🎙️ EP15: Building the 3rd Reconstruction and Restructuring Capital with… | InvestHer Podcast

Welcome to episode 15 of InvestHer podcast. Now this is a very particular one because of everything that's been happening in the world linked to Black Lives Matter and just, you know, the importance of having respect for every human being and giving equal opportunity and equal rights to everybody on this planet. So I'm very, very honored and happy to welcome on this week's podcast our special guests from Re-Inventure Capital, that is Julianne Zimmerman and Ed Duggar III. Now, Julianne and Ed have created ReInventure Capital to help us understand how and why we should all invest in diverse founders of color. Now, in this episode, you're going to learn about their whole funding philosophy. You're going to learn about the Third Reconstruction, what that means for people of color in the United States and beyond. and how we can all get involved in that third reconstruction. You will also get lots of practical key tips from Julianne and Ed as to how we can diversify the way we invest in founders, the way we give opportunities to founders, and you will also learn from their wealth of over 30 years' experience of investing in these founders when other investors didn't even think about them, didn't even know that it was impact investing. You know, they've really worked hard to have a track record to make a difference. So for me, this episode is super important because Black lives have always mattered to me and to us at Global InvestHer. And, you know, you're going to hear about how Julianne and Ed are making the change happen today, how they are restructuring capital for people of color when it comes to funding their businesses and giving them the opportunity to shine, to create wealth that's going to be generational wealth, and I'm really, really honored to have them with us. So I think you're going to enjoy this episode. Make sure you get all their links to their fantastic resources mentioned in the show notes, so do take a look when you see this episode.

Enjoy!

Investor Podcast is for you, the female founder who has a product, a service, or a message that you believe in and need to get funded, or for you, the investor, who wants to learn more about the huge untapped investment opportunity that gives you a higher return— women entrepreneurs. My name is Anne Ravanona. I'm an entrepreneur, TEDx speaker, and women's advocate, and I'm passionate about helping women entrepreneurs get funded. In each episode, we'll take a behind-the-scenes look into real-world funding tactics and strategies to help you get the funding you need faster. Let's put the fun into funding. Thanks for spending some time with me today. Now let's get started. So welcome everybody to our live podcast today for InvestHer Podcast, and I'm absolutely thrilled and delighted and honored to have with me today the founders and managing partners of ReInventure Capital. Welcome, Julianne Zimmerman and Ed Duggar. How are you both doing?

Delighted to be here with you.

Very well, thank you. Indeed, indeed.

We are lucky to have you with us. I mean, really, really lucky to have you with us. Let's just get started by saying for our viewers and our listeners who are joining us live, when you have any questions for Ed or Julianne, please feel free to pop them in the chat box, not the Q&A. We'll see them in the chat box and I will feed it through to them as we move forward, if that's okay with you. Just say yep, Fine, put in the chat box and I know you can— you've heard that. All right, so let's get started. I like to start with a fun, a fun thing. Can you each tell us a fun fact about yourself, something that we don't know about you?

Well, I guess I'll start. I think the fun fact about me, given that what I've been doing all my life is that— and that is finance— I don't have an MBA. Yeah, I never— and yet I was able to advance because along the way folks saw something in me that wasn't on my resume. And I think that is so important to remember. That's how we— I've conducted myself in my business, looking beyond, taking off the blinders. And so that's to sort of define my life.

I love it. I love it. And actually, fun fact, me too. I don't have an MBA. I have a BA in marketing and languages, but not in finance. And here I am, motivated to get the women funded. So there you go. Julianne, what's your fun fact?

So I also don't have an MBA, but I was an EMT, an emergency medical technician, for the better part of 15 years. And for 10 years, I volunteered at the finish line of the Boston Marathon. So, if you crossed the finish line of the marathon and you completed the race under your own power, but then required medical attention, you probably passed by me. And I'm also a co-founder and an advisor and a mentor and a judge. And sometimes kind of like an auntie to a bunch of founders. And the perspective that I bring in that work, as well as in Re:Inventure, is really about connecting the dots.

Mm-hmm.

As Ed said, you know, we're looking for interesting indications of potential and opportunity. And so that's connecting the dots in terms of ideas, and it's connecting the dots in terms of connecting people. And with that in mind, you know, I personally don't— I don't really subscribe to the conventional wisdom. You've seen our website. You know, Reinventure is really almost orthogonal, let's say, to the conventional wisdom. But I sort of insist I instinctively distrust a sentence that begins with everyone knows that or everyone else is. Pretty much anything that comes after that is probably not going to be convincing to me. And in my own experience, I know that the most interesting opportunities and ideas and potentials really exist at the edges, at the fringes, in the interstices where everyone else is not focused. And so that's really part and parcel of what motivates me in the work that we do with re:Inventure.

So can you both kind of, in whichever order you'd like, tell us a little bit more about yourself and how you came to become venture capitalists? Because I think that's also very interesting for our audience and our listeners to hear, because I think the path to venture capital is very varied, and I think it's always very useful to see that you're normal human people. I was just saying before, we went live that even though there are Dragon's Den and Shark Tank, you're not dragons and sharks, okay? They are real people with a focus. So can you both maybe let us know a little bit more about your journey to become a VC very shortly? Because then we want to get into Reinventure Capital and the incredible changes and shifts that you're bringing into the ecosystem.

Well, my journey As I mentioned, it did not begin with an MBA. It actually began with a graduate degree in public administration and urban planning from Princeton.

Hmm.

And so my journey began as a real estate developer for a family office in the Midwest, and then sort of very early on took a shift when a friend of mine who had interviewed at the firm I ended up managing, called me and said, look, I interviewed for a job there, uh, I didn't get it, but I, I think there would be interest in you. And I didn't know why, because venture capital, real estate, didn't quite—

You used to be hunters in both, maybe.

