market and make bets.

Welcome back. This is From Startup to Grownup. My name is Alisa Cohn, and today I'm thrilled to welcome Isabel Friedheim to the podcast. Isabel is the founder and managing partner of Athena Capital. Athena is an investment fund focusing on the intersection of private companies preparing to go public or considering exits through mergers and acquisitions. Athena's team is comprised of founders, chairman, former and current CEOs who all happen to be women. We had a fantastic conversation, which included Isabel's first entrepreneurial experience when she was 12 years old. We talked about how being an only child and growing up all over the world helped her as an entrepreneur and how she learned to build confidence in herself. A very instructive story for everyone. We talked about the genesis of her fund and the organic way it became a woman-run business because Isabel was able to tap into this underused talent pool. We also discussed the way Isabel thinks about building relationships and networking and the counterintuitive approach she has about reaching out to people she hasn't talked to in a long time. Isabel has been an incredibly successful entrepreneur and investor, and it's inspiring to hear her journey along with the practical advice she shares. So please enjoy this great conversation with Isabelle Friedheim, founder and managing director of Athena Capital. Isabelle, welcome to the show. I'm so excited to have you today.

Thank you. Thank you for having me.

Now you're the founder of Athena Capital, but that's not your first rodeo. Tell us about your background before you founded Athena.

Yeah, so I actually started my investing career in private equity with Invesco and previously had worked in investment banking briefly, but really my investing career started with private equity and then I made investments in venture capital until I co-founded my company. So I co-founded a few companies. If I go all the way back, my first one was when I was 12 years old.

Tell us about that.

Yeah, it wasn't quite a company, but I started going to the flea market with my mom on Saturdays and found these cute little boxes of Tiger Balm. They're little little red boxes with Tiger Balm that helps heal all kinds of ailments. And I brought one to school and everyone was interested in the little red box. And I would keep going back then on Saturdays and buy bucketloads of Tiger Balm and sell them at school. Now, this was a Catholic school and they were not happy with me running a business at school, but I would sell them and, you know, the kids were really happy to buy them. And And it created a lot of joy. And funny enough, what the school was upset with wasn't so much me selling Tiger Balm boxes at school, rather it was making a profit that they had an issue with.

Oh, how come? Yeah, that is interesting. Why did they have a problem with you making a profit?

You know, it had something to do with the Catholic morals, school system, yeah, value. I don't know. So, but that's what I remember. Than telling my parents.

That's hilarious. I— there's so much to sort of say about the way people relate to profit and business and building businesses. But I get— and I want to hear the rest of your background, but I sort of want to pause here and say, so you really— your first business was 12 years old. Do you think— you've interacted with so many entrepreneurs and so many founders. Do you think that there is a relationship between people's early experiences and whether or not that they become entrepreneurs? Do you think kind of like you're born an entrepreneur and we see seeds of that when you were like 6, 7, 8, 9, 10?

I don't know about born. It's the never-ending nature versus nurture debates. But I do believe that either born or through early life experiences, those elements can absolutely shape your areas of interest. So, In my case, I had a very chaotic childhood, moved lots of different countries. My stepfather was ambassador. My father was in the entertainment industry and had me grow up as a child actress. And lots of moves, countries, schools, different schools every year. And in that chaos taught me adaptability and it taught me to operate outside of the box. Speaking of boxes. And, and so, so that was one, one element of what drew me to be an entrepreneur and what enabled me, I think, to be an entrepreneur because there was no box as far as I was concerned. And what do you mean?

What do you mean by out of the box?

So thinking about the possibilities and thinking about reaching your goals. So you envision a future goal. A business or whatever it is. It can be any kind of goal by thinking about how together without constraints. And there are lots of constraints that come into play when it comes to a career. So people will start their career thinking, I was told I have to go into investment banking, do my 2 years of investment banking, then I can go into private equity and then I can do this. Or, you know, that applies to parenting too. I was told I have to raise my children this way. They have to go to, you know, music school. They have to go, they have to do their homework and and having it a certain, having the ability to be flexible on how to get there helps it out. And I'm not saying that those paths don't lead somewhere. They do. They certainly do for a lot of people. You know, like Jeff Immelt is a great example of a product of a linear path. And it definitely works for some people, but I think for a lot of, I would say in most cases, something gets in the way at a certain point in time and that linear path is broken.. And how do you jump over that bridge to, or how do you create a bridge to continue to your goal is what I was, what I learned very early on.

So it, it sounds like you, you taught that to yourself. Would you say that's true?

Yeah. Or it was, uh, the circumstances that I grew up in that, uh, that brought this. Uh, but yes, to a certain extent, I think there's a level of personal growth that I went through that helped me adapt early on and later on in different ways. Yeah. Wow.

Oh, I would definitely want to hear more about that, but I don't want to interrupt your little journey. So like you're 12 years old, you're selling Tiger Balm and then you got slapped on the wrist, sort of.

I will say there's something else that shaped my journey and that's the fact that I was an only child. Hmm. And I got bored a lot. There were no video games at the time.. And I spent a lot of time alone, and I really truly think that out of boredom comes creativity. And I had to invent games and make up my own goals. And I was— I was— my, my— both my parents worked a lot and, um, and had this, you know, crazy chaotic life. So I was on my own a lot and had to invent games and things to do for myself. And I think in in a society in which paths can be so structured, including academic paths and after-school activities, that is actually something that I would say had a profound impact on me, on my ability to envision goals that weren't necessarily in the box.

Right. Because you were, you actually, it sounds like you had a lot of unstructured time and just not a lot of supervision and not a lot of like playmates or whatnot so that you kind of for whatever reason, that, that experience pushed you in the direction of like making up games and making up goals and kind of making up things to do. Is that right?

So if every minute of your day is structured and planned, you don't have time to— for imagination.

Yeah. Has that changed how you— you've mentioned parenting— has that changed how, or that affected how you are raising your own children?

