Through the Looking Glass: Holly Lynch

Holly is the Founder and CEO of The 85-Percent. She is an advertising, strategic planning, and brand communications veteran, with twelve years’ experience at agencies such as Ogilvy, BBH, and StrawberryFrog. In 2010, Holly founded The Good Girls — the first branding firm focused on women-led enterprise and social innovation. She is currently running for Congress for New York’s 10th District. You can follow Holly on Twitter @hollylynchny.

By way of background – were you always mission-oriented?

I think I was born with a justice bone or an entire body of bones with that sort of perspective. I grew up in New York City during the ‘80s. It was really hard to grow up here and not realize the level of injustice in the world.

There was the Homeless Epidemic, the AIDS Epidemic, the Crack Epidemic. I grew up on the Upper West Side, and everybody thinks the Upper West Side is a pretty cute wealthy neighborhood. And unless you lived there in the ‘80s and were offered crack at the age of two, you don't really understand just how challenging New York City was at the time and how much of a disparity there was between those with wealth and those without.

It was hard for me to not see the fact that there were drug addicts all over Central Park. Central Park was off-limits. I wasn't allowed to go there without at least one adult, if not more than one. At the same time, there were a lot of buildings that were being torn down. We had a major real estate challenge back then similar to how we were dealing with it now. A lot of buildings that could not support themselves were being torn down to be replaced with high-rises. So, the ‘80s was kind of similar to where we are right now in the sense that we're seeing a lot of these issues that have sort of bubbled under the surface but not been as obvious. And one of the reasons why I'm running for office now is because I've seen this already. It's only going to get worse unless we start stepping up and doing our job as citizens. 

I got very engaged at about the age of six. My parents actually gave me a petition board and pimped me out to the local churches that were going to get torn down to be replaced by high-rise buildings. They thought a six-year-old would be more appealing to get people to sign petitions then an adult.

And I think it's a really great experience for kids to have to do that sort of thing. You lose your shyness really quickly. I also went to a very progressive school run by some crazy Episcopalian nuns who protested in Tiananmen Square. 

I was raised Roman Catholic, but I went to an Episcopalian school and the Episcopalian Church is much more progressive when it comes to the ordination of women, gays, etc. My school was very focused on women's education and advancement. I gravitated towards what I was taught at this really politically engaged school.

I ended up going to Harvard where I naturally gravitated towards the Phillips House. I did environmental action work and I built homes with Habitat for Humanity. And Harvard is kind of like New York. It's a whole bunch of really ambitious people that care deeply about trying to make the world a better place, and I just naturally gravitated towards the human rights and environmental action work. 

Finding my career path was significantly more challenging than I thought it was going to be. I thought I was going to go into environmental science and public policy, and I didn't do that. I ended up pursuing social anthropology. It landed me in the world of trying to understand human behavior and how the world that we grow up in shapes our behavior and decision-making. 

I ended up going into advertising. I really loved it for the most part, but most of it was really bad. I had a hard time working with stupid brands. My more meaningful work was with cars like Volvo where it was all about the safety of the passenger and with the Dove campaign where we're trying to flip the conversation on beauty and what it means to be a beautiful woman. I entered the advertising world with a specific agenda which was to make things better, and I took every opportunity— whether it was the hybrid affinity drive with Toyota or it was some other initiative. My proudest moments were pitching organizations like Al Gore's Climate Fine Protection Organization. Those are the things that really got me up in the morning, and they're still the things that get me up in the morning. When I decided to branch off and do my own consulting work beginning in 2010, I did it because I was exposed to Silicon Valley in its early development.

I knew a lot of techie guys who were getting angel investments and had no problem asking for money. And meanwhile, I saw all these young women with really great ideas who were too afraid to say anything. I really wanted to help them develop their own brand identity to pitch for money and to feel confident in front of people pitching their ideas. It's like being pregnant for the first three months. You don't want to say anything, but if you don't say anything, you don't get the support system to get you through the rest of your pregnancy. I am driven to change the mentality of not being ready to talk about it because who cares if it's not ready? I know it's a good idea, and there are people out there that should be interested in hearing about it. A lot of my work with 85-Percent was really focused on getting women more comfortable with the ask, communicating what they do, and communicating why it was important to them. I loved that work.

I also worked with Harvard University and a number of higher education institutions that were trying to raise money for really important initiatives. Soon after all of that, I really found my grounding within the angel space because things were kind of exploding in 2012. I joined the Pipeline Angels where I met Angela Lee and a lot of other women who were of a similar age group and financial means. We realized that it was our responsibility as a new generation of people who could actually make a difference to do it.

It was a great experience to learn how to invest with other women of the same age group. The challenging part for me was realizing that there are women of significantly more wealth who were 20 years older who don't care that much. I don't know if it's a boomer mentality, but I know that Gen-Xers like me and Millennials have a very different perspective when it comes to supporting younger women and their dreams. It really excited me to know that I could do something really impactful with my money to help women get their ideas off the ground and through working with some of those organizations.

I met Nnamdi [Okike] and became an early investor in him simply because I believed in what he was doing. When you meet somebody who is so above board, so honest, so forthright and so buttoned up, it was just an obvious thing to want to support him.

How do you see the landscape evolving as it relates to social impact investments?

I’m actually going to be chatting with a company called Closed Loop Partners next week. Their whole strategy is around the whole circuit, from birth to death, of recycling all resources to actually continue to invest in more solutions-oriented stuff. For me, I think it should be an element of every fund. Look at Blackrock. They’re getting more and more invested in social impact because they realized that they’ll lose their consumer base if they’re not investing in climate change and resiliency.

