Season 2 Episode 4: Jesse Draper of Halogen Ventures

Come on into The Room. The Room is a series that lets you get a view into the room where it happened. I'm Claudia Laurie.

And I'm Madison McIlwain, your co-hosts. It's not every day you talk to an Emmy-nominated, former television star turned venture capitalist. In today's episode of The Room, we sit down with none other than Jesse Draper, founding partner at Halogen Ventures, an early-stage venture firm that focuses on investing in female founding teams. Halogen recently closed their second fund, no small feat in COVID, so that they can continue empowering tomorrow's CEOs. You've likely used or heard of many of Halogen's portfolio companies, including The Skimm, Popshop Live, SenRev, and the sill. Jesse has a knack for investing in great people. And while many VCs learn these skills over time in their career, Jesse herself has been learning how to evaluate companies since elementary school as a fourth-generation VC. However, she didn't follow in her immediate family's footsteps right after college. Rather, her initial path was inspired by her Aunt Polly Draper and brought her into the world of acting. After 3 seasons on Nickelodeon's The Naked Brothers Band, Jesse started her own talk show. The Valley Girl Show, one of the first web-based talk shows. Jesse interviewed technology leaders such as Sheryl Sandberg, Drew Houston, Elon Musk, and many more. In many ways, Jesse's journey from sharing other people's founding stories on The Valley Girl Show to becoming her own founder of a successful venture fund inspired both Claudia and me to start The Room. In today's episode, we'll explore themes and insights such as building a brand for yourself, the difference between being an angel investor and an institutional investor, and the future for female founders. Let's open the door.

Jesse, thank you so much for taking the time with us today to come on The Room.

Thank you for having me.

We're really excited to explore your founding journey to building Halogen Ventures, an early-stage venture firm based in LA, which began through an atypical path in Hollywood. Before we tell that story of how you were working in Hollywood and then also were, you know, working in entrepreneurship generally, and then went on to be an angel investor and start Halogen, we'd love to start actually at the very beginning with growing up Silicon Valley yourself.

You really grew up in the heart of venture and also grew up with a family of 4 venture capitalists.

For those who know, the Draper family is really a household name in tech. How did you and your family influence you and your early ideas of tech and entrepreneurship and venture from a young age?

Yeah, so, well, to give you a little of my background first, grew up in Silicon Valley. I am a 4th generation venture capitalist and the first female, and I think that's important because I didn't know that I could go into venture capital because I was a female and I didn't see any women around me at all. I grew up there and I watched my mom work incredibly hard raising 4 children. And then I was like, well, what do women do? Like, all I know is entrepreneurs and startups, similarly to you. So we relate on that level.

Yes.

Venture capital daughters, I guess, if you will. And I just didn't know that I could go into this profession. And so when I looked around me as a little girl, you know, they say you can be what you can see. And my aunt, who was this very successful actress in the '80s, she— her name's Polly Draper, and she's on a show called Thirtysomething. I was like, okay, I'm gonna go into entertainment. Like, that's what women do.

Walk us through what young Jessie was like working on a hit show that— I mean, I know Claudia and I watched growing up, which is the Naked Brothers Band. Maybe can you take us back to the peak Nickelodeon era and walk us through those, those times?