Yes. And I wish I— this is one area of growth I still need to address. But in my case, I actually wish I had a little more structure.

For your kids?

Yes.

Yeah. Are they— do you feel like they're making use of the unstructured time in a similar way to you, or do you feel like their unstructured time is They don't have that, that only child, um, um, structure time, if you will.

So they just spend their time fighting if it's not structured. So that doesn't work. That's right.

So the same lessons don't apply. So if we go back to your entrepreneurial journey after 12 to selling, selling Tiger Bomb in school, what, where, what are the other businesses that you founded or co-founded? And, and I guess I'm just curious about your takeaways from those experiences.

Yeah, I don't know. I found myself in leadership positions early on. So even as I was in high school, in college, when I started college, I ran for positions. And every time I would have someone who would come to me and say, "Hey, can you do this? Like, run for, you know, can you be the school class ambassador or whatever?" And I don't know, I did it and it worked for me. But I'm then started working in investment banking after college, and that did not work. And it was a surprise because I actually struggled to operate in such a structured environment. And actually, one of the things that I struggled the most with, which is going to sound kind of funny, is sitting in a chair for so long because there's so much face time in investment banking and you're sitting from, you know, 7:00 AM to 11:00 PM and you can't move. I was told you have to do a certain level of face time. Face time is important here. And— and I was told this by someone who was a year older than me, who was an associate when I was an analyst. And, um, and he had gone through that. So he told me, this is how it works here. And I think Wall Street has done a great job at evolving this culture and being able to extract value from people without requiring face time. So, so there's been an evolution there, but then I actually really struggled with sitting in a chair and not that I'm hyperactive or anything, but just, it's a long time to sit.

It's a long time to sit.

I like being, you know, walking around, being outside. I'd rather go to meetings than sit in front of a computer all day. So that was kind of a surprise to me. And I left investment banking pretty quickly and then went into private equity, but that was a different, I had a unique opportunity to take on a senior-ish position as a junior because I worked directly for two senior people in that group. Group. So it was a unique opportunity and I jumped on opportunities as they came. I had the CEO of Federated who offered me to do, uh, joined the, the group as, um, doing this rotation management program. And then I discovered it in like the retail industry, which at its core really revolves around merchandising. I just didn't like merchandising, but, um, but it was a great, nonetheless, a great opportunity to learn about another industry and learn a framework to think about what do I want to do? I started another business when I was in business school. And that was a business that we had to pivot because we were somewhat too early, an escrow service for e-commerce platforms, but ended up working with wholesalers because we were so early in the process. But there was eventually, you know, fast forward 5 years later, demand for it. And I went back into more structured venture capital funds, but kind of always did my own thing within within structures. And I start— yeah. And, and so I, I had, you know, when you're sitting on the venture, when you're an investor, and I'm really an investor at my core, cause I, I did this for, um, you know, now 15 years of my career and have seen so many cycles and industries and sectors and companies succeed and fail. And as an investor, you are always sitting, or I, I, and I know I can speak for other people cause we've had those conversations, but you're sitting on one side watching all these people succeed, these companies do well, and it's very tempting. You feel like you're sitting on the sidelines and you have a lot of venture capitalists who say, well, I should do this. I know, you know, I've seen 20 of those guys and I know better than them. And but similarly, when you're on the entrepreneur side, you think, well, these guys have kind of a cushiony job. It's easy. They just take my company and after a couple of meetings and that was, that was the extent of their work. So, but it was very tempting. And so, I went back and forth and I started in 2017 making, starting, I co-founded a company. So I co-founded the company with Vinay Nair, who's a wonderful fintech entrepreneur. And Vinay, I had met when I was in venture capital when, with Mission OG, where, which is a fund that was founded by Gene Lockhart, who was CEO of MasterCard and CEO of the global retail bank for Bank of America. And he was also with General Atlantic for, many years of his career before going to Blackstone, but very astute investor. And his partnership, the partnership of the fund was very markets driven. And in that context met Vinay Nair, who was at the time creating a company called 55IP. And we were very detailed investors and would take a long time to get to know entrepreneurs and kind of missed that one because the company was acquired by JP Morgan pretty quickly. And, um, And so, uh, never made that investment, but nonetheless, Vinay had shared his vision for a search engine at the time, which is— uses artificial intelligence and machine learning, a search engine for financial products. And that's what Magnify is, which I co-founded in 2017 and operated as CEO.

You were the CEO?

Yes. And I raised multiple rounds of capital for the company and along with Vinay, worked on hiring the team, the product. He was very product-driven, deep technical understanding, and we leaned more on machine learning than we do now. And now it has turned into more of an AI company. But in 2020, we hired a growth executive to come as co-executive chairman, David Potrak, who was CEO of Charles Schwab. And a big, a big hire. Um, and Vinay, to his credit, brought a lot of great people to the, the board as well. Eventually Kathy Woods ended up joining the board. And, um, and, and so the company was acquired by Tiffany in 2020, which for me was a time of— I had worked very hard and all of a sudden there's nothing to do. So I decided, I thought, this is great. I'm gonna take a break. Finally, I've said I was gonna not necessarily retire, but take time to figure out what I wanna do. And wow, was it boring.

I think about a month.