So I think it would be a logical move. I’m not saying they have to put a majority of their funding into it, but maybe just 1% or 5%. A lot of things are already promoting their impact funds as a selling point. I’m going to be talking to Morgan Stanley about how I can just work my assets over there because I’m really concerned about that. I have a great portfolio of Blue-Chip stocks, but that only favors me and won’t solve any major problems in the long run. I think those of us with the capacity to invest should really be thinking about the future for everybody. It’s not just about our own portfolios.

I may be an outlier from the norm in that sense, but it’s only one planet we’ve got and we all need to survive. It’s not like I’m investing for the sake of giving money away. I’m investing because I’d rather have a return on my investment than just give a charitable gift. I could give money away, but it’s not a good model to set up when there’s no real return on your investment. And I think we need to be thinking about the world as an important investment.

I’m becoming more conscious of making sure that my own portfolio reflects my value system, and what I’ve always cared most deeply about are gender equity and making sure that minority and immigrant families have the capacity to survive here. It’s just getting more and more challenging for people to survive. It’s very expensive. We’re not making it easier. The more real estate property goes up, the more challenging it becomes to afford anything.

My focus has really been on the environment and ensuring everybody can have a sustainable job. My other concern is education. We’re not preparing high schoolers for anything at this point. I’m not sure what jobs will be available if they’ll be able to get jobs. They certainly can’t afford college. We’re walking into a dead-end street where nobody’s really paying attention to what’s fundamentally important to the survivorship of the human race and this country.

My first investment was in a company called Day One Response, which is actually female-founded. They make disaster-response water bags. A Cal Poly grad worked with her professor and P&G to develop a water bag that decontaminates water in disaster situations. To me, we should be looking towards things like that as major investments down the road because the one thing that we can be sure of is that climate change is real, and access to clean water will become more and more important every day.

There’s a couple of organizations that I met with down in DC that are focused on helping individuals think differently about their personal investing. Millennials are about to be handed 30 trillion dollars from their parents. That amount would solve a lot of the world’s problems. The sooner we start doing it, the sooner we start solving the problems. I don’t think federal government funding is going to do it.

I think we need to have really smart investors, really smart banks, really smart venture capital firms, and technology companies taking this on as a public-private partnership. Because unless we’re all on board, we’re not going to solve the problem.

If we got everybody on board, it would be a much easier fix than depending on public funding to solve the problem, especially with a divided government like the one that we have. 

So much of what we do in this country is a waste of money. We spend it on wars where we’re still there 20 years later. We’re still sinking trillions of dollars in two wars that we will never win.

Nobody’s paying attention now to climate change. I just feel like we spin a lot of wheels without anybody just owning it, campaigning, and coming to the table with a realistic solution as opposed to a pipe dream.

A lot of the solution is giving women the microphone so that they can be who they are. Women and men run things differently. It’s a completely different leadership structure. Whenever I run a team, it’s not been a top-down; it’s been a sideways networked effect of we all have our jobs, know where we’re going, and don’t need one person on top. It’s all of us figuring out what role we’re playing, and we’re all moving in the same direction. I think that network approach allows for more collaborative work than a pyramid approach does.

But how do we get it? I think we need more diverse founders. I think we need more people who have actually worked in the social impact space advising venture capital firms and technology companies. It’s still a very selfish industry where the unicorns are guaranteed billion-dollar exits or whatever. And that’s a really short-sighted perspective from my point of view.

Silicon Valley is still living in its own little bubble and not paying attention to what’s happening in the real world. The last time I was out in San Jose, I was horrified at the level of homelessness. You have the crazy speed bus that takes people from Cupertino to San Francisco where they’re living, and they completely bypass the real world of homelessness, drug addiction, and opioids that is the road between Silicon Valley and San Francisco. They just don’t see it because they don’t have to see it. I think, at some point, we need to force them to see the impact of their greed, whether we’re talking about a Wall Streeter or Silicon Valley person. It’s the same money, different coasts, right?

Are you finding other people who are as motivated as you to solve these issues? 

I'm trying to find those people. Luckily, the Upper West Side is a pretty liberal progressive community. We have Columbia University and NYU, so there are academics, corporate interests, and organizations that are much more socially engaged with what's going on in the world. But when it comes to the average person, most people don't care. I was having a conversation with a friend last night, and her issue is that for a lot of people, it's just about whether or not you can afford to feed your kids. We're talking about these high-minded issues like healthcare and climate change while the average person who's working three jobs just wants the tax credit so that they can maybe get a bigger apartment or afford more clothing for their kids. We're in a place where the immediacy of everyday needs is becoming more apparent. 

It's why I love Dessy. I'd like to get more engaged with what Nnamdi and some other more progressive thinking venture capital funds are doing because unless we have at least a few bastions of people who see it and are willing to put something against it, it's just going to end up being the immediate need.

How do you integrate your values into your decision-making process for investments, whether they’re public equities, angel investments, or LP investments? 

As I said, the first investment I ever did was in DayOne Response. That was my toe dip into the world of social impact work. It was also a female founder. There a lot of things that came together in a beautiful way, and she's done extremely well ever since then. I have made a concerted effort. I have a great banker. We meet every couple months to talk about my portfolio and how I can be moving more into things that I care about. She's done a lot of research on gender-parity funds and climate change funds for me. It's very active pursuit. 

I sat down with my friend, Jamie Moyer, who does a lot of blockchain work and impact work with blockchain. She's been introducing me to other people, if my banker can't necessarily do it for me, reallocating some funds to other places where they do have access to certain types of investment structures.

It's a constant pursuit. And it is something that I care very deeply about: diverse founding teams and impact investments. I have the luxury of being able to do that. I'm not using anything that I need to live on to make these investments, so it's not really a gamble.