Yeah. So I went, I was asked to be inter— come to Boston and be interviewed. I was offered the position, and I think that what attracted me there was the fact that this was an unusual venture fund because it had as its initial intention, besides generating a competitive return, uh, actually addressing the inequity in the allocation of risk capital to founders of color.

Yes.

And so it had a purpose, uh, that others did not. In, in a way, uh, as a result of, of assuming this position, uh, I became an early impact, um, pioneer in impact investing. And so the, uh, the, uh, opportunity to do that, uh, uh, and again, a situation where somebody looked at me differently, Mm-hmm. allowed me to take what I could, take the opportunity that everything that had presented, prepared me before, before, and use it. And so that's really that. And I was fortunate that after being there a couple of years and advancing, I actually became head of the firm at 27. So—

Wow, that's impressive. That's like—

I love—

so how many years ago was that? Not because I'm looking to find out your age or anything, Ed, but it's more what I want to pick up on is the pioneering aspect, because that really is pioneering. And now people are finally waking up to this importance of rebalancing and actually giving equal access to opportunity. So how long ago was that?

This was in the '80s, 1980s. So it was very much pioneering. We didn't talk about it in terms of impact investing. We really thought of it as important to be able to create a database, or a data point, if you will, around this to say there is the opportunity, there is a possibility that conventional wisdom around founders of color, for instance, not being able to build scalable businesses, not be able to do it profitably, uh, we wanted to dispel that myth by our own performance. And, and we did. Just a little bit more about that. And we did it, one, because we generated internal rate of return of 32% over the last decade investing in founders of color exclusively.

Wow.

And we also created some of the largest African American businesses. We were successful in helping them attract over $2 billion of financing for their growth in business. And we, in the process, generated some 7,000 family-supporting jobs. And so all of these things were measurable. And intentional. But I have to say that my greatest satisfaction is really as a result of creating things that weren't measurable but were invaluable, and that was creation of hope and changing people's lives in the process of what we were doing.

I love that. I absolutely— oh, you're so eloquent, Ed. Oh, I know Julianne told me you are, and I was just dying because it's the first time I can actually hear you because I just love It's so important the way that you are telling the story because you really were a trailblazer. And it's important to lay down the facts that you have been extremely successful, you know, with this business case for over 30-plus, 40 years. And that this is not— you're not a newbie to the block, okay? And that's very important with regard to reinventure capital and your new fund, which really isn't new. It's building on all of that experience. And I think it's important to— to position that. How about you, Julianne? What led you to— on your path to become a VC?

Well, kind of like Ed, I did not aspire to be a VC. I didn't set out to find myself here. And it really was an organic process. So I started off as an aerospace engineer. I had a wonderful first career as an aerospace engineer. I had all sorts of grand adventures and, and had the incredible honor to be a finalist twice in the NASA astronaut selection process, which was an extraordinary experience. And following that, I became a co-founder of a clean energy company in the early 2000s. So before we had the clean tech boom. And, um, and from there became very actively involved in the innovation and entrepreneurship community in a wide variety of capacities. And, um, and sometimes joining teams early on, sometimes as an advisor or board member or mentor or judge, you name it. But, but having been involved with dozens and dozens of companies, I ended up, much to my own surprise, forming my own investment thesis. And I did not see myself as an investor. I saw myself very much on the operations and innovation side of the table. And so it was kind of out of frustration, honestly, that I saw this opportunity that no one else was pursuing that I ended up co-founding a small seed-stage investment practice and raising a couple million dollars and making a handful of investments. And this is in the early teens. And just as I was sort of putting a bow on that and getting ready to think about what might I do next, would I go back to working with some companies or would I start doing more investing or would I do something else altogether was when Ed recruited me to join him. And so, we spent about a year together talking about how it would work, what we would carry forward from Ed's former endeavor, what needed to be different, how we would work together and What would that look like? And we concluded that conversation with what we came to call the bad-good news.

Okay.

So the bad news is that here we are in the late 20-teens now. And the situation for founders who are female or people of color or other underrepresented populations is as bad, or in some cases worse, than it was when Ed pioneered the investment strategy with his former fund in the 1980s. And that's bad for everybody. That's bad for our economy. That's bad for society. That's bad for the state of innovation. It's just— that's bad.

Yeah.

It's bad for LPs, by the way, too.

Absolutely.

It's just bad. But the good news is that the opportunity set, the population of founders, was bigger and more varied and more vibrant and more fertile and more robust than it had been ever before. And we had a playbook. So, you know, we knew how to approach that opportunity. And so Um, that's really how we embarked on, on this endeavor together. And, and by the way, having been a co-founder and having worked with so many founders, I was very well acquainted with the extreme disparities in, in the way that different founders experience the, the venture sector. So I didn't need any convincing on that front at all.

Well, and I think what's very interesting to hear is, is, you know, that you both had very different experiences, yet, you know, it was a common calling linked to deep values that brought you together. And a lot of bringing together your wealth of experience to serve this underestimated—

Mm-hmm.