I started decorating my house, which was a project in it by itself that I really enjoyed. I'm very creative and I enjoy making art and I love interior design. But I got so bored. And at the time in 2020, there were a lot of SPACs that were emerging. It was the boom of SPACs. And I knew I had a lot of portfolio companies who I hadn't— the companies I had invested in over the course of the years that I've worked in the industry as an investor, and I've been lucky to form close relationships with founders of companies I've invested in. And a number of them would ask for advice. One of them being, should I go public through a SPAC? Because everyone else in the industry is, and, and I thought, great, I can take one of these companies public, or I can, um, you know, this is a, this is something to do in the meantime. So I decided to launch a SPAC and it was meant to be somewhat part-time, I guess, until I figured out what I was gonna do. And the game at the time was find the highest profile person that you know and put them on the board of your SPAC. Celebrity, an athlete, or whatever. And I looked at my Rolodex and everyone was already on the board of a SPAC. And I thought, oh, I'm late to the SPAC party. And, uh, but then I took a closer look and I realized the men were taken, but not the women. Hmm. I thought, well, there's a great opportunity. I mean, I've been complaining for years about the lack of women in my industry. And, um, and that's true in, you know, finance and technology and especially the intersection of the two. And, and you see women absent from the formation of new financial products. So take, go all the way back, you know, the high yield boom in the '80s or the '90s, the leveraged buyouts in the '90s, and Um, you know, hedge funds and private equity funds and venture capital funds, and then founding of tech companies, and women are nowhere to be found. It's still true now with, you know, certain blockchain products or even AI. So emerging technologies, emerging products, and they do show up later, 5 years later, 10 years later. We all know the numbers now. They're still low, but But they are there and, but they, they come at a time when it's too late to claim a market share and be a true leader and a shaper of that product or that industry. So I thought there's an opportunity to bring women early on in a new product and, but also create an opportunity for women to access economic growth that is missing because we've come a long way. And now there's almost parity on boards, or at least the intention is there to have women on the boards. People welcome women with open arms on boards of companies and C-suites. And sure, the numbers are still not parity, you know, 50%, but there's been a lot of progress and more of meritocratic environments now.

Before we go any further, can you define very briefly a SPAC? Because just, I wanna make sure everyone understands what that is.

It's basically, you can think of it as an investment fund that is publicly traded that will only invest in one company, thereby taking it public. So it is an alternative for the company that is being acquired by a SPAC. So the SPAC is the fund publicly traded that will buy a company or a, a portion of the company. And by merging in that way, The company, it goes public because it merges with a public entity.

Right. And what are the advantages or maybe the, the distinctions between an IPO and a SPAC?

Well, a SPAC can go a lot quicker because the entity is already publicly traded. So that is one of the issues in the US with regards to going public. It's very lengthy and very expensive to go public. There are a lot of regulations. We hope that's going to change. Soon, but it has been historically very like that. It's a year-long process, if not more, that takes up a lot of the management team's time to go on roadshows and present to investors. Whereas the SPAC has that appeal of more concentrated investors and, or at least it did originally. Now, the SPAC market has been what it has been, but it wasn't just the SPAC market, it was also the equity market altogether, the public equity markets that that didn't perform in a general risk-off sentiment by investors to invest in debt products and less risky profiles, more mature companies, right? So, so the SPACs have struggled because there was a large number of SPACs that came to the market all at the same time or within a very short period, 6 months, a year. There were at some point 500 SPACs. In comparison, there are today about 50. So, and we have, we've dealt with our SPACs. So, and then ended up moving away from SPACs as a product that I think will continue to stay and play a role in the industry. But we went back to focusing only on investments.

Got it. I mean, the pendulum swings on these kinds of things. And I think that SPAC was a very helpful vehicle for a time, but I appreciate what you're saying and I want to dig deep because what you were saying is that you, you realized there's a thing, a SPAC, and this is an opportunity. And then you looked for an influential person to be on the board and realized all the influential people had already been taken except, aha, there's women. So I know, like, it's like, who would think of that?

Yeah. I mean, I looked at the list that I put together and I thought, what an outstanding group of people. And that's when I had the idea of making it all women.

Love that.

And, and again, I, what I was saying earlier is that women who are on boards, uh, for example, that's great. And a lot of them have managed their personal brand well, but that's not an economic opportunity. It's great, but we need to go a step further and go get away from check the box. I have a woman on my board to women are actually making money. But, but there's some more risk aversion, I think, among women themselves who get in their—

Is that what you found?

I, yeah, absolutely. And, and lack of confidence. I, I don't know, it's so technical. I'm a CEO, I don't know SPACs, or, you know, I don't know how to make investments, or I'm an investor, I don't know how to operate. So there's, there's a lot of hesitance and I think it's cultural heritage. And, and that is, is something that needs some evolution, but also people around women and minorities in general, there is still some discrimination, but it's not, it's not voluntary. It's, it's this, it's, I haven't seen the data anymore. I've seen lots of people who look like Mark Zuckerberg and they execute. And that's the data that I have in my head. Um, I just haven't seen people who look different and you put a lot of data points together to make up for a projection of what you think is going to be a successful investment or partnership or.

That's true.

Yeah. Or manager. And, uh, and so the path that I embarked on was to set a precedent and create the historical data. All right. Now you have it.

Oh my God.

And execute.

I love that mission. Wait, to bring us back to that moment that, that you were sort of, or, or the moments where you were thinking, I know I'll do a SPAC and you're looking for all the influential people and they're all taken. And then you thought, eureka, I'll find a bunch of women. Who were some of the initial women on the list and what was that like as you began to compile that list and then go reach out to them? And what was their both excitement about it but also hesitancy about it?

Yeah, it was very organic. I, a lot of them I had met over the course of my career and, um, and then they would bring with them someone who they thought highly of who should be a part of it. And that's how we built Athena, who goes well beyond SPACs, although that's how we started, but now with the fund. And, you know, it's a group of women, or about 40 women, and, uh, all are personal investors and have been on boards. And, but I, I'll get back to that. But the group that we ended up assembling is, is a group that has, uh, really top-level and execution capabilities is what I wanted to focus on so that we were not yet just another women's network because there's so many of those. And in a group who was beyond capable of executing. And we did, we delivered on that promise.

What is, what specifically did you deliver? When you say you delivered, what did you deliver?