It's more of an experiment. If it works, I don't know how to get more people to realize that it's not charity. What you're doing actually will have more impact in the long run. I think they're a lot of conservative people who just think giving is giving. I have some friends who would rather give to charity without investment returns at all. There are a lot of different perspectives. I happen to think that the two should be together in the same structure. I understand some people think they will make more money and give more money away if they stick with the traditional investment structure. I think that approach is short-sighted. But you know when something's been doing 10% for the last 20 years, and you have our offer something that only give you 1.5%, that's a sizable return difference.

Now I'm patient; I'm young. I don't need the 10% right now. I'm not seeing it as a zero-sum game. I see it as an incremental engagement in solving a problem. 

I think a lot of it needs to happen early in school. If I hadn't been exposed to a lot of things early on in life, if I had not gone to a school where these topics were regularly discussed, if I hadn't grown up in a cultural situation where immediate crises were evident, I wouldn’t be as open minded. I see a lot more than most people because I allow myself to see a lot more. I've also traveled a lot. I've been to India, I've been to sub-Saharan Africa. I’ve been to the South. I've been to a lot of places further away where real crisis is evident every single day. But a lot of people don't want to leave their suburban safety net and their comfortable investments in portfolios that guarantee them certain things.

Do you think the data on performance of certain sectors, like investing in diverse founding teams or social impact companies, will ever be sufficient to change the perception of scale?

No. It has to do with LPs pushing for things. I think we need to start enforcing quotas. I think the only way we're going to see massive change is when we require venture capital companies to invest a certain proportion in diverse trending teams and social impact. I don't know how you do that. 

I don't invest in anything other than places like 645 Ventures and social impact, but I don't think most people are like me. I would hope that more women are like that, but I don't know that for sure. Unfortunately, as long as we still have mostly white men running venture capital and banking industries, it's going to continue to go in the direction of what they're comfortable doing until we have more people of diverse backgrounds in positions where they can push this thing even at an early age. I look at Europe and other parts of the world where there's a 20% board quota. We need to start experimenting.

Bill Gates and Microsoft are heavily invested in a lot of these funds that I'm looking at. They're just not talking about it publicly the way they should be. I think Bill Gates could have a really positive impact on the world if he stepped out just as he did, condemning Mark Zuckerberg for saying that technology is amoral. Technology is not amoral; technology takes on the morality of whoever designs it. And until we have more people like him or Elon Musk actually stepping up and saying they're putting their money in social impact investing, nothing's really going to change.

And I would love to see more female tech founders doing that too. I mean those who have seen success. There hasn’t been a hugely successful, female-founded company that has stood up and said something for change.

On a different note, how did you end up deciding to run for office? Because that is not an easy decision. 

It comes from almost dying from cancer twice. In 2014, I was diagnosed with the massive brain tumor, and that's when I first stepped away from my business. I actually just started working with multiple Myeloma research foundations when I was hospitalized with grapefruit-sized tumor in my head. But after six weeks of radiation, everything looked okay, and I went back to life and started my business again. Then in 2016, I was diagnosed with cancer again. It was in a different location, but the same size. It was also more critical so I spent about six months in chemo. That was when Hillary was running for office. I made a promise that I would survive because she was going to win. I needed to see the first woman president of the United States. I basically spent my time in chemo rewriting my will, getting all my friends together, phone banking, doing everything I could.

Then it took me about six months to figure out what office I was running for because New York is challenging.

The morning Trump was actually elected, I was just like, ‘Fuck, what did I live for?’ I was so excited to see the first woman president. I worked for President Faust, the first female president of Harvard University, who transformed my alma mater. It became a better place, a better school, a better environment, more loving place, and I was so excited to see the first woman president. I just, I saw all of our problems potentially being solved, and she lost. I was so angry, and on that day, I decided I'm going to run for office. 

As it turned out, literally the only office I could run for, where I could get everybody in my family, was if I challenged Nadler for Congress. I started doing my research on the him. He's been there for 26 years and hasn't done anything.

Our infrastructure is falling apart. Our transportation is falling apart. I lost healthcare both times that I was diagnosed with cancer. Our education, like everything, is falling apart, and he's been sitting there doing nothing for 26 years. And with AOC last year, I believed this is possible. The Democratic party in New York is so corrupt that it's time to blow things up a little bit, but it was also me waking up in my home district and realizing that I was back in the same place I was as a child, surrounded by homelessness, drug addiction, and incredible poverty. 

If this District ends up underwater, the rest of the country is underwater. We have no water security in this district. We're surrounded by Hudson River - if we have a foot of sea rise,  some streets are gone. We have contaminated water for the rest of human history, and he's doesn’t get the message. He just completely doesn't get it. He's too focused on Mueller, but that's not what's going jeopardize the lives of his constituents and the people who are my neighbors. 

And that is because it's mostly people between ages of 50 and 65 who know when the election is -- because that's another thing they don't tell you -- they hide it from a lot of people and it's majority-white older people. 

It's not the vulnerable immigrant populations. It's not the seniors who can't even get out of their apartments to go to the polls. It's really rigged by a system that benefits the wealthy elite who have the knowledge and the capacity to go vote that day. That's got to change. There are people still paying off student debt, they'll never be able to afford to live here, or they're not getting an education at all. And they're going to end up underwater on so many levels, struggling to keep it together. This includes a lot of women too.

The levels of injustice in what should be the most progressive, advanced congressional district in the country is horrifying to me. And he's going to get reelected because nobody has ever bothered to challenge him. 

He knows that I exist. I guess he's taking me very seriously and I'm glad. It’s the same challenges as starting a business. It’s being able to raise money, being able to stand up and yell louder, having the confidence in the network, the influencers, the social media following, the right audiences, and the access to the right room. It's rigged against women just like the business world was rigged against women, so I have to break some rules. 

What was your call to action to start?

Yeah, every day feels really overwhelming. I wake up every day terrified that I'm making a huge mistake and that I'm going to be a laughingstock. But where do I start?  I've never actively felt like I made a choice in my entire life. I've always sort of felt like I was pushed in directions.