Population of incredible value bringers. And they're all out there waiting for us. And as far as I'm concerned, you'll always hear me saying on this podcast and on the stage that, you know, women entrepreneurs and diverse founders, we are the biggest arbitrage opportunity and we are the biggest market, you know, out there. So the fantastic thing is you guys get it and, you know, you're going to help us to move things forward. Busula has made a comment here live, and I'm not sure if it's a he or she, so forgive me if I'm not too sure, but they say that it's very inspiring to hear everything. It's a she. Thank you, Busula, for telling So she's absolutely super inspired to hear from you, particularly Ed, because, you know, as a— she seems to be a Black female founder, and it's great to hear your story. And that's why we're doing this, because we need to hear your story to see it's possible and to be role models. So you're the perfect embodiment, both of you, of what re:Inventure is and how we can rebuild this, because it's like female and diverse founders from diverse backgrounds. Julianne has worn different caps of experience. Experience of sector expertise and so on, and yourself as well, Ed, and bringing in the Black and Coloured founder and investor perspective. So having said that, let's dive in. Now we want to keep an eye on the time because it's moving away from us. So tell us about Re:Inventure and what is the third reconstruction? Because on your website you've rebranded and you have not rebranded, you have come back with a different story, a stronger, more focused story, given the things that are happening at the moment. So tell us more about that, the third reconstruction.

Okay, um, before I go to that, I just want to add to what Julianne said, is that part of what we concluded in our year or so is that we would add women.

Yay!

That was a major big change.

Thank you, Julianne!

I wanted to add—

Sorry, Ed, I'm not saying you were closed to investing in women. I'm just so happy.

No, quite the contrary. Some of his biggest successes were female founders.

Yeah, I was going to add that as well, that, uh, investing in women was not a side activity. In fact, it generated my best returns.

Say that loud and say it clear. Say it again.

It generated my best Yes.

Okay.

All right, the Third Reconstruction. To understand the Third Reconstruction, particularly those on the line that are, are not as familiar with American history, is that the— really, I should put it in the context of the First Reconstruction, which actually, uh, resulted, um, in— because of the disparity, I like to think of what happened with our creation of a constitution that was idealistic at its core, we dragged into it our founding fathers, dragged into white supremacy, white male supremacy in particular, into our constitution, which has infected our country even to today. And so our attempts to rid ourselves of what I would call the first— our first pandemic here, which is white supremacy, is that we had— it came to a conclusion in the first instance under the first Reconstruction in the Civil War, our Civil War. And that Civil War, uh, was settled part of the issue, uh, but it left undone a lot. I like to think about the first Reconstruction as creating sort of bodily freedom.

Mm-hmm.

Slaves, folks, African Americans in particular, were freed They became citizens but did not have those rights. And so the Second Reconstruction, which we think of as the civil rights movement in this country, really attempted to close the gap, if you will, on what wasn't accomplished during the First Reconstruction or what was rolled back in terms of achievements of the First Reconstruction. And so the civil rights movement, and when you think about it, gave us social equity— not equity, but equality— in the form of things like a Fair Housing Act. It wasn't until the, you know, the Civil Rights Act of '64 that African Americans really had the right not to be discriminated in housing public accommodations, etc. And so, uh, that brought us to a point. The Third Reconstruction is really about economic equity. All along, although things were improved, what wasn't improved was the economic opportunities, economic conditions of people of color. And so the ability to be self-sufficient, to create generational wealth, was all denied. And so the Third Reconstruction is the recognition that that large task is still at hand and that it's being joined by all kinds of forces, the most encouraging of which is the fact that it's multicultural in its approach.

Yes.

And so the Third Reconstruction, to be successful, has to address this issue of the extraordinary gap in wealth, income, economic opportunity to be successful.

And I really thank you for explaining that so clearly because, you know, I think as we were saying just before we went on air that it's important that we educate everybody and we help to create an Opal and like a a similar playing field of education to understand that these are the phases.

This is—

and we're now in this third phase, and that, you know, it's still a lot remains to be done, and yet we're hopeful. And that you said that already in the '80s, that what you were doing was creating hope. And I think we are all hopeful because we have hope in the goodness of human beings. And, you know, there are always going to be some bad apples, but the point here is that, you know, you as as an investment fund, as a venture capital fund, that you can be— you can shine the light, you can educate, but also kind of focus on the people who get this and say, right, let's get the people who get this together to fund the people who deserve it and who have incredible businesses that are ready to scale, and they just need the fuel and they need the contacts that we can bring them to help them do that and to help reduce those gaps. So tell us more about why, why this 3rd reconstruction is more important and what you're doing at re:Inventor is more important now than ever.

Well, I think one of the really key reasons is that there is much more opportunity, really. I mean, over the years, as I look at the, uh, opportunities, business opportunities presented by, uh, folks of color and women, they've just expanded dramatically, dramatically. And so that's, as Julianne says, is the good news, that we're seeing, uh, uh, opportunities brought forth that are really, really exciting. The bad news is that the blinders are still on for the traditional venture capital segment.

Yeah.

Uh, or industry. And they continue to ignore, um, you know, what these great opportunities are, creating, creating, as you said, an arbitrage opportunity. But more importantly, I think it's, it's, um, in a, in the social context, what we're doing, what the traditional venture capital, uh, industry does, it concentrates capital, it concentrates wealth, it concentrates privilege to an elite few. And that is increasingly the case as our demographics change. And so you, when you think about it, most traditional venture funds would say, well, we're not, we're looking at everybody, et cetera, but they only invest in a few. Uh, so as we can, as we target founders of color and women, when you think about it, our audience is larger Our target market is larger, really, in fact, than theirs.

So, you know, what is beautiful is, you know, the McKinsey reports that a few years ago were saying that women was the biggest market, bigger than China and, you know, Russia and the BRICS and the developing economies at the time. And actually, you guys are even smarter because you're saying it's like women and people of color. So you're getting an even bigger market, you know, and That's what's very exciting. And, and so tell us a little bit more about ReInvent Your Capital and how you, um, fund and support, uh, diverse founders, so founders of colour and, and women. So what is your investment thesis? Walk us through all that.

I'm going to let you jump on that one, Julianne. Okay.