We, we closed transactions and we raised capital for the companies that we take public, that we took public in, in the most challenging environment. And, and we're still in the process with, with one of them. But yeah, it, it was, it was an incredibly challenging environment and we never gave up. We made a promise and we followed through. So that was the, the really good thing about the types of individuals and the, that I brought on board and the grit, um, and the leadership. We, each group had management teams that were full-time and boards and, um, operated almost like as an, as a pawn. And, uh, but in each of them there was tremendous grit.

Yeah. And each— when you said each group, do you mean each sort of SPAC group that sort of you formed a company and then—

Okay. Now, and— Got it. And I, I led this thinking this is going to be a, um, we need to render a service to companies that we work with, that we collaborate with, and assemble different resources that could help Um, again, deliver on that and be the best partner we could be for the companies that we took public. And within that group, I assembled a lot of, a lot of them were board members. For example, we had board members of companies like Citigroup, Aetna, Comcast, Oracle, Johnson Johnson, WeWork, Starbucks, Ralph Lauren, you know, Fortune 500 boards and CEOs of companies like former CEO of De Beers in the US, former CEO, lots of CEOs. CEOs and C-suite executives, top-notch investors from, you know, growth funds who had the deal flow. But we also brought regulators. We had a former SEC commissioner on our board. No other SPAC had a former SEC commissioner on their board. That was really unique. And in fact, it helped us engage in a very productive dialogue with the SEC. We presented to their small business committee at a time when they were questioning SPACs. And, but even going further, we've established a, a positive relationship. And then we ended up having, now we have the former chair of the CFTC on our board. So regulators became an integral part of what we do. And again, a great opportunity to both create economic opportunities and leverage on what women can bring. And you see men do that often, create, and they were regulators, they create a consultancy group and But putting all of this to use and leveraging those assets and deriving value from it for ourselves and for the companies that we work with, for our investors, was, in my opinion, the element missing.

Very good. Very— that's so tight. I love how elegant that all is. So you were saying that, you know, women are— I think women and, and as you said, minorities, they're in some ways they're left out because we have all this data that we see what founders, what investors look like, and they look male, they look white male, they look a certain way. But also, and I think you were getting at this, some people who are not comfortable, who are sort of left out of the process, left out of the system, they then also don't have the comfort. They are risk averse, as you were saying, that women are. Tell, tell me more about you. Like, what is a story that you could tell that kind of made you come to that conclusion? The understanding that women tend to be, for example, more uncomfortable, less willing to maybe dive into things they don't know, more risk-averse. What are some examples that make you say that?

I'll give you a few examples. I had women tell me So two different themes here, but some of them would say, I don't know how to do that. I haven't done it before. But I was like, wait, you weren't a CEO before either. How did you manage to be a CEO and not, you know, you think you can't find— and there's something intimidating about the public equity markets for some reason, which I don't know why, because I mean, there's what we do in SPACs really is not that complicated, nor is what we do as investors that complicated. Um, so it's a psychological barrier. Or women would say something like, hey, it's great what you're doing, I love it, I just want to be a part of it, I'll do it for free, tell me what you need. And that's when I thought, well, that's the whole point, we're not doing things for free. Why? And that was a novel concept for a lot of people. You know, they wanted to form this, uh, these relationships, but it doesn't have to come at the cost of enhancing personal relationships to also have work relationship. So I think women tend to be more risk-averse, and I've seen this across cultures. I grew up in France and in Romania, and when I came to the US, I saw something that was very much along the same lines, and that was an inherited from childhood perceived, um, risk and in, in leaping into something that you don't know how to do. Yeah. And I don't know why I haven't figured out why.

Yeah. How come you don't have that?

I, I probably do. Um, but I have overcome it, but it's still come. I, I do overcome it, but it comes with some fear and Butterflies, but I do overcome it. And again, I've been in a way lucky, as difficult as it might have been at the time, it was a blessing in a way to be in this somewhat chaotic environment and go through, have that opportunity to grow and be forced to overcome fears by changing cultures, changing, you know, being in Putting myself in situations in which I don't have a choice but perform. Like for example, I came to the US, I didn't speak English, and I went to college. I transferred from France to the US. I don't wanna say I didn't speak a word of English because I studied English, but I didn't really speak English, let alone understanding the topics. I studied economics. And You know, it's like if you go to a new country and you have to write a 15-page paper in a language you don't know on the topic you don't really know much about either, it's really challenging. I mean, that's just one of the examples, um, which I was kind of forced to overcome discomfort and push through this comfort, and it becomes a habit. So there's no other way. Than plowing through and keep going through the discomfort. It's almost like going to the gym. It feels really uncomfortable when you start a new exercise or new, you know, gymnastics or whatever new that you start is hard. But of course it becomes easy as you practice.

I love that. How did you convince the, the people, the women who are now part of your company, part of Athena, how did you kind of overcome their, let's say, trepidation in, you know, their discomfort, whatever reluctance they had?

Well, some were quick to jump on it and they loved it, but some we— so you'd see there were two kinds of responses was the right away response, yes, I'm in. And there was the, you know, take a year to think about it response. And, you know, study this back market, study this and that. And there's no right or wrong answer. More thought-through answer. But in either situation, it was the same kind of questions. And in our case, it was, let's hold hands and do it together if that's the issue. And that removes a perceived barrier. We're all in this together. And hopefully that's the beginning of being in a situation in which that's not needed anymore and people can comfortably do that. Yeah.

You now— so now you have a woman— it's women-led, obviously, women-run company. And yet you've dealt in many, many, many situations where it's like a mixed room, right? Men and women together, probably plenty of situations where you're one of the few women or the only women. Is there anything to say about the dynamics of your, you know, women's leadership team, leadership team with just women or the company of just women that's noticeable to you, that's different or noticeable?