I have always felt like there has been some guiding force. There's always been some element that has told me when I’m wasting my time here.

Reflecting back on college, I thought I was going to do environmental science and public policy or English. I pursued both of those courses and decided they were a waste of my time. I end up doing social anthropology because I wanted to work with Habitat for Humanity.

I got into angel investing, specifically with women, because as I was starting my own company, I was just talking to a bunch of rooms with people like Janet Hansen of 85 Broads. You pick up on the do's and don'ts of starting a company and how to network.

I think if something is right for you, it'll choose you. You don't have to force yourself to want to do something like when the Dove campaign found me. I actually really didn't want to work on that. I had just worked on IBM. I love B2B technology, and I love doing research and strategy work with C-suite guys, server room guys and hanging out in the basements of banks, but I am a total nerd and I love hanging out with R&D people at Unilever.

I like hanging out with the nerds who are really passionate about what they do every day. So, when I was put on the Dove campaign, it was like, I had to do the fluffy beauty shit. It wasn't until I got to know Sylvia who was just a badass angry Brazilian woman. She hated the fact that they wanted her to have three forms of plastic surgery, and her feelings were contagious. So, we all got mad with her. A whole world of women got mad, and when you can harness that level of passion and when you can identify with it, the rest of it takes care of itself. And my whole life has been guided by these things that have just popped up and I’ve thought, that's wrong; it’s my job to fix it.

And maybe it's just that all the wrong things find me, but it's hard for me to ignore them. I've always had a hard time ignoring things that I know are wrong. That's what got me to start a business. That's what got me to help women get their businesses off the ground. 

I don't know how much I can do. But I'm alive. Almost dying a couple of times really brought that home.

If you've got a life to live, then you better be doing something meaningful with it. Otherwise, you're wasting your time. But, even if I lose this election, I'll have tried, and that is why I'm terrified every day. I have nothing to lose. I've almost died, and this is certainly not going to kill me. It might be embarrassing right? I might lose some friends, but I don't think so.

I think what I'm trying to do is obvious, and I hope people get it. The message I'm moving around with this rise up, and what I want every woman, every minority, every vulnerable population to realize, is that empowerment is a fiction. Nobody is going to empower you. I have lived a life of listening to people tell me about empowering other people.

It's not going to happen. You either rise up and take it, or somebody else will take it from you. I need every single woman to realize that her job is to rise up and take her own potential to do something. Maybe it's starting a business. Maybe it's about taking five dollars out of her account and putting it into something that she cares deeply about.

It's not even doing it for somebody else -- do it for yourself. And I think if more people just owned what they care deeply about or allowed themselves to feel the injustice and inhumanity, then it wouldn't be so hard for them to recognize their own potential to make change possible.

Through the Looking Glass: Diane Henry

Diane is the founder of Rogue Capital Collective, a venture capital firm that invests in tech startups that focus on building solutions in the following categories: the future of money and real estate. Prior to Rogue, she dedicated 10 years to the successful operation and expansion of her Manhattan based commercial real estate company, landing her in Forbes Company to Watch. You can follow Diane on Twitter @InvestorDiane.

I'd love to kick off with a little bit about your background and how that led you to the world of early stage startups. 

I started out as a bootstrapped founder. To be totally clear, I was a founder first, and an investor second. My previous business made it possible to make angel Investments, which I started doing five years ago. One motive for me was the meaning and purpose I find in providing founders with resources, advisement and capital in a way that I did not have when I started out. I definitely cut my chops doing it the hard way, and though it toughens you up, the hard way can be overrated. Instead, you can get a lot done with the right counsel and resources at the right time. So part of my objective was to share some of the hard-earned knowledge I acquired launching and subsequently running my business for a number of years. 

The other thing that drew me to this work -- and I spoke about this a little in my TED talk -- was curiosity. Long before I was a tech seed investor, even before I could legally drink, I was making small investments. I worked through school, and whatever didn't go towards necessities went towards making very small investments, often in tech companies. This was back when companies would IPO a lot sooner, so I was able to buy a modest number of shares in public companies, many of which grew to become household names in tech. 

I was a thesis-driven investor before I had that language for it. I asked myself, ‘Where is the world going? What's happening in the Zeitgeist, and how is that influencing consumer decisions and how we live our lives?’. I think about products as an extension of how we live, how we view the world, what we want from life -- all of which drives consumer behavior. This thinking informed my early investment decisions and it played out well. 

Can you talk a little bit more about your own company and some of the key learnings there that are particularly relevant to your early stage investing now? 

One of the things I learned from my first company was how to hire well. Making an early investment in not altogether different from making a decision about whether I'd hire this person or team to be the founders of this company. Sure if the title of “founder” had a JD, it'd be broader, more cross-functional, and have higher risks and responsibilities than a regular job would, but it's still a question of fit -- is this person fit for this mission? 

My most significant business was in commercial real estate. As with any founder starting out, there was a lot of recruiting people into something that was just a vision at the time. Winning the best talent early often meant effectively competing with the perceived security of lucrative roles at established companies. To win the war for talent as a new company, you have to be beyond persuasive, you have to have an opportunity that's legitimately compelling, and be someone people can get behind. Winning candidate interest is the first hurdle, choosing the right hires is the next, since first hires are mission critical. Assuming a sound founding team, these all involve learnable skills and I emphasize them in my work with seed stage founders. 

Another thing I've developed a nose for is partner dynamics. This one makes me laugh because it often gets relegated into the world of soft skills, which is code for "optional things". But in fact, it's one of the leading causes of startup failure: founder disputes. 

So I think about the dynamics of founders and whether their strengths are complementary. None of these considerations are prescriptive but they are important factors that I take into account. 

What portion of the experience that you've accumulated, especially regarding hiring, is transferable or teachable to the founders? 