Sure thing. Okay, so, um, we invest exclusively in US-based companies that are led and controlled by Black, Indigenous, and other people of color and/or women of all identities, female-identifying people of all identities, and specifically companies that are at breakeven and poised to grow profitably. So let me unpack that a little bit. We are, we are focused on those companies that have both majority ownership and day-to-day operational authority in the hands of those founders. So we're not interested in a company that, say, has one woman on the leadership team or one person of color, you know, among the founders. or, you know, in the management.

Yeah.

We're really interested in companies that are in the hands of our target founders. And what we mean by breakeven and poised to grow profitably is companies with a team in place, a full-time team in place, with repeat Revenues. So, you know, customers who are coming back, you know, either if it's a subscription model who are, you know, subscribing and increasing their subscriptions or repeat purchases or however the business model is structured. And so, they have verified or validated their business model. They have evidence to support that not only have they tapped into a value proposition their customers are excited to pay for—

Mm-hmm.

but that they know how to deliver that repeatedly. And so they're now ready to scale. And so that's an important juncture point because, as you know, Anne, and I'm sure many of your listeners do as well, it's a really uncomfortable inflection in the life of the company, right? There's a kind of grow or die moment there. And so that's where we want to be involved, and that's where Ed's former fund was so successful in assisting companies to flourish through and beyond that point. So it's a cross-sectoral investment strategy. We look for companies in fragmented industries where they are at the forefront of one or more shifts unfolding in that industry or segment. And again, as you know, we have so many shifts Going on right now. We have demographic shifts. We have regulatory shifts. We have technology shifts. We have use case shifts. We have— right now, we have so many shifts going on in the way people go about their daily lives or their businesses, right? So, companies with a profitable business model in a fragmented industry or segment at the lead of one or more of those shifts are advantageously positioned to be at the forefront of their segment as they grow.

Yeah.

And, and those are the economic engines we really look for. And many of the founders we are in conversation with also have their own impact objectives, and that's important to us as well, because we are most interested in companies that are solving real problems. We're, we're not terribly interested in convenience apps or luxury goods. I wish I could remember who coined the phrase Snapchat for hamsters because it's just brilliant.

I've never heard that.

That is not us. No Snapchat for hamsters here.

Oh my goodness.

But we, we're very interested in, in then working with those founders to help them as they grow to continue to be profitable and to increase their profitability. We're interested to work with them to help them achieve their impact objectives as they grow. And we are committed categorically to working with those founders to help them hire, promote, and compensate equitably at all levels of the company so that they don't just revert to the mean. And helping them to, as they grow, to access commercial debt as a lower cost of capital than logarithmic equity raises, right? And so keeping the cap table shallow and maintaining ownership in the hands of the founders so they can perfuse wealth creation as deeply as possible in the company to as many employees as possible, and also preserve the widest possible spectrum of lucrative exit scenarios, right? So we don't have to have a headline-making unicorn, deca-unicorn, mega-unicorn, dragon, whatever the, you know, crazy thing of the moment might be. kind of exit in order for everyone to benefit, right? And so, this is, again, this is the playbook and the model that Ed pioneered with his former fund. And it's a majority success model.

Mm-hmm.

So, 2/3 of the companies in Ed's former fund contributed to that 32% IRR. And of the remainder, of the third that didn't contribute to the fund return, about half still contributed back a portion or all of the investment capital. So, if you look at that distribution, really only about a 6th of the portfolio could be counted as outright failures on an investment basis, right?

Yeah.

And so, that's almost a complete inversion of the most prevalent venture capital model. If we were to have one or two, you know, runaway successes and all the rest sort of, you know, casualties we don't speak about, right? For us, that would be a disaster.

Yeah.

That would be an outright failure of the fund and of the strategy. Because what we are interested in is not that hyper-concentration. Of, of capital and opportunity and wealth that Ed alluded to. What we're interested in is breaking that hyperconcentration and more successes, more wealth creation, more innovations finding their way to market as economic engines, as, as contributors and creators of value. Not only for a few, but for, you know, their stakeholders more broadly and for society at large.

And I love the way that you, that you share that, that your ethos— it's not just an ethos, it's your modus operandi, it's how you function— is about the majority success model. And that's so rare. And that's why I really want everybody to know about you guys. And hopefully you're going to have an incredible Founders knocking on your doors now.

We do.

Even more, because remember, you're the majority. Okay, so founders of color and female founders and, and founders who identify as female, you guys are the majority. So come on, if you are scaling your company and you've got those break-even and you're US and you are thought leaders and changing things and you're having impact, we know you're out there, we know you're listening. So go and check out Reinvent Your Capital. Check out Ed and Julianne there. And all this information, you don't need to go looking for it, guys. It'll be in the show notes afterwards. Okay? So, you know, you don't even have to do your homework. You're listening here as you're walking or as you're driving, you go, oh my gosh, I have to talk to them now. So that's what we want. Okay, guys, we want you to talk to them. And if maybe for some reason Re-Inventure Capital are not exactly the right fit for you, they could be for some great founders that you know that do fit this thesis. So please do tell everybody.

Good point.

Okay.

And I really want—

so that's up for both the investors who are listening in and the founders who are listening in. This is about spreading the information, about creating more value. And the more that we can come together and share resources, especially in this VC funding game, it's all about sharing the contacts and stuff. And what I can say to all of you is having known and dealt with Julianne for many, many years and knowing Ed, you know, they are really the— they walk the talk. They're the real deal here. Thank you.

Thank you.

And I'm sure that people can hear it from how you're saying things and what you're saying. So—

Thank you.

I do mean that sincerely.

Thank you. And let me just say, for anyone, either investors or founders, Who is intrigued and wants to learn more, not only do we offer more resources on our website for you to learn more, and as Anne said, if we are not a fit for you, we name not everybody else, but many others who have similar or adjacent investment strategies and approaches so that if we're not the right ones, you might find others who are. And if you do want to take up the conversation with us, we have very convenient contact forms to direct you to the right member of our team. And so we try to make it as easy as possible for you to find your way either to us or to the right partner for you.