This is the moment— I just want to articulate my face right now. This is the moment when you're like, I'm old. My Nickelodeon fans from when I was 19 on a show are interviewing me about my career. I just had this moment of like, I don't know, this is going to be a very memorable moment for me in my life. And I've definitely talked about it before, but I'm like, wait, because as a Nickelodeon star, if you will, I played the babysitter, and I was the babysitter also because I was one of two main adult characters. And also it was my family. It was a weird— my family is very crazy. And so actually what had happened is like we always are performing as a family, even like the business-minded individuals. We have all these sort of crazy traditions. It was very normal for my family to say things like, we're making a movie this summer. My aunt was like, hey, Jesse, I need you to be in New York this summer. Like, we're making a movie. And I was like, OK. And that was a normal— phone call. So I was like, okay, well, I mean, I'm acting. This is like my full-time thing. So okay, great. So I was in New York that summer, filmed this movie. It was like a mockumentary. And then Polly calls me up and is like, hey, so like, we got into this like Hamptons Film Festival. Do you want to come? And I was like, yeah. At the Hamptons Film Festival, Albie Hecht, who at the time was head of Nickelodeon, and now he's the head of HLN, he saw it and he picked it up, produced the show. It was funny because I was on this show and I was an adult with all these kids and I would have a really bad day. "Oh, he was awful to me." I'd go to my friend's house and be like, "He was awful to me. And like, we got in a huge fight and whatever." And then she would look at me and she'd be like, "But he's 11." And I'm like, "Yes, but he's my coworker." It was so funny because I was on a kids' show, but it was so hilariously inappropriate. And I had all these tattoos all over myself. And I would have tattoos for 6 months out of the year that said— they were supposed to be all my ex-boyfriends. I had, like, Guido and Abdul and Butch and Vinny all over my body. And the first year, they drew them on every day, and it was like torture. The next year, I convinced them to get them made. But then they're, like, not permanent, but they're, like, sort of permanent. You know, like, you can't— you have to, like, remove them. So I literally had tattoos. And I'm this, like, UCLA girl. My best friend went to Yale, was living in New York City when I'm filming this. And she brought all these, like, Harvard kids and, like, Yale kids together one night and like asked me to go to dinner with all these like girls. And I just got to the point where I just was sick of explaining my tattoos. And I would just like go and wear a tank top because it's hot in New York in the summer. And they would look at me and they would just be like— they called her the next day being like, "So what's with your friend with like all the weird tattoos?" One time I was in this elevator with like Holly Hunter and he looks at me and I have this like barbed wire with "Daddy's Girl" and he goes, "So Daddy's Girl, huh?" And I'm like, yeah. I'm like, I'm not even gonna explain it because I'm so tired of explaining that I'm on this Nickelodeon show and these are all my ex-boyfriends and it's hot and I don't wanna wear like a sweatshirt in the summer. It was so fun. I mean, I am the luckiest person. I feel like I've lived all these lives. And so I did Nickelodeon and then I was just auditioning. I did a bunch of indie films. I was in a movie called "Doggy Boogie" and I was the lead and I had to learn how to dog dance. And they say that like, as an actress, you'll never work again if you haven't experienced working with kids and dogs in acting. And I think it's true.

That's a great transition to you becoming your own boss, but still in the entertainment industry, working on The Valley Girl Show. When Claudia and I were starting our podcast, we feel like podcasting is a little bit the modern-day version of what you had done with The Valley Girl Show and getting to interview tech executives and entrepreneurs and understanding their stories. And we considered naming our podcast The Valley Girls. As an homage to you and what that held as we are here as well in Silicon Valley. I love that play on words. There's obviously like a not too kind connotation behind typical Valley girls. And then as it relates to women in the Valley, there are a myriad of other kind of stereotypes that come beyond that. And you did have the chance to interview incredibly impressive people on that show. What was one interview that has always stuck with you?

I'm such like a businesswoman at heart. And so when I think of my best interviews, I think of the ones that like went the most viral. And like did the best for me. And they were also the most memorable in a lot of ways, but it would be, I would say it was Sheryl Sandberg, Mark Cuban, and Jessica Alba, 'cause those three like put me on the map. But when I put, when I think of like, you know, I was trying to ask funny questions, make these people approachable. I was supposed to act like a Valley girl. I was like a cartoonized version of myself is how I used to explain it. And I was supposed to act like the San Fernando Valley girl that you're, talking about, but be a Silicon Valley girl trying to learn it. If you watch the old episodes, those are so embarrassing, but they got better and better over time. And you really learned the art of an interview and how that— that was the biggest lesson I've had. That's helped me through my entire life. I think, you know, those are my most memorable interviews. But the one that, like, I just, like, love this guy. Anish Chopra was the first CTO of the United States of America and under Obama. And he came on my show. And I remember my favorite question that I've probably ever asked I asked anyone was when I asked Aneesh Chopra what the Wi-Fi password to the White House was.

The answer wasn't as exciting as coming up with the question, but I just was like, "This is brilliant." So it seems like, you know, early days of the Valley Girl Show, there were a lot of male guests, and you had that realization there needed to be more female representation. Walk us through some of those, like, early realization moments that there needed to be more diversity and you were in a position to help with that. And kind of how did you transition from kind of being the host of the Valley Girl Show into your early efforts with angel investing and then later on kind of raising an institutional fund?