If a founder is of sound character and intrinsically motivated, a lot can be learned. If the raw material is there, a founder can be coached. With hiring, there's identifying the right person for the right role, and then there's getting a yes from your first choice recruits when you don't have as much to offer upfront. Beyond that,whether it’s recruiting, fundraising, or selling the product, someone on the founding team must be able to draw people into a vision before it exists and demonstrate that they are the leadership team to bring that vision to life. While I can't hand a founder these skills, I do choose founders who show potential in this area and then build on that, sharing my own tried and true strategies and perspectives. When it comes to hiring, it’s knowing how to see a person beyond their LinkedIn and their stats to determine if they're a cultural fit for the team and have the aptitude to deliver on what needs to be done. It's also important to suss out whether they can thrive in a start-up environment because of the vast difference between start-up and corporate. Before I was a founder, I worked briefly at a top global investment bank -- the level of resources and the number of tiers of support are worlds away from that of a startup. 

Lots of people are up for that adjustment to start-up life because they want the creativity and the opportunity to have their contributions directly affect outcomes. They want to feel vloser to that generative process of building a company.

Can we talk a little bit about what your focus is at Rogue Capital Collective? 

I tend to be a thesis-driven investor. Right now I'm focused on two areas. One is what I call the future of income, and the second is real estate software. 

For the first area, when I say the future of income, I'm not talking about the gig economy or even the future of work necessarily. I'm specifically talking about the future of income itself. I'm looking at the various ways that people pull in money that do not necessarily connect to any type of conventional employment. I like to look at recreational income -- whether it’s from managing a small stock portfolio on my own,  earning credits for creating game content on my favorite gaming platform, or selling my old clothes on consignment online. I'd include these or anything else I do online for fun that also contributes to my financial well being. 

Usually when we talk about fintech, we think about payment and savings, but I'm really more interested in the creation of alternate ways to make even small amounts of income. So, platforms like earn.com. I would even include Airbnb, where there's secondary income being generated and it's not being generated from what is traditionally considered work. You could call it the future of non-work. 

The second area I mentioned is real estate SaaS. Apart from having domain expertise here, real estate interests me as a sector whose time has finally come. It’s overcoming its historical reluctance to change. It has particular incentives as an asset class and nuanced stakeholder behavior patterns on the commercial side. The residential side changed first, and the commercial side is soon to follow. Commercial real estate also has its own set of problems to solve that haven't been touched by software. But software is a great decision making tool for the built environment. From repurposing existing real estate assets to discovery of real estate assets to construction management. For perhaps the first time, there's enough capital to support growth in that sector. 

Can you talk a little bit more about how you view your role as an investor with these companies and what your level of involvement and engagement tends to be? 

I often say I'm an investor and I'm invested -- meaning, I have a stake financially and otherwise in the outcome of this company and it's a bit personal in that regard. I'm invested in what happens. Seed stage companies' needs differ from companies that are further along. So to me, seed investors are loyal advisors at a time when founders are getting a lot of conflicting advice. They're a fresh pair of eyes on the situation and dispatcher of resources. Even if strategies and business models inevitably evolve, investors should be supporting founders and upholding their vision. 

That being said, I personally believe in founders running their own companies. I'm not a fan of internal power struggles.With the exception of cases of misconduct, I am unconvinced that it leads to better outcomes in the long run. To the degree possible, founders and their investors should be on the same side of the table. 

I think that aligned investors are going to keep founders true to their vision of the company. It’s what I would want. And that alignment comes from the founders and investors having the same goals for the company and understanding what venture capital is and isn't for. All of those things should be part of the picture. 

Do you run into a lot of situations where it seems like there is a mismatch between a given company's trajectory and expectations and venture capital as a whole?

 I think you sometimes see it from the outside, in hindsight, if founders publish post-mortems. Sometimes these things play out for further downstream, after the seed stage. My focus is in the very beginning, and I think that is a great place to determine alignment: who is on the cap table matters, what the configuration is matters, and how well they reflect the founders' outlook for their own startups matters. I actually think fundraising can become easier when that is part of your strategy at the start. 

What drove you to start your own fund rather than join an existing one? 

I was surprised by the degree to which people had been waiting for me to launch a fund. After I announced, that became clearer, but you know, I'd been working in the ecosystem, advising, and investing for five years at that point. A lot of people had sort of suggested that I start a fund here and there, but it wasn't until I sat down with a very prominent VC friend who really made the case in no uncertain terms that this was the direction that he strongly believed I should pursue. He was not the first person to suggest that I launch a fund, but he was the last. 

I think that for me -- and this is true when you start any business, a fund is no exception -- it came down to this: is there a gap in the market? is there somebody else who's doing this that can help as opposed to starting my own thing? When all of these answers pointed to a new fund, it became clear that this was something worth pursuing. Once it was clear that there was a market gap in terms of my thesis and who I am as an investor -- only when that was clear -- did I decide to explore doing a fund. 

I think a misconception about venture is that you want to break into something. People are always trying to get into the space and break into the VC game. Ok, you want to break into it, but why? Does that space need you, and if not, well, what can you bring that the space does need? I think that's a hard question but once enough of us have a strong answer, it elevates the game. 

What have been the biggest differences in the transition from angel to sole GP institutional VC? 

I am the founding member of the Rogue Capital Collective and at the moment, it's a solo GP fund. That may or may not change in the future, but I'm ready, willing, and able to do it solo. 

One of my favorite differences between being an angel and running a fund is having LPs. I've been an LP, and now Rogue has LPs, and any time you have other stakeholders, it changes the trajectory of what's possible. When I saw that the work I was doing had material benefits and favorable outcomes, it became clear that expanding upon it was important not only to me, but also to the ecosystem. 