You see, that's what I mean. They walk the talk, you know, 'cause often it's true that when founders are going through the maze of how do I get to the right VC, how do I get to the partner, do I have to jump through hoops with certain people first, whatever. At least you're being very clear about your process and you're going to make it, you know, easy for people to find you, to get to talk to you. So thank you.

That's—

we need more investors like you guys. Okay, so how do you think COVID-19 is infecting— infecting, well, that's a good—

Definitely infecting.

It's infecting and affecting funding and fundraising now, and it's infecting fundraising too. How is this whole COVID-19 situation affecting fundraising in your view?

Fundraising for us or our founders?

Good question. You can take it any way you want, Ed, and, and, or one or the other or both.

All right, well, for our founders, or as we look at our pipeline, it's clearly had an effect. And for some, actually, there's been a silver lining. And so, in other words, it— in most cases, it's slowed down their process in terms of both revenues and their fundraising efforts.

Mm-hmm.

But for others, it's actually accelerated some of their growth because the services and products they provide are a good match for the pandemic and the stress and strain that we're in now. And so As we look at opportunities, we've added a COVID lens, if you will, that helps us to think about that particular opportunity in terms of those pros and cons. And we look at it, we try to look at it from a longer point of view, not that what will happen in the next few months, but how is this likely to affect the business?

Yeah.

Over the next year or two, quite frankly. And so it's changed that thinking. It's made it a fact of our lives. I think we're looking at it that way, that it'll have long-term implications. So that's how it's affected the way we look at it in terms of our funding. As far as the fundraising for ourselves, I don't see that having a direct impact except for the fact that— except for how we communicate with people.

Yeah.

No more face-to-face meetings. You know, a lot of Zooming back and forth. I do recall when Julianne and I were first— I guess this was maybe about a month ago, perhaps 6 weeks ago— asked by one of our prospective LPs, uh, if he asked us if we could meet with him in person, it gave us quite a— we had to think twice about that, you know. Well, where are we going to do it and how are we going to do it? And so it's that sort of dynamic that we're dealing with at the moment. But, uh, it just creates a new way, you know.

And you know what though, listening to you, I think It's a good thing, particularly when it comes to evening out the playing game, the playing field for founders and investors to connect with each other. And I think that we're— it's going to make it a little bit more democratic, number one. Number two, everybody's going to have a better energy and better focus.

Mm-hmm.

You know, obviously, once the really high levels of pandemics have gone down, because I know you guys in the States are still very hard hit, and we're a little bit further on that in France. But once, once things kind of settle, I think that the way that we talk to each other and the attention we give to each other and the importance of building a relationship, I think that is going to change because, you know, we will be less jumping on planes, running to conferences, running in to try and grab attention in all these other energy-consuming and money-consuming ways. And I think we'll be just more focused on, you know, targeting the right investors and having a more meaningful conversation with you guys rather than, you know, spreading out our energy and focus willy-nilly, if you will.

I think I agree.

I hope you're right about that, Anne. I'm always reluctant to, you know, latch on to an idea that the future is going to be substantially different and better And I think that takes a lot of effort on many people's part, and it doesn't— it often doesn't turn out the way we might imagine, right? However, I do think that, you know, one of the things that, that we believe, obviously, from, from what you've heard us say so far, and, and, and that we put into practice, is that You know, it really is all about a relationship, right? An investor-founder relationship can be incredibly vibrant and productive and supportive. And we certainly make the effort to build trust-based relationships with founders before we make an investment decision and to cultivate and maintain those relationships.

post-investment.

And one of the things that, you know, as an instructor, as a mentor, you know, as an auntie, that I advise founders all the time is to understand that a dollar is not a dollar, a franc is not a franc, a euro is not a euro, a yen is not a yen. You know, the relationship and the expectations around that investment make the investment a good investment or a bad investment. And, and if you have a strong relationship with an investor or a sponsor or a backer, then, then that's probably going to be a good and productive investment for both of you.

Right.

But if you have a fraught relationship and there are frictions and there's mistrust, then it's going to be extremely painful, right? It'll end in tears. Yours, not the investors. I'm sorry to say, because it is— it is a steeply asymmetric relationship, right? There's a very substantial power differential there in terms of who has rights At the end of the day.

Yeah.

And so, you know, the thing that I tell founders here in the States all the time is that people talk about an investor relationship with a founder as being like a marriage. And that has some truth to it because it's an extremely intimate relationship and it's a long-lasting relationship. However, unlike a marriage, if God forbid, in, you know, in an unhappy marriage, it's expensive, it's heartbreaking, it's painful and disruptive, but you can divorce, right? If you have an unhappy investor relationship, you're stuck. And your investor can actually remove you from your own company.

Yeah.

And so that's why it's so terribly important to align with investors who have a similar ethos, a similar philosophy, who have objectives which are congruent with your objectives for your business.

Yeah.

Right? And, and with whom you have a sense of mutual understanding and with whom you either have an existing foundation of trust or with whom you feel confident that you can build a strong trust-based relationship.

Yeah.

Because the, the upside is that much greater.

Right?

Yep.

And, and if you don't have that, the downside is, is just— it's so extremely painful. So yes, we, we believe very much—

You can see your concern in this conversation coming through, and I think that, that—

and, and it—

and I'm, I'm hearing you so loud and clear, and what, what resonates so strongly with what you've been saying Julianne, for me, is around, okay, of course, the importance of building that relationship, but it's around expectations. And that, I think, is something that can get caught. That's what the cause of all this misunderstanding, mistrust, it comes from having different expectations.