Yes, there is a lot of grit and couple that with loyalty to each other. It's incredibly powerful, incredibly powerful. And that's the beauty of having a mission and a mission-driven company. Look, I've built companies before and groups and have led organizations and have led investments And you, you, I don't talk here about the fact that we're all women, by the way. When I, when we go to our investors, we talk about the asset class that we invest in, which is pre-IPO companies that are about to go public. We talk about the numbers. It's obvious we're all women. People know it. People know our brand now. Um, but it's irrelevant. That's an, and it's an internal mission for us, that loyalty, that glue. Is what allows us to perform, to go above and beyond. And we did go above and beyond with taking companies public and raising capital for the companies and putting a fund together in an environment that is, again, most challenging for fundraising as well for funds. And, but people really, the founders, both founders that we interact with and investors who invest in our fund, really understands the value of this tightly tight-knit group. We call it the council, the Athenian Council. And, and that's why we have retreats. We get together every year. We have a WhatsApp group. We have pods in different cities. And so it's an active and tight group. And people will sometimes describe themselves, even though they all have other— many of them have other professions, right? We have the core group as investors in the fund, the partnership, but others will describe themselves as, um, you know, they're, I'm a member of Athena or I'm part of Athena. And, uh, and that's, it's really nice to hear that and to hear the impact that it can have on their professional opportunities outside of the fund as well. But we very much leverage on that when we go to founders and we can introduce them to kind of just about any board in corporate America and help them extend, grow globally. And we have these tentacles at the highest level, whether it's government or, or corporate. And that's really unique. No one else has that, or they do, but some do, of course, but in different ways. And we can pick up the phone and if there's a woman on a board, we can get to just about any company. So that, that's, uh, that's really unique and especially for a first-time fund and an early fund, because this is the first fund that we have launched together. My partners came from SoftBank and, you know, we have decades of experience investing in late-stage companies, but this is new together as a group.

Yeah. Was there more you were going to say?

I was going to say the founders appreciate having someone hold their hands as they go through a transition like an IPO., you know, or an exit selling their company to a private equity fund. And there's something about being women that they actually pretty, that they value. And a lot of them will proactively pick board members from our group when other VC funds struggle to get a board seat. We've had companies ask us for additional board member addition in addition to what we agreed to. So, and, um, and you know, that, that is really important and not a lot of VC funds will do that, which is continue accompany the founder through the journey of the exit. Because going public is a very solo journey. Being a founder, being a CEO is very solo, um, where you're very alone. And when you go public, you're in the public eye. You have to report to investors. You have quarterly, a lot of pressure. And in a bank, we'll take a company public and we don't try to replace a bank at all, but the bank is out when they're done with the transaction and they help the founder think about raising capital or not. In we help them think more holistically. First of all, is it the right time to raise the most capital you can at the time of an IPO where capital might be more expensive? Or are you better off raising a little bit now and take, you know, maybe make a market bet that in 6 months the cost of capital will be lower as an example of how we help founders think through longer term and, and stay on their board, stay with them, um, help them think through global expansion, help them think through investor relations, non-dealer roadshows, how to market to the investor community because that's their audience.

Yeah. Listen, I love all that. That's fantastic. Are you saying other firms don't do that?

They, they do, but some of it is just marketing. Some of it is they try to do it, but it's done in a very different way. Some will micromanage Some will— we have competitors, of course, but what we do is really unique. It's, it's a unique approach to achieving what a lot try to achieve, right? And some might do it better than others, but there are very few actually that can deliver on that.

Hmm. So a lot of what you've talked about, you've talked about tentacles, and really it's just about in some ways the value of your network. Can you talk about what, you know, is there a time early on that you realized, wow, networking is really important and how you've thought about building relationships and building networks over time?

No, it came naturally to me. Sorry, I don't have a good answer there.

That's okay.

But what—

maybe you were an only child, so it's not like you had practice building relationships with your, with your childhood, with your sibling peers.

Yeah, yeah, that's right. So maybe it was, you know, instinctively I turned to friends since I didn't have siblings. Um, but I have always surrounded myself with amazing people, and that's that's key. And I've seen a lot of different paths and different, you know, value in different relationships. But I have also learned to discard relationships that weren't healthy, you know. But that's not— that's professional. I mean, professional relationships.

Yeah. How did you— when you say you learned that, is there an example like that made you realize that? You don't have to name names, but like, a moment that you realize this is no longer working for— it's no longer win-win?

Yes. I mean, I had it. I, I— there was someone who had, I think, a personality disorder that was very disruptive to all everyone around. And, um, and, you know, there's a lot of growth, personal growth, that, that happens throughout a person's journey, and some people will choose to grow more than others, and You, you hope that people can evolve in their seat as a leader or as a manager or as an investor, but that's not always true. And if they don't want to, you can't force them and it's just not gonna happen. And when you recognize it's not gonna happen, you, you distance yourself.

Yeah.

If there's no other way.

Yeah. I think it's so important to sort of constantly, really professionally speaking, to really be assessing your network and making sure that you have the capacity to have the right people who make sense for you and your business over time. It doesn't mean to like cut off necessarily in terms of relationship with people, but you have to emphasize and kind of be intentional about building the right network for the company that you wanna build. How do you think about that?

Building the right network?

Yeah. And what advice do you have for people?

Well, there's always, um, you, you have, if people tend to have a much broader network than they realize, but pull on different parts of the network for different, uh, needs at different points in time. Just like I will have people who will reach out to me and say, hey, I need help with that. And I haven't heard from them in 5 years, but it makes sense. And, um, I think not forgetting that you have this network, even if you haven't spoken to people in 10 years, you know, you can pick up the phone and call them. So a lot of it is, there's not so much proactive building, it's proactive looking back and realizing that it is there and people grow with you, right?

Yeah. So it's really, yeah, it sounds like what you're saying is, and I think that people, certainly my clients regularly think like, oh, I'm so uncomfortable. I can't reach back out to that person. I haven't talked to them in 5 years. Or 10 years or whatever. But what you're saying is, well, that's actually appropriate. There's nothing wrong with using that moment to rekindle the relationship.