Being part of a fund, which I called Rogue Capital Collective for a reason, changes what's possible. It changes how much you can offer founders and how many founders you can support and at what level. It's also drawing together of a set of people who have an outlook in common that is a little different from what already exists. 

That word, "Collective", is an expression of how fundamentally collaborative this investment work is. Every group movement or every set of cultural factors of this industry is driven by a collection of people who agree about something. And there are collectives of people who agree about things that are not yet industry standard, but when we find each other, it completely changes what's possible. I would include you in that collective for sure. There are a lot of new voices coming into this business, and I think that's what's going to create the new opportunities. That's what's going to create the next fresh crop of ideas because in the end, this industry is about discovering what's new, not replicating the past. I think that when the industry gets too stuck on replicating the past, it stagnates. And for venture capital as an as set class, stagnation is death. I actually think that it becomes a risk factor. The difference between being an individual investor and being part of the fund is that more is possible within an institutional structure rather than without it. 

Absolutely -- having LPs adds a different level of rigor and accountability that I think changes the dynamic in the working relationship in a positive way. 

A thousand percent. I believe that having external stakeholders and having accountability are incredibly useful for many reasons, not the least of which is having a sanity check. Primary control rests with whoever is in charge, but external accountability will help people see blind spots and possibilities they weren't seeing, and I'm no exception. If you're a founder of a fund, you're subject to the same status of being human, which means that there are things you can't see, and there are only 24 hours in a day. So that leverage is incredible. 

I also really liked your point about stagnation in the venture industry and how that is, as you said, death. I'd be curious to hear a little bit more about your thoughts on what you feel has changed over the last couple of years as you've been increasingly involved in early stage funding. 

A few things. There's more money in venture than when I started five years ago. And that money is also pooled more and more towards the later stage. I think that the need for seed stage capital is increasing in a way. Yes, there are a lot of microfunds, which are counted as anything under $100 million. But there's a lot of daylight between, say, $1 million and $100 million, yet they're all considered micro. 

The increased size of rounds and the pooling of capital later, even later in terms of what we'd formerly refer to as "seed", has really created white space in what I'd call "true seed", by which I mean a team with a defensible market position, a working prototype, and maybe some early users. People conflate the overall increase in capital in venture with everything getting funded and that's not actually true. The distribution of those dollars matters. These dynamics create opportunity for me as a seed investor. So I'd say that's a big change - the amount of money and how that money is being distributed. 

I will mention this briefly -- the conversation about diversity did not exist five years ago. When I started, it was not a thing. One of the byproducts of that, interestingly, is that a lot more has been said about it than has actually happened in terms of increasing the numbers. The numbers don't bear out the degree of attention that the topic has gotten. I think that could be a little dangerous because people think it must be a solved problem because of how much has been said, but when you look at the data, it doesn't bear that out. Yet, I am what I call a battle-tested optimist. I believe that those dynamics can and hopefully will evolve, but at the moment, the conversation is ahead of the progress. 

What do you think is causing that lag? 

That’s a good question, and it has a multi-faceted answer, but I'll just say that there's got to be people who deploy capital with the willingness and the authority to depart from business as usual. And I'll leave it at that. It really comes down to the replication of the past versus building towards the future that we want. 

What do you see being the main drivers of that shift, if you were to map out what it looks like on a structural level? Because it's one thing to have a one-off success story and it's another to really re-evaluate the incentive structures and the alignment issues that we were talking about earlier.

I think that it's important when we have this conversation to think about how the incentives work in this industry. As individual investors, we are driven by returns. So I really need to see where are the opportunities to realize financial returns, and do so in a way that creates real value. To me, those two things are tied together. There are ways to make money without generating value, but those aren't what I'm focused on as an investor. I'm focused on what's actually going to generate value creation for people, and the financial returns are a proxy for that value creation. 

Not everyone who's managing capital is looking at it that way. Sometimes, the incentives are to not lose money. Then you're not looking for opportunity, you're looking to avoid risk. I think that any conversation that doesn't speak to the actual incentives of the people at the table is going to be a conversation that goes in circles. 

As far as what it will take to move the needle, I think a lot of people are genuinely ready to see things done differently for a number reasons -- not the least of which being the fact that everyone's looking for alpha -- where we can get more returns? So we have to be in places that haven't been tried before.

I'm a big believer in directing resources towards people who have a credible track record of supporting places and people that aren't overrepresented already. For LPs backing funds, it's important to back fund managers who have already actively gone to bat for diverse entrepreneurs in some way, ideally over a meaningful time period. Let me be completely clear about this: | think anyone and everyone can back founders who don't look like them. I certainly did. It's not to say that the only people who can do it are the people who represent the group in question. 

There are many, many groups that are underrepresented in terms of access to capital. But when it comes to the redistribution of resources in a way that will allow these emerging opportunities to reach their full potential and to realize the return that they're waiting to deliver from the market, I think that it's a good idea to give the reins to people who know how to ride the horse. Channel the resources to people who have the credibility to deliver and to properly evaluate founders who are matching new patterns, because every investor is pattern-matching in some way or another. The problem with pattern-matching is when you have hidden heuristics - like when people are not counting that all the founders have something in common that's not being named. 

If you want to see different outcomes, then you want to back people who know how to properly evaluate a candidate who doesn't match the existing pattern, but matches a new pattern -- one that positions them for success -- and is not based upon dubious factors that have nothing to do with success such as gender. 

Can you share some thoughts on your outlook for the industry? 

I think we are in an incredible time in the industry and in the world right now. In my time in the ecosystem, one thing that I've seen is that when new VCs step up to the front, new founders surface. That's an incredible thing -- who's at the front of the room influences who raises their hand. As venture investors, it's our job to find opportunity where others are not looking. It's our job to stay ahead of the curve and to open pathways for founders who are ready to deliver tremendous value and will take off once they have a way in. And that's the role of the seed stage as I see it. 