Absolutely.

So, you know, I think if you can choose the right investor, meaning the people, as you say, who are on the same mission or who are on the same wavelength, who want the same things for your company, And with whom you are comfortable disagreeing respectfully and finding a solution together.

Absolutely.

And managing those expectations, but not having to manage your investor or manage your founder. I mean, that's when communication's breaking down.

Absolutely.

So it's a question of managing those expectations. I want to kind of reach out to some of our live listeners and say, you know, If you have any burning questions, please do type them in the chat box because we're coming, you know, we're watching the time and I want to make sure that I ask your questions as well. This is for you, so that's what's the beauty of having a live podcast. So let's move on. What has surprised you or not surprised you about changes in the funding scene due to COVID-19? So what have been the surprises and the—

Not— no surprise.

Well, I think actually one of the things that we've seen that's less about COVID and more about the other crises unfolding here in the States and around the world is, you know, we've seen a lot of declarations made in the last few months, particularly from entities who have made, you know, press announcements or they've otherwise made public statements that they are putting some amount of capital into investing in whether it's female founders or founders of color. And we are always— We are always excited to welcome Mm-hmm. Colleagues, partners, allies, you know, people who are legitimately interested in those grossly underserved, undercapitalized founders. One of the things that is, I think, really pleasing to us to see is that there are over 200 or so funds of various sizes, various strategies, different stages, different sectoral focus, you name it, that are at some level of operation.

Hmm.

And, and so some of them are, are just really starting out, some of them have been around for some time and, and are, you know, on a fund 2 or fund N. Many, many are new. And we're delighted to see that. That is a very heartening development. At the same time, you know, we see some of these announcements that are really just kind of performative gestures.

Yeah.

And that's not surprising, but nevertheless, it is disheartening because it's a significant distraction.

Right.

And so, you know, we are, we're focused very much, as you've already noted earlier in this conversation, we're focused very much on, on moving capital, on building successes, and on partnering and sharing intelligence and making connections among those who are actually doing the work. And so I think I think the challenge for founders, particularly, is to be very, very astute in paying attention to what people are doing and how they are going about what they say they are doing. I think it's also really important to just ask other founders.

Yeah.

Right? If you are talking to a particular investor, the founders in that investor's portfolio.

Yeah.

What is it like working with them? What was it like, you know, in the pitching phase? What was it like in the due diligence phase? What was it like in negotiation? And most importantly, what has it been like since closing the deal, right? Because, you know, as As one of the characters says in the final Matrix movies, some things never change and some things do. Right? So, you really want to— you really want to understand, you know, what is the actual stance of this particular investor? How do they go about making good on those public commitments? And as you've already said, how well is that aligned with your objectives as a founder for your business?

Yeah.

And I think that it's really important what you've just said because often, like, I find it mirrors in all of our interactions and relationships. How you begin the relationship is a very good indicator of how things are going to be moving forward. So even if you look back to any significant other in your life, if you go back to when you were courting or when you started going out and you like these things about them, they're the things that you're going to continue to like. But there are things that annoyed you that'll continue to annoy you at a very superficial level.

Mm-hmm.

But the point is that, you know, really watch out, really notice, and that's— and really observe and notice how the conversation's going, how they carry themselves, as you say, what they do, not just say what they say. say they're going to do, but what they do and how they do it and how they treat other people. And that's absolutely crucial. And I want to just bring in here, we have a comment here from Busula, and she says, you know, unfortunately for underrepresented founders, warm introductions are light as well because they don't have the network due to systemic issues. Absolutely. It's like you get a double, triple whammy there. And so if you're a woman of color or a non-binary woman of color, my goodness, you know, and then if you happen to have a disability or a special need and you're a veteran, you get all the prizes. Like, no, I'm really not joking.

No, it's all true.

So how can we even out this playing field? I mean, what would be your practical tips to help Busola and others who have several barriers, and I like that way you call it, Ed, earlier, kind of just up against them that they have to kind of smash or get around. It's just extra burdens to get over.

Yeah, I don't know about the tips so much, but I just want to build a little bit on what both of you have said. And that is notice the questions that, that you're asked as well. Yes. Because they can be very telling. Resist the temptation, which is incredibly strong, to sort of bend over backwards to be what they want you to be.

Yeah.

Because in the long run, you'll end up regretting it. And so, but when I think consider the questions, um, because often the questions are different for women and founders of color. Uh, as a general— to make the point, I often say that, uh, for, uh, uh, traditional venture capital, they have a set of ques— they have a set of boxes they like to check.

Mm-hmm.

And they have to do largely with success and, you know, where did you go to school, where did you do this, where you— what are your relationships? Etc. Uh, and, and often founders of color and women don't check all those boxes because one, they're too narrow, they're too— they're incredibly biased. And so look for those who are going to look at your journey, uh, because it's more likely than not to have been circuitous. It's, it's not a straight line.

Yes.

Uh, and look to see to what extent they value That journey.

Yes.

Your— not only your successes, but how they address or how they react to your setbacks, how you then got up and pressed forward.

Yeah.

Uh, if they value those things, then you're probably on the right track. If you sense that they don't, uh, you're probably not.

Oh. Ed, I wish that we could bottle you up and Julianne and bottle up your secret sauces and your amazing advice and just package it out there and, you know, inject it in all of the investors and also in the female, in, you know, in the founders out there who— because it's so true what you're saying. It's so true what you're saying about the questions, but also I love what you're saying about the journey because Both of you have talked about your atypical journeys. I have a completely atypical journey, and I think that everybody, you know, I really honestly believe that most people have— most founders who are entrepreneurs who have the guts to go and do it, and most investors who— you're also entrepreneurs because you have to create your fund and manage your fund.

