Why established venture firms should court emerging managers – TechCrunch

In a VC ecosystem that has now looked up long enough to embrace the Black Lives Matter affirmation and the diversity conversations that have followed, firms are thinking creatively about how they access investment opportunities by underrepresented

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From experience, I’ve seen that diverse fund managers tend to be concentrated in micro VCs, with a few notable exceptions, including Miriam Rivera of Ulu Ventures .

Five years later, we’ve fully deployed MiLA Capital’s first fund, built an ecosystem for founders building tech you can touch, and invested in 22 companies.

Latinx and Black-owned firms manage 1% of aggregate AUM in venture capital (Knight Foundation), even though, according to the NAIC, these types of diverse-owned firms can generate superior returns.

But it means that, much like founders, emerging managers are used to wearing dozens of hats and performing insane tasks, like unclogging the facility toilet and making a Costco run for air freshener.

A press release or call for submissions likely didn’t yield them torrential deal flow overnight, and so they’ve had to establish inroads with organizations, universities and other investors as a way to evolve their access to opportunities.

Consuelo Valverde (SV LatAm Capital), Christine Kenna (IGNIA), Jodi Sherman Jahic (Aligned Partners), Noramay Cadena (MiLA Capital), Lisa Feria (Stray Dog Capital), Miriam Rivera (Ulu Ventures), Ariel Jaduszliwer (Brainstorm Ventures).

Typically, institutional investors favor managers who’ve spun out of an established firm over those who’ve broken into venture from outside.

In a VC ecosystem that has now looked up long enough to embrace the Black Lives Matter affirmation and the diversity conversations that have followed, firms are thinking creatively about how they access investment opportunities by underrepresented talent.

Emerging fund managers are driven by a desire to fill funding gaps.

In order to jump over the valley of death that is the distance from fund one to fund two, the emerging manager had to show wins from their portfolio.

Today, 80% of investment partners at venture capital firms are white, compared with only 3% Latinx and 3% Black (NVCA).

Noramay Cadena is co-founder and general partner at Make in LA, an early-stage accelerator and fund created to support technology-enabled hardware companies.

Sidecar funds are being launched, pitch competitions are being promoted, VC job postings are being shared more widely, intros have been bypassed and processes are being streamlined and made more transparent. That’s a great start.

I vividly remember bringing on a partner and seeing the horrified look on their face when we shared our first “call for capital,” which we’d sent as email text.

At the start, although I’d spent a decade launching satellites into space, I needed a serious crash course in venture capital.

The experiences of emerging managers, and even their personality traits, position them to be ready to scale within an established firm.

However, there’s an alternative path that deserves a spotlight: Spin-ins by emerging managers who have broken into VC by raising their own funds.

These micro VCs have been heads-down focused on building sustainable inroads and foundations, and on delivering on their visions to invest differently and with a gender and diversity lens.

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