Right now I'm laser focused on the two areas I mentioned, and as a founder, if you even think you might be in one of those areas, contact me. I read every deck that crosses my desk, even if I can't respond personally, and there's a reason for that. I think the closed network aspect of the industry can make it harder than necessary, especially for first-time founders. 

I also think there's enough information out there that first-time founders can assess for themselves if they're even ready to pitch. It's a two-way street: we have to make a pathway for founders to get in, and founders have to be able to accurately self assess if they're ready for prime time, if they have something to pitch that's actually investable. 

But if we all do our part to widen our lens -- and that includes GPs and LPs -- we can all play a role in the industry leveling up. 

Through the Looking Glass: Carlos Miguel Gutierrez

Carlos Miguel Gutierrez is the Founder and CEO of Highline Point Group, LLC, a strategic advisory firm based in New York City. An investor and advocate for entrepreneurship, he is also a Managing Director of Golden Seeds, one of the nation’s most active early stage investment firms. Carlos also serves as the Executive Director of the Ignite Institute at Saint Peter’s University, which focuses on fostering entrepreneurship. He is a contributor to The Huffington Post, The Times of Israel, Asia Times, and The Jerusalem Post. His writing has also been featured by CNBC, Univision, and El Pais. You can follow Carlos on Twitter @cmgutierrezjr.

I'd love to start with a little bit of your background and how that led you to the world of early-stage startups.

I've had experience in various Industries: politics, government, international development, government affairs. I'm a lawyer by training and I also went to grad school for business leadership. All of these things helped me when I decided to really get into investing. 

I was always interested in public companies. But as you know, investing in public companies is very passive.

I had the opportunity to make my first angel investment a few years back, and I realized I could really be more hands-on, almost like a part of the extended team of the company. I could use my background and network to help the company and really see myself adding value -- so I was hooked. It’s very interesting to work with people who are passionate and who have identified a solution to a big problem. I think just by osmosis, it makes you passionate. 

Can you talk a little bit about some of the roles you had within the venture ecosystem? 

I've been an advisor, a mentor, and an investor. I have gotten involved with various groups and organizations, not only to invest in Innovative companies and entrepreneurs, but also with a mission-driven approach that has a social impact. 

I was introduced to Golden Seeds a couple of years ago and was very impressed. Golden Seeds is the most active angel group investing in women-led companies in the United States, having invested over $110 million in women-led companies over the last 10 years. We all know about the funding gap that exists for women and minorities -- even geographically. So naturally there is a great opportunity there. I always tell people that yes, there's a social component to it, which is helping women who are not receiving funding anywhere near the levels of men. But the second part is that if you look at the data, women-led companies tend to perform better than those led by men, and diverse teams perform better than homogeneous ones. You can create a pretty strong investment thesis behind that. 

Through my work with Golden Seeds, I was introduced to Chloe Capital, an early stage VC firm that invests in women-led founders and diverse teams by ethnicity, gender, and geography. They’re an extremely passionate team, so I’m very glad to be able to lend my insight to that mission as an advisor.

I’ve also invested as an angel across various verticals, including cybersecurity, ed-tech, financial services, entertainment, and retail-technology among others. Additionally, I’m a mentor with the Stanford Latino Entrepreneurship Initiative, a program that helps Hispanic & Latino entrepreneurs learn about scaling their businesses.

I really enjoy being around entrepreneurs. 

When making investments, are you mission-oriented or financially driven? 

A little bit of both. I'm industry agnostic, and like any investor, I’m looking for businesses that have the potential to grow to be very big. I’m not focused on any particular market. 

Yet, within that basic thesis, I am also looking for underrepresented founders, who by the way are just as good as everyone else; but who are not receiving the attention that they should be, or they don’t have access to networks or mechanisms that will allow them to go out and raise funds. 

With that said, there are many opportunities within specific segments. For example, there are businesses targeting certain demographics that may perhaps only come from a demographic that understands that need. That’s where, as an investor, you have to keep an open mind, because there have been many great opportunities that have been passed on by investors because they lacked that open mind. If you look at Spanx, the founder had a tough time convincing male VCs about the product, and those who didn’t invest missed out on an amazing story. 

One thing that you mentioned that keeps me up at night is access. So much of the traditional venture landscape is premised on raising friends, family, and angel money in order to build traction, reputation, and network to then raise venture capital. Especially with underrepresented demographics, this track becomes increasingly challenging, especially on a socio-economic basis. Do you think there has been any sort of structural solution to this challenge of getting ‘inception’ capital, and has it changed over time? 

I do think that never before has there been so much attention placed on the problem. Everyone is talking about it. From a structural perspective, I think that there are more VC funds and angel investors who are specifically looking to be the very early stage investors in companies that are founded by entrepreneurs of backgrounds that are typically underrepresented. So there is a lot of activity.

Yet, at the same time, it is a little bit disappointing when you see how much activity there is, and then you see the data, and you’re like, ‘Wow, we barely made a dent’. So, there's definitely a disconnect there. Going back to your question, often times, you might hear investors ask an entrepreneur, “Who’s invested in your company? Have your friends and family invested?” Some investors consider that your friends and family know you best, and if you can’t convince them to give you money, then, something’s not right there and they might move on.

The problem with looking at it that way is that, as you mentioned, not only are you missing out on a potential opportunity, but you're also ignoring socio-economic realities. Not every entrepreneur has access to friends and family that can fund their company. 

So, I think that requires a shift in thinking. I think there are people --  both angel investors and firms -- that understand the reality of the underfunding gap, and they’re looking at it differently. One change that’s taking place -- and will take a few more years to reach a critical mass -- is increased diversity in investors -- not only in angel investors and LPs, but also in venture capital fund investors who bring a different perspective and mindset. But as I mentioned, it does still appear from the data that there's a lot of work that needs to be done.