Yes, that's true.

We're all different, you know, we have unique journeys to get there, and I love what you're saying about valuing the journey and valuing how you managed the setbacks and got back up. That's— and Busula is saying amazing, and it is amazing. She also mentioned, for a founder in seed stage, how long is the courting stage to get to know— and the get-to-know period of the investor and suitability? Like, that would depend, I'm sure, but what would be your advice?

Julianne?

Sure. Well, it does depend enormously. It depends from investor to investor. And different investors, not only different investment firms, but different partners and decision-making investment team members within firms or family offices also have different dynamics, let's say.

Yeah.

And again, you really wanna make sure that you're not just seeking a dollar amount, but that you're really looking for someone you want to work with. to help you make your company successful.

Yeah.

So, you know, for us, we have a— we have much more of a focus on that relationship building than many or most. We like to get to know founders well in advance of a potential investment. And what that means is that we like to have a— We like to start a conversation and we like to have an ongoing conversation in which we hear about the founder's objectives, what inspired them to launch this business, what they hope to accomplish, what experiences they are having. To the extent we can be helpful to them along the way, we try to do that. And then when we get to the point, for those of those founders who do line up ultimately to be investment prospects for re:Inventure, then, you know, we're not trying to get to know each other in this little like mad, you know, speed dating frenzy. We already do know each other and we're trying to make a decision together about whether we are the right match for the company at that point in its development. The other thing I would say, though, and this might sound a little bit strange coming from somebody who's doing venture investing, but venture capital is only one kind of money, and it's definitely not the best or only kind of money you should be thinking about as a founder.

And, okay, so I have to pause and say, Thank you for that. Extremely rare. You're, I think, one of the first or the second. I know Shelly Morgan tells that a lot, like we're always talking about the funding spectrum and the funding menu. Thank you for saying that, Julianne. Yes, VC is not the be-all and end-all, and it may not be the right source for everybody. That's true. And I love the way very early on in this conversation you shared how debt financing is something that you also encourage so that the founders keep more of the equity and can spread more of it. So you can get debt finance. Can you explain a little bit for some of our listeners who don't necessarily know how debt financing works in the VC from that perspective? Maybe just a little bit on that, very short.

Well, so really, really briefly, there is something called venture debt, which is a whole separate kind of venture investing. But, but really, the, the point that I would make in this short little bit of time is to say that as a founder of a company, you have lots of different kinds of capital you can potentially draw on to provide short-term liquidity, to have for example, revolving credit that enables you to absorb the dynamics of your capital needs on a short-term basis, right? You may have— you may have a small business loan or another just simple lending instrument that provides you capital to get you through, say, a capital purchase or a manufacturing run or some other— capital demand that, that is mismatched with your revenues. You may have, you may have loans from partners even, right, in the form of equipment financing, or you might have customer financing in the form of upfront payments for products and services you will deliver later.

Yeah.

Right?

And many, many others, right? So what I really encourage founders to do is to think about what are all of the capital needs and uses that are relevant to your business, and how can you line up the right source and flavor and amount and timing of capital to meet each of those needs in the way that is most advantageous to you and your business?

Yeah.

And frankly, we talk about venture capital far too much as though it answers all of those needs in the best way for everyone, when in fact venture, you know, serves a specific set of needs for a particular kind of company and a particular stage, right? Depending on whether we're talking about seed or angel or later-stage venture or whatever we're talking about. So, so really for founders, you know, it's, it's your business.

Mm-hmm.

Protect it, fund it, uh, you know, build the relationships in and around it that will enable you to make it what you envision and, and, you know, what you will consider to be Oh, that's so beautiful.

You've just wrapped up— like, I was going to say, what would be your key tips on funding? Beautiful bow, Julianne. I mean, it's absolutely fantastic. And just kind of building on that in the last couple of questions here, what needs to change?

This is the big question.

What needs to change in the funding ecosystem moving forward?

Well, I think there's a couple of things.

Now, you guys are catalysts of change. So what for you are the key things that need to change?

Well, I know Ed has a lot of things to say about this. So I'll just say the one thing that I talk to people about all the time is that so long as LPs, the people and institutions who invest into venture funds, are themselves sort of, you know, hypnotized by the prevailing venture practice, I don't think we will see a lot changing. And so, I really encourage people who have not been LPs or who have not been angel investors or who have not participated, who have the means, to get into it.

Yeah.

And if you're a small investor, there are crowd equity funding platforms. You can invest as little as, you know, $10 or $50 US. And so, you know, if you haven't participated, there are ways to participate. And I encourage you to participate because bringing more people onto the playing field will change the game.

Yeah.

And if you are an existing LP, I really encourage you to acquaint yourself with the mounting body of evidence from multiple sources, the Brookings Institution, You mentioned McKinsey, Morgan Stanley, Forbes, the World Economic Forum, on and on and on and on, who have looked at the data and said there is a compelling investment case, and investors who are not pursuing opportunities to invest in funds that target underserved founders are missing an opportunity. Morgan Stanley put that at $1 trillion.

So—

Consulting groups have said, like, yeah, that if, like, if we invested in more female founders and founders of color— I'm just gonna say the female founders— they said that it could add $5 trillion to the global economy and 6% to global GDP.

That was—

those were their estimates pre-COVID-19, and I think it's gonna be even bigger now afterwards. Ed, what would you build on that? Thank you, Julianne, that was awesome.

Yeah, I'll flip it just a little bit. Julianne gave you the win-win scenario in terms of LTs, and there's something— another win there actually is to not be complicit, not be complicit in the things I mentioned before.

Yeah.