Yeah. And then you keep— yes, that's right. And you keep growing. That doesn't mean you don't keep growing and meeting new people then. And your network might evolve as you silo into more specific, narrow areas. But at some point, you might need something from a whole different life. Right. And call them, right?

How, what, how do you think about adding new people to your network? What are your specific strategies that you use to do that?

I mean, for us it's been very organic. There are endless amazing women that I could keep bringing, but we've purposely capped it at 40 so that we— because then it becomes a management exercise. But I continue to meet new people. I mean, look, my, my life is very centered around my work, so I meet a lot of people at conferences and meetings in Um, you know, company founders, investors. So that happens organically.

Yeah. What do you, what advice do you have for founders? Because it sounds, I kind of am experiencing that you're like, I don't know, you just do it. And I think that it does come naturally to you. If you could break it down and give advice to other founders, other investors, other, you know, ambitious career, ambitious people in their career. What are one or two specific tips you have to add new people to your network that will help you professionally?

I would say take interest in people genuinely as people, not just as what they can bring to you. Of course, you have to be aware of that to be efficient with your time, but building true relationships. You know, I had a partner who was very focused on, I got to meet every CEO and every billionaire tonight and it was so single-minded. And so, you know, it was not fruitful because, you know, you end up being scattered and that's not the point. That's not necessarily who can help you the most, but now it can, it can help making friends. I've made great friends that way. But I think not purposely trying. I mean, if I, if I tried to recruit someone specifically or add someone to our network as an investor, as a board member, then I will go specifically after that person and I may or may not know them ahead of time. But, but, but if I'm just opportunistically building relationships, let's say, you know, on a high-profile conference, for example, I don't actually look for anything in particular. If I don't have a role in mind, I just look to get to know people and I don't know, I find people very interesting, whether, you know, CEO or analyst, they're all very interesting to me.

Yeah. So it sounds like build up your curiosity with people and try to build genuine relationships.

Yeah.

How do you, if you are looking for someone in particular and you say you go after them, how do you sort of make that approach or that, like, if it's a cold call or how do you, how do you approach someone who you don't know?

I share our mission. I share about our—

like, do you find them on LinkedIn or how do you literally get in touch with them?

Um, sometimes most of the time I will hear from someone, oh, you should, you know, here's an idea. So we have a lot of brainstorming sessions. I call people and say, you know, do you know so-and-so? Or do you, you know, do you have an idea? Most of the time they'll introduce us or, um, they will say, just look up this person. And, um, that's it. Yeah. You reach out, find the number, reach out. Yeah. That helps if needed.

Yeah.

Usually know someone who will get us there. And if not, yeah, cold, cold emails, I guess. Work. They work for me. Yeah. But yeah.

Whatever it takes.

Yeah.

Now you've been on both sides of the table. You've been a founder, you've been an investor. I mean, really, you've done so many elements in all these different kind of environments. Given that experience, I think I think maybe the first question is, as an investor, what do you look for in a founder such that you know they're gonna be successful? You want to partner with them on this journey?

Oh, so I think you look for qualities in founders one step at a time, meaning what can they do for the company that you invest in for the next 3 years, not for the next 10 years, because that is very, very very rare. Mark Zuckerberg, Jeff Bezos, that's very rare. Most companies will have a growth founder or someone who will be best equipped to start a company or someone who will be best equipped to run a publicly traded company. And there are many failures along the way when there, the interest isn't there. And sometimes founders have the interest, but they can't pull it off for whatever reason and it gets in the way and, or they would really prefer to start another company, but they're stuck in a publicly traded company as CEO. And, and it doesn't match. And of course, anyone can grow into a role, but sometimes it's a matter of not that it can't grow, but that they're not interested because their passion was really founding a company. They founded the company to get public or CEO of a publicly traded company. But again, some have grown and some have found their comfort zone there, but for the most part, it's, it's pretty rare. So, and if it works out, great. But I personally look when I make that investment, um, 4 or 3 years ahead. Now we right now invest in companies that are about to go public. So we look for those qualities or for companies that are about to be acquired. So we look for a professional CEO who can run the company, and maybe that's the founders in some very rare cases, but very often we see some adjustments, or maybe it is the founder, but we need to surround them with different people. And so if they have done that, it's a huge win. That's really important. Now, the other thing is market. So I used to, as an investor years ago, focus on understanding the market, the competitors, the need for the product, and become expert in some segments. And that's great. But I realized later on that I, in many cases, had completely underestimated the macro piece of it that seems to be outside of your control. And it is powerful. I mean, look at what happened to the equity, public equity markets in the last 5 years.

Yeah.

And that was, and there's a need to make a macro bet. A lot of investors will say, well, we don't bet on, you know, interest rates or the future because we can't predict the future. But I think that's an error because it's a mistake because you make assumptions every day in your life and predictions on the future. If you knew you were going to die tomorrow, would you spend your day today taking the subway and going to work? Probably not. So you make assumptions about the future and why would that not be true in investment? So you do have to make a market bet. And you know, I have seen catastrophes in, because of macro factors that were overlooked that were predictable in many cases. Some were not like COVID, but they can still, you know, they can still affect, the growth of a company and take a biotech company, they have this new flu vaccine and money's, you know, pouring in and then here comes COVID. Nobody cares about the flu anymore and everybody's investing in vaccines or, you know, then that's true across so many industries. And so you do have to think actively, proactively about the market and make bets and understand why and explain them. Yeah.

Yeah, for sure. So it sounds like you're really focused on, you know, obviously the macro, making the bet and making sure that the industry feels like it's going to be the right thing. Although actually to your point about COVID you know, black swan, you know, surprises do happen. But that also when you're looking at late-stage founders, you're looking for somebody who can, you know, sort of manage the business or have people around him or her that can manage the business. Are, like, what are the markers? Like, how do you know?