Also, founders to a certain extent are very important in this discussion. For example, I've spoken to founders who say that they wanted to talk to Golden Seeds because they want women investors because they don't want all their investors to all fit one certain profile. 

And, then there's also pressure even just from society. You see that across all Industries, whether it’s changes to representation or to pay. A societal shift is going on, and we're all putting pressure to create positive change. 

I’m really interested to see how the dynamic will change from the LP level and whether there will be pressure from institutional investors, fund-of-funds managers, even high net worth individuals who are making investments into funds, and whether this topic is going to become a priority for them. What's your experience been with that from an LP perspective? Is this something that's picking up momentum?

I think the rise and success of funds investing in underrepresented entrepreneurs is indicative of the desire of LPs to invest in those companies. The conversation does come up more, and I think it goes back to what I mentioned earlier -- not just from a societal perspective, but also in terms of the recognition that there is a thesis behind investing in underrepresented founders. 

I think the signs are positive from all angles, moving in the right direction. It’s incremental and it's going to take time, but I think the industry is moving in the direction of better representation. 

How do you think about your different investor roles, as an LP, a fund manager, and an angel investor? What are the benefits of the different structures/vehicles for you personally?  

One very basic answer is just for the sake of diversifying. As you know, it’s very risky to invest in early stage companies. The risk of failure is very high. In terms of diversification, I think it makes a lot of sense to invest as an LP in funds that have greater resources than you do as an individual, not only to conduct due diligence but to be able to source deals and cast a wider net in building a portfolio. 

In terms of being an angel, it's very rewarding. To do your due diligence, go through the process, meet an entrepreneur, learn about what they're passionate about, and be able to say ‘I can be helpful’. So if I meet companies where I don't understand the industry or have a background/network that can be helpful, then it's not as exciting or interesting for me because I can't really add a lot of value. I like to be able to help when/where I can, which is what entrepreneurs are looking for as well -- they want strategic value beyond just writing a check. 

Both methods are great ways to get exposure into a very exciting asset class. 

What advice do you have for people who do not typically have experience with a start-up or even with technology necessarily, but are looking to gain exposure to the VC industry, which can be very daunting and insular from the outside looking in?

If you’re interested in learning about venture, start going to events. Start going to pitch events, demo days, panels -- there are so many activities where you can just go and learn not only about the industry, but also the language and terms used in the industry. Over time, when you're involved in venture capital or angel investing, there are things that you learn from being involved and gaining experience. You can read a book, but it's not the same. So I would say number one is to just get involved and seek out opportunities where you can be around people who know the industry, gain that entry level knowledge, and start networking. 

Beyond that, I think joining an angel group is a great way to learn about investing. In my case, I had my own due diligence process that I had learned on my own. Golden Seeds has a very institutionalized due diligence process and I learned a framework that I could place on top of my own framework when I invest. Also, in an angel group, you're surrounded by other individuals who have broad experience across various Industries and verticals, and it's helpful to hear how other people are thinking about companies and what questions they’re asking. This expands how you would assess a potential opportunity.

It’s also a little bit tough if you're just entering the investing world, looking for deals and sourcing deals by yourself. It helps to have an angel group that not only sources but also screens deals, so you look at companies that are at a certain stage, have been derisked a little bit, and have been evaluated by people who  know what they’re doing. That way, you don’t have to go out there and invest blindly.

Portfolio Spotlight

Emerging Venture: Beyond The Headlines

To many, venture capital is what is seen in the headlines - unicorns, mega-funds, runaway valuations, and hoodie-clad tech-titans cruising the Valley on scooters. But at its very core, venture capital could not be further from this image. Venture is where capital meets innovation, primarily outside of the headlines, touching every corner of our personal and professional lives: how we eat, communicate, exercise, commute, work, and travel. This makes it a critical asset class for investors with long-term investment horizons, but it also demands deliberate strategy, structure, and process to properly allocate capital and manage risk.  

Not every venture deal, however, results in a blockbuster $1B+ IPO. The reality is actually quite to the contrary. Over 90% of 2018 exits came via M&A transactions, of which 83% were sub-$500M [1]. This suggests a deep opportunity set of “sub-unicorns”, putting smaller funds and often, emerging venture managers, at the forefront of the innovation curve and enabling them to stealthily deliver outsized alpha to those who wish to look for opportunities between the cracks in this vital but often fragmented and opaque asset class.   

Emerging venture firms, though perhaps not yet household names, are doing the digging and nimbly deploying smaller pools of capital while leveraging strategy, structure, and process to create value through hands-on engagement with entrepreneurs. Data shows this grassroots approach is generating attractive returns relative to larger funds and more established brands. In a recent study completed by Canadian Technology Accelerator, top-quartile venture funds <$249M generated IRR of 39% versus IRR of 33.6% ($250M-$999M funds) and 9.9% ($1B+ funds) [2]. This engaged approach is fully aligned, free enterprise innovation in its purest form. It is also miles away from spray and pray methodology and underscores the criticality of manager selection in the venture asset class.  

At Laconia, we live on the outskirts of the land of unicorns (though we are certainly happy to identify one!) where there may not be headlines, but there is exciting opportunity for those willing and able to do the hard work. The moral of the story is there is a land not terribly far away, just on the other side of the forest, inhabited by innovative sub-unicorns that are generating venture returns beyond the headlines. Choose an able guide to help you find the way – you will be glad to have taken the road less traveled.  

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[1] Data provided by Pitchbook and the National Venture Capital Associations’ “Venture Monitor”. Data as of 12/31/2018.

[2] Data parameters: 951 venture capital funds, Based in the US and Canada, FY2002 – 2014. Study conducted by the Canadian Trade Accelerator (2019) ctaconnects.com/emerging.