In terms of thinking about diversity and inclusion, it was something that was just frustrating to me. And I think in a lot of ways I was like, okay, I'm interviewing these guys all day. And as a talk show host and you know your audience and you're also trying to stay relevant, I need different ages. I need different races and I need, you know, different genders. We had no women at all coming on. It was hard to find them at first. And then I found them. Then you put the word out that you're a woman looking for women in tech and I call it the Batwoman signal. It's like they're everywhere. You know, we saw 5,000 deals last year. That's more than most of the traditional funds in Silicon Valley, Seattle, and beyond in the early stages. And that's because we were looking for women. In terms of the transition, you know, I set the show aside. I did it for 5 or 6 years and I created a nice brand, like a really great brand. Like I still have people bring it up to me at conferences or people who used to watch it because there was nothing then to watch these entrepreneurs in like the early days when people really, you know, it was a much smaller community. And I created this nice brand. But I'd been through the wringer. I mean, it was early days of digital distribution. I built out a whole new distribution model. We did 35 different distribution deals with everyone from like those screens in airports and hotels all the way to like we were one of the first companies to partner with Forbes Video Online, Mashable, anything tech news site I could find, some Hearst papers. And it's like basically the one-woman show until I brought on my business partner, Jonathan, produced the show, built out the tech blog news sites with me. You can't do anything alone. We got to this moment where we took the show to TV, we're nominated for an Emmy. We did a pilot with Fox in San Francisco and then CBS poached us and we did a whole full series run with them. I mean, the stories I could tell you, I was blackmailed by my producer. He stole all of my hard drives. It was like crazy. I had to like go pay him like $25,000 in a parking garage, even though everyone advised me not to. And then I canceled the check and it was just the craziest thing ever. So I had been through the wringer and I was like, okay, I've done this and we're barely breaking even. This is like the Wild West, this industry. I want to solve it. It's not going to be from this side. And that was the moment my husband was like, so I'm looking at you, you've been up for 4 days straight. Most people are like crazy at that point. Like, You're also pregnant. I don't want anything to happen to our first child. Like, we need to like do something about this. Even here, I'm getting millions of views in fast food restaurants and gas stations across the country, but like the sponsors are not paying enough. So I set the show aside and I said, okay, like, let's go raise a fund.

Could you walk us through the difference in being an angel investor versus an institutional fund?

Angel investors usually are high net worth individuals and will write one-off checks into companies. What I do is I raise money often from angel investors, high net worth individuals, institutions. I raise this pool of money to invest in many companies versus investing individually in companies. Is if you're investing in early stage companies like I am, it's very unlikely that the first couple will do okay for you. You want to invest in a fund because we do 20 to 30 deals per portfolio, assuming a certain percentage will go under. And so if you are an angel investor, what I usually suggest is take the pool of money you have and pick 10 companies and divide it up because then you'll have a nice little portfolio. And if a couple go under, which they will, you will not lose as much money. So we work with both high net worth individuals and institutions. Institutions are, which means a large body of capital or money to invest in funds specifically like mine, or they could come from an endowment or a large foundation or school endowment. A lot of university endowments and things like that, or pension funds. Those are all institutional. And then high net worth is, you know, it's usually someone who has a lot of money, and either they made money from being a great entrepreneur, or they worked their way up the ladder somewhere. Or, I mean, I've had all sorts of interesting— it's fascinating having pitched 500 people for that first one and probably 400 for the second. It's a grind. Like, I'm exhausted. We just raised our second fund and like, I'm exhausted. It was the hardest thing I've ever done because of COVID and a million other things. But I, I'm so, you know, you just have to like stick with the grind.

Congratulations on closing your second fund. That's a massive milestone for anyone, but especially a solo entrepreneur fund leader such as yourself.

I mean, it was not a solo effort. You know my team and they're incredible and I couldn't have done it without them. I have an incredible team, Ashley and Alexa.

Well, I am curious. Just because you, you mentioned earlier around how you and I both share venture dads and now working in venture ourself. And I don't know about you, but growing up, the dinner table was often food for conversation on what was going on in my dad's life and work life and heard lots of stories around these different aspects of venture and are lessons that I didn't know I was learning, but I am implicitly taking with me today in my work life now. What were some of those conversations around the dinner table that you carried with you as you went on this journey journey of building your own fund?