So, I mean, again, we come in later when the company's about to exit, but the first sign for me is, have they thought through, have they envisioned the future? Have they thought through their first quarterly earnings if they're planning for an IPO? And you'd be surprised, a lot of them have no clue. They have no clue about the process. They have no clue about the parameters. They have no clue how to think about communicating with public investors. And it's very surprising and they're still focused on raising their, you know, last bridge round before the IPO or Series E or just closing that. And they're still very much in the mindset of a private company. So that to me, the first sign is, have they looked, have they planned for what the future looks like? Do they have a plan? Do they have, does the company have internal compliance measures that are consistent with a publicly traded company? Have they thought about whatever the regulations are at the time? Could be ESG, it could be whatever. Have they thought about that? Have they thought about the board composition? And many of them will passively just, they still have the venture capital investors that join their board and it's very passive. So I'd like to see a proactive approach where You know, we are going to sell to a private equity fund and this is, you know, how we're engaging this value we're going to provide. We're going to be a mature company, provide cash flows and have thought about that. But because otherwise you have founders who run around trying to sell to a private equity fund, but they haven't thought about what value they're going to provide to the owner and they don't think like owner anymore because a lot of them aren't even owners anymore. Yeah, for sure.

But they, at the same time, I have to assume that you've dealt with, I mean, I, in my experience with my clients, actually, and all the startups I've, you know, sort of thought about or dealt with or interacted with over the years, I think it's hard to make that leap unless someone— you don't know what you don't know. So you might think you're being proactive about thinking about like, let's say the next quarter or after a public company. But I think the details of that are not really straightforward. That's something that they have to be taught.

Oh, I think you have, yeah, taught and therefore studied. So it has to be you have to do some research and think about what's next. And if you have no clue what's next and you surround yourself with the right people, whether it's a, I don't know, a business coach or banker or whatever, or ask the questions and, and figure out what questions you should be asking yourself. And, you know, even, even growth. So a lot of companies continue to grow through the, the way that they have grown for a long time, which is markets, as you know, do marketing campaigns or whatever. Send their sales force to enterprise sales and they can overlook often they do hunt for acquisitions, but they don't hunt proactively and don't, they don't think of a strategic acquisition plan. Like I want to proactively grow in, you know, the small business category rather than reactive. And they'll take, oh, this company approached me, they want to sell their company. Should I acquire them or not? Or this is a great opportunity. And when you do a little bit of research, like how did you meet them? And Well, they approached me and sure, in some cases that works, but, but, but I'd like to see a more strategic plan and a thought-through plan. Like I want to specifically grow in the defense sector. Therefore, I'm made a list of all these companies and here are the ones that are attractive and, and it's a more proactive approach. And that's actually very often lacking for companies that emerge from venture capital growth. And that's a lack of maturity and companies are maybe not so ready to exit. Mm-hmm. Yeah.

Also, I, it's a very good point that, you know, sometimes their investors have not quite fully served them and, you know, it sort of enlightened them and educated them because I think that, you know, oftentimes venture, well, I mean, investors are often on just multiple boards, so they don't always have the time to really focus on any one company.

Yes, that's true. That's true.

How have you personally grown as you've kind of gone through your journey starting from when you were 12 years old, 12-year-old entrepreneur to sort of, you know, back to back and forth between an investor and entrepreneur, back to an investor and also an entrepreneur. What are some of the areas that you kind of look back and you realize, this is how I've personally grown?

I have grown a lot in confidence. I am much more confident. Now than I was 10, 20 years ago. And but when I look back, there was no need to lack confidence. There's no reason. You can be young and inexperienced but confident in your ability to participate in a team and add value to a team, to a company. Or in my case, my ability to speak the language, for example, I felt inadequate, you know, when I first showed up in college and I put a lot of pressure on myself and it came with a lot of anxiety, but at the same time that gives a drive to perform and grow, but it didn't have to be that way. And that's something that I learned over time. And I think surrounding, I've learned to surround myself personally with the right people, but also broaden this. So I had, You know, I had for a long time a partner who was very risk-averse and while encouraging, had a very specific set of ways to do things. But that can be true for anyone in your life. It can be a parent, you know, your father, your mother. My dad did things this way, you know, he worked at GE his whole life and therefore I'm gonna do the same thing. And that's the way you grow. And having that rigidity can get in the way. Because that's what worked for them. That may have been an example, but if you have a conversation with them, it may not actually be what they would really recommend if they listen, if they truly listen. But certainly, and, but if, but if they keep, you know, being stuck in a way, I think then you need to get other data points, other input, right? You know, there will, there are people who will, who will give as advice, you know, just be very closely guarded, like keep your, all your equity, like don't, uh, or don't spend, like be very frugal when it comes to how you operate a business, um, more focused on cost cutting than on growth. And, but I think being, and then you can have the opposite, you know, um, just, yeah, go spend, try, fail, start again. And, but that can, they can do a disservice to people if they keep if they don't learn from it and if they don't grow. And, and I think not following a rigid model and having some flexibility, um, really helps with personal growth, professional growth, and in so many aspects of, of life. Um, and I think you have, you have now— it used to be that entrepreneurship was more and was less defined than it is today. And we've gone through a period of time in the last 20, 30 years where there are things like Y Combinator that emerged. So take 30 years ago, an entrepreneur like Amazon or whatever was new. It was doing things their own way in an uncharted territory. Now it's another form of investment banking. You know, I've done my two, is that, have I done my two years investment? I've done my Y Combinator. I've, you know, worked two years at Google. I did Y Combinator and here I am. And so, that doesn't really translate flexibility and an exploring mindset. So when I look at young entrepreneurs, I still look for that, that flexibility to be cultivated or developed. And I would encourage people to really surround themselves with different points of view.