By not examining the venture funds from the perspective of their management team and how diverse or not they are, or their portfolios and how diverse or not they are, uh, who they have decided to invest in, a close examination of that, and not taking that into account, you become complicit with the industry concentration of opportunity, wealth, privilege, etc., in ways that are quite frankly damaging to our fabric of our social fabric as well as our democracy. I mean, to put it quite bluntly.

Yeah.

So don't be complicit because you were not You didn't know, or don't claim you didn't know. There's opportunities, as Julianne has mentioned, all kinds of recent data studies, etc., that suggest that, uh, returns can be achieved, uh, while you make the necessary impact.

And, and I think that is— they are so important messages to share. And, um, at Global Investor, we are 150% behind everything you guys have just said. And we have just— we're literally about to launch our directory, which I'm going to give you all the address.

I've seen the preview. Thank you for sharing with me. It's brilliant, Anne. Thank you so much for creating it.

So the directory is—

so the Investor Directory is basically the place we want it to be. It is the go-to place for female founders to be found by both customers and investors, and for investors to find the up-and-coming female founders. So there are currently like 263 companies on it. We want more. We want many of you. It's a subscription model, so you can come in there and you come out if you want. But really, we don't want you to because this is about showing the power of the network. And you cannot believe the number of incredible women that I've come across just like doing my research and inputting them into this directory.

We can believe it.

Oh, they're so awesome.

And I'm just like—

and you'll see on the directory, go check it out. You will see you can search by sector. We have it chopped out, chopped down for you already. You don't even have to do the searches. We have it broken down by sector, by region, by funding stage, and by type of diversity. So it's all in there for you to check it out. But beyond that, like, I've discovered so many incredible companies. So on the consumer side, I've been buying more products from those founders and, and then sharing out on Twitter and stuff. And, um, I've bought Currently, like recently, 2 products from 2 Black female founders who are awesome. You're gonna laugh at this. I honestly thought that Pat McGrath was an Irish man, white man, the cosmetic company, because it's a totally Irish name and I'm Irish.

So this is my bias and blinder that was in there 100%.

When I discovered she's an incredible African American founder who's just like— I'm wearing her eyeshadows, okay? Look, look, look.

I love her stuff.

I'm like telling all my friends. And then I discovered Briogeo as well. Briogeo, which is an incredible hair care product that do beautiful natural— my daughter has beautiful curls, natural curls. So I was like, this is it. And I actually was telling the saleswoman in Sephora who was taking my order, I said, do you know— she was a woman of color— I said, do you know this brand? And it's just arrived in France, Briogeo. I was like, I don't know, probably I'm not even saying it. Briogeo. There you go. If you've got curls, natural hair, check it out because it's all beautiful natural ingredients. But she didn't even know. I said—

she said, oh, great!

So I was like teaching her, like, go buy it, this is fabulous. Come on, we gotta help the female founders. So check out the directory. So this remains for me to say thank you so much to both of you, to Ed and to Julianne.

Thank you.

You have been outstanding. Thank you so much for sharing your wisdom, for sharing your perspectives. And for inviting us into your way of doing things and inviting us to come and reach out to you if we are founders of color or female founders in the US who are scaling our businesses at the break-even and who are, you know, really changemakers within their verticals. Go and check out Julianne and Ed. What's the best place to find you guys? Where's your preferred place? Is it on your website? Is it on Twitter? What's the best place? Because they're all going to want to run to you.

The best place is web— our website, which we just recently launched. All that we've said today, uh, support— would support it on our website that we're reinventing investing. If folks did it like us, uh, the world would be quite different.

So that, that website, which as Ed said, we, we just unveiled a newly redesigned version of our website.

Is reinventurecapital.com. Uh-huh.

R-E-I-N-V-E-N-T-U-R-E capital.com. And, and as we mentioned earlier, there are easy contact forms there. So please check it out. And, and again, if we are not the right match for you, look at the other resources to see if, if you can find somebody else who is.

And you— what you'll find, there's almost 100 other funds that might be of interest as well.

You see, that's walking the talk, okay? That's walking the talk. People who are listening in and who are watching, any last burning questions for the ones who are live with us? You've got 2 seconds to type it in before I say goodbye. I thought I'd let Ed and Julian go at 15 of, and we're like few minutes, but I want to let them go because they're very busy investors changing the world. Type in your questions. If you don't get to fill them in now, don't worry, I'll field them to them by email. But thank you so much, Ed and Julianne.

We love you.

We support your work. I want everybody to know about you. LPs, if you really want to walk the talk, invest in their fund. These guys are the real deal. So invest in their fund. Founders, you've heard their thesis. If that's you, go to talk to them. If it's not you, but you know a friend who's amazing who fits it, send them to them. That's all there is to say really, guys. Let's make the market bigger, better. And as you absolutely say, I'm going right to my notes, majority success model. So it's the majority. We are reinventing funding, reinventing the majority success. This is the third, what?

Signing out. Okay, not signing out. We are building the third reconstruction. So thank you both so much for being with us today, and we'll be in touch very soon for our other future partnerships together.

Thank you so much, Anne.

It's been a pleasure.

Oh, it's always a pleasure. Thank you so much.

Take care.

Take care. Thank you for listening to InvestHer Podcast. Don't miss more great funding tips and insights by subscribing to the podcast on Apple or your favorite podcast host. And while you're there, I'd love you to rate and review the show. We'd love to hear from you. So if you'd like to send in some questions, interact with our guests, or suggest other great people we should feature, join our community on the Flick InvestHer group or send us a message on investherpodcast.com. Want more great resources for female founders about funding? Check out our InvestHer Academy at academy.globalinvesther.com. I'm Anne Ravanona and look forward to having you with us again for our next episode. Let's put the fun into funding and get more women entrepreneurs funded.