Yeah, it's so nice to talk to you about this because I— it's hard to relate. I am aware not everyone has a venture capitalist father. I'm in a really unique situation, especially now, because my brother— my— both my brothers run funds, and I run a fund, and my, my mom's like the CEO of the family. And so we have these dinners, and she calls them board of directors meetings because she's like, uh, are we talking about business again? And it's truly all we talk about. Like, it's really— I mean, I actually sometimes have to be like, okay, I'm getting like too in work mode, and I to like connect more personally because it's a problem. We're constantly sharing notes. How did you structure this? What was this? Did you do an SPV for that? Like, it's just nice to have people to bounce things off of. And I have great mentors and advisors and investors even who I work closely with who give me great advice too, but it's nice to just have that little group in the Trust Tree.

Experiences as a funder and working with female founders at many stages of business across different industries, Are there any common threads that stand out to you in the challenges of the female founder journey?

Of the challenges, well, they don't raise enough money, so they're constantly raising. And we have 3 male CEOs with a female co-founder, and it's just fascinating to watch them raise. Like, it's just— I watch the women raise who have a killer idea, are doing $10 million in revenue, like, shouldn't have any trouble raising, and it's like they're collecting these tiny, like, $25,000 checks to raise $5 million. That's a slight exaggeration, but like, that's basically what it's like. You watch the guys and they're like, they don't even, they don't need the money. They don't have the idea totally fleshed out. And by the way, my male founders are amazing. I'm raising $20 million. Even $20 million, I don't know. The benefit of that though is that women raise less money, but they're more profitable. They double the return, their dollars go farther. So actually investing in women-run businesses is better business overall. Just because of that data. And so I feel like it's an enormous opportunity that people just are not even seeing. It's an underserved market. And so, you know, you have a bigger opportunity to make these huge returns.

How do you see the landscape of funding these female-led businesses changing over time?

I hope that eventually it's sort of like, doesn't matter if you're male or female, like you're just running a billion-dollar business. I think we're still catching up, you know, Women were taught not to talk about money and men were taught to talk about money and men passed down the pocketbooks to their sons. And that's slowly changing, but it's still a problem. And I see it even in, you know, the family offices that I work with where they're passing it down to their sons. And I'm always like, well, what about your daughters? Like, you should show them our portfolio. I think they'll be excited about our companies, you know, and you should get them involved. And I feel very grateful and lucky that my dad was always making me learn how to invest and think about how money moved. From a young age. It's a real problem. And I think the landscape won't fully change until women take more risk with their money. We need more women buying Bitcoin. We need more women investing in public stocks. We need more women investors investing in private companies. We need more capital run by women. And the problem with women and investing, that because we were taught not to talk about money and we were actually taught way worse, women were taught to give it away. And like, that's the worst thing you could teach anyone who doesn't know how to invest yet is how to give it away. So yes, there is a place for charity. Like, I'm giving away as much money as I can right now during this time. There are nonprofits that are doing incredible work. I think nonprofits solve a very important, like, a lot of important problems in society. But like, for-profit companies are much more sustainable and don't need to continuously fundraise. I had this dinner before COVID with like 5 of my best girlfriends from college. Hey, just want to make sure you're all invested in the stock market. And they were like, it was like I sucked the life out of the room. They felt so uncomfortable because again, we've been taught not to talk about money. And I really am looking at it like, I hope you're growing your money. You know, you guys are at a point in your career. I want to make sure that you're like building this nest egg for retirement, etc. I think people feel like I don't want to tell them how much that was or whatever, but like, you should because women don't do that. And so I just say like, take more risk with your money. That's how, that's one of the ways we start leveling the playing field.

A lot of our personal friends and many of our listeners too are kind of embarking on that first-time founder journey. And for people who might not necessarily be in the room to sort of see how all of these kind of deals play out and what it's like to pitch to a VC and actually close a deal. Do you have any tips and tricks for a first-time fundraise for our listeners?