That's great advice. I love that advice. Isabel, just a few more questions. We talked about, you know, sort of lack of confidence and a few times both in yourself and others. Have you ever experienced imposter syndrome or a sort of a severe self-doubt that prevented you from doing things you wanted to do?

Yeah. And it's the same thing as confidence. And yeah, all the time.

What's that like? Can you give an example?

I mean, well, you know, being in a room, whether it was when I first started working in investment banking, the Monday morning meeting, or what am I doing here? Or I mean, just any time or with investors or, but a lot of it is reframing the experience and it can happen on the spot or it can happen years later. And that's how you grow. And it's, uh, processing the experience. And you know, now when I look back at my Monday morning meeting in investment banking, of course I was capable of doing it. Why did I feel that way at that point in time? Um, or, you know, I'll give you an example because we were all women. We went to an investment bank and said, we wanna do some SPAC. Can you take us public? And they said, well, we might have a, a conflict of interest. Because we have another SPAC that has women on it. And I thought, wait a second, there are 500 SPACs, 499 of them are all men or, you know, run by men. And you have one other SPAC that has women on the management team and you think that's a conflict? Have you told all the other 499 men that's a conflict? And that was an example of what was on the spot where my first thought was, I was, oh yeah, I guess, Narayen. But that was an on-the-spot, wait a second, no, that's not a conflict. And you know what, I'm going to go work with another bank. And we ended up working with Citibank and Jane Fraser as a role model and who also was supportive and sent us a note. It was wonderful in the end. Something good came out of it. But, or, I mean, there are lots of examples, but it doesn't, it's useless unless you process it. And so again, it can be right away, like I did that one time, or it can be years later. And that's when you're able to process it and overcome it is when you grow. So that's why I would encourage people to look back at prior experiences where they felt that, and that's when you realize that it was completely distorted reality and your own perception that is not true in many, many cases. And, um, and in fact, I think people who truly don't belong, which is pretty rare, but when people don't belong, most of those people don't actually even see it. And it's great. It's a blessing. It helps them, allow them to grow without fear. And so So that's interesting. Yeah. And there are times when I've had to reframe where I sit in the world, what am I doing. So take the All Women Experience, for example. I came to that with a mission in mind, and that completely reframed my purpose. I have no fear because I'm also bringing a mission with me and defending a mission and working for a mission. And that that helps. And not that you want to hide behind that, but it does give a new meaning and a new level of determination. And there's something about fighting for others that makes it easier in a way. And I've reframed also how, you know, raising capital can be intimidating, but I don't want to say it's been easy for me, but I have been able to do it. But I think in large part, again, reframing what that means in whether it was with starting my company or starting a fund. In the end, you're creating a partnership with investors and you're providing a service, doing something that fills a gap and doing them a favor by bringing them a good deal or a good opportunity or a good investment. And You know, it's a work relationship. That's it. It's just reframing it as don't look any further into it. It's just not a personal attack, you know? And I think a lot of people fail with that. And there's some work, personal work, that I think is important for people to do if they have been burdened at some point in their lives, whether in childhood or later, with this thought of it's about them.

Yeah. What kind of personal work?

Well, I mean, look, to me it came naturally, but I, I think— and it came through thinking about it, maybe reading some books on personal growth. But I think that's why— that's what— that's why coaches exist and therapists. And in many ways, it's, it's— if you really want to grow as a leader, there's some a personal work that can help people become better leaders. And some do very well with whatever neurosis they have, and that works just fine. And, you know, maybe they're not good life partners, but they're great at running companies. And if it works, you know, fine. They might not be happy, but it's working.

Isabel, what do you wish you had known earlier on your journey?

Just that's what I just described, um, to have confidence in myself. I've, I, in the past, listened to people and the, all the information was there, the positive one and the negative one. And I don't know why I chose very often to hear the negative one, or you can't do this, or, you know, it is too much work or it's too difficult. Or, um, I don't know why, maybe part of me likes to have a, a challenge, but it would certainly create a challenge that did not need to exist. So I would tell people that start early in their career to find that confidence, whatever it takes, whether it's, you know, going one small step at a time and realizing that you can, or whether it's personal growth or whether it's surrounding yourself with the right people, putting yourself in a different job, but finding that confidence in yourself. And, but also understanding what you really want to do. That's really important. Um, and that's not to say that you can't suffer through investment banking for a couple of years if even if that's not what you want to do ultimately. I, I, I'm not saying that at all. Go be an entrepreneur right out of college or drop out of college because I'm not suggesting that. Again, it might work for some people. It might, but all the data points to don't do that. And so you have to find the right balance between interpreting data and following your instinct. Yes.

And last question, what advice do you have for other founders as they embark on their journey to grow into leaders?

At what point in time is that? Because for a founder at an early stage is a different piece of advice for them than it is for a founder at a later stage. And, you know, at an early stage, just have to be ready for whatever comes your way. And you have to be able to be flexible, handle challenges, and you need to have within you that grit to continue because there are a lot of bumps in the road. But for a growth stage founder, or you said your question was phrased for founders who become leaders.

To grow into leaders.

Grow into leaders. And that might be at a different stage of the company because starting a company is almost like individual work where you go, you're on, you raised the capital, you're the front figure, or maybe you had a partner, but it's very individual. And to grow into a leader, you need to be able to manage teams and understand what people need. And we've seen big failures, right? I mean, there are movies about them. We all know them. And there is a breaking point where if you can't lead a team and continue to act as a single actor, you lose value that can be derived and extracted from the teams.

Isabel, what a great conversation. So, so deep, so rich. I really, really appreciated your experiences and I appreciate you sharing them with us today. People are going to get a lot out of this. So thank you.

Thank you so much, Alisa Cohn.

Thanks for listening to From Startup to Grownup. If you like what you heard, give it a review on Apple Podcasts. Podcast so other people can find it. And if you know of a founder or someone else who is meant to be on this podcast, drop me a line through my website, alisacohn.com.