I'll tell you, yes. So tips, 10-page deck, don't do more. Here's what you should have in it. Get your notepad. Name of company, start there. What are you doing? What problem are you solving? Explain the situation. Pictures are great. Like, why do we need this? And then how is it defensible? Why is it different? Why will you win? What's the moat that you're building around this business? Do you have IP? Do you have patents? Do you have something that makes it so that no one else can do this? How will you be a billion-dollar business in 10 years? Talk about the market size. It must be in a multi-billion-dollar industry. It must be a billion-dollar industry. So if it's smaller than that, you should not be going out for venture. Then you should have any kind of financials you have. If you aren't making money yet, like don't be afraid of that. You should have some sort of projected financials. This is typically in consumer. Sometimes, you know, you're starting a social media business and you haven't hashed out the entire business model yet, but projected financials. I'm married to an accountant and it's like the complete opposite of the way I invest. Like in the beginning of our lives together, he was like, why would you invest in that? Like, I don't like it. There's only 3 people on that team. I don't know. And then I made some money and he's like, maybe you should invest in another one. And so we started doing well with these investments and now he's like, turned into like this very supportive accountant husband, but before he was very risk-averse and I'm like the big risk taker. And then you want to know something about team, maybe advisors, if other investors are involved. And then on the last page of your deck, write how much you're raising, what the terms are of the round, make it really simple. And women have like trouble. I feel like I can say this based on personal data, having taken so many pitches from women. Women specifically have a lot of trouble asking for money. So don't ask, put it on the last page of your deck and just let that page speak for itself. You got to the last page, it says, "I'm raising $2 million, you know, at a $20 million valuation," whatever. And then it's like, that'll just make it easy for founders who really are open to pivoting. I ask these crazy questions, like, true story, I used to ask questions like, "What if there was an international pandemic and everything shut down? What would you do then?" I invest in the founders who roll with it.

Now that you've raised your second fund, what is changing about your investment strategy, if anything?

We're writing bigger checks, which is exciting and stressful all at the same time. We are much more thoughtful about our ownership and strategy and what companies we're following on. The strategy worked out for our first fund, so, and is continuing to work out for our first fund. So I actually haven't changed it too much.

I'm really excited to see what companies you invest in out of this. Honestly, Jessie, you're an inspiration. You're an advocate for female entrepreneurs everywhere. You are raising two kids. You're an entrepreneur yourself, both from the acting side of the world and all the way now to being an entrepreneur of a fund. What is next for you?

So I think what's next for me is— were lots of things working on this fund. I hope to raise many, many more. I hope we're managing, you know, billions of dollars one day and building out our team. And then I really hope that we can continue to push this gender diversity conversation forward. I recently wrote an article called Investing in Women Isn't an Effing Charity. You should all go read it because it talks about the business case for investing in women and just the personal experiences I've had within the last year or two that are still so awful, misogynistic, like, you know, had guys booking prostitutes at a dinner, like in front of me. Like, this stuff is still happening. So I think we just really need to continue to push this conversation forward. And so I hope that everyone out there listening can— investing in women is an opportunity. Women need to put their money to work, and then men need to champion women. This is not a man-hating club. I love men. We need men. And I want men to champion their daughters, you know, make sure there's always a woman in the boardroom. Just start thinking that way and also listen to them. Don't just, you know, I think often like there'll be one woman in a room, you have a whole bunch of men at the board level and the woman is just like completely dismissed and that's wrong. So, you know, make sure that the woman's heard, listen to her. Usually she's smarter than you. I mean, I'm just saying, again, not a man-hating club, but it's true.

We have our hero question that we ask all of our guests, which is, who is a woman in your professional life who has had a profound impact on you?

I think my Aunt Polly, because she was really the first woman I saw just working incredibly, incredibly hard and doing something out of the ordinary, and just in terms of being a power female. In terms of what I do today, I'd say Sonya Perkins is a big advisor, mentor of mine who was at Menlo Ventures for 20 years and made some investments like McAfee, a company I'm sure you've heard of, and then keeps us all safe online. She runs Broadway Angels now, which is a group of women angel investors, and she's a good friend of mine, and, and I just look to her all the time.

Thank you so much for sitting down with us and chatting. Your stories have been incredibly inspiring. And, you know, I think I was sort of low energy at the beginning of the day, and I think this personally has really brightened my day. But also, thank you for sharing tactical advice for future founders. Whether they're women or people who, you know, not necessarily are in the room and helping them on their fundraising journey.

So thank you so much for having me.

Thank you for listening to this episode of The Room. If you enjoyed our conversation, please like, follow, subscribe, talk to us in Clubhouse, and share with friends.

All opinions expressed by Claudia Madison and podcast guests are solely their own opinions and do not reflect the opinion of The5EC. This podcast This is for informational purposes only and should not be relied upon as a basis for investment decisions.