Midwest Tech and Missed Opportunities with Candice Matthews Brackeen

real life friendships and communities on the virtual stage. Charles sets some light on how he picks the founders, not the companies he invests in. If I think about most of the people we're back though, it really is some combination of the clarity of purpose around what they're building. You know, most of the companies we invest in, they don't have a ton of data or attraction. There's no

products to touch a feel. In most cases, if I'm trying to assess as the person sitting across from me, as they really thought deeply about the problem and trying to solve until they have a thesis on how to solve it, that I think is going to play out well over the next five seven years. That's a big part of it. The second piece, though, that's related, is do I think that the founder has capacity for tremendous personal growth as a leader. And it's super subjective and like.

Part of what I'm looking for is people that I think the process of running and building a company is going to bring the best out of them. They have the work ethic, they have to drive, they have the focus, but they also have areas um where they can grow and develop as a leader and where a startup is going to really put them in a position to do that. And generally speaking, when I see that that's what we're looking for. It's less about, you know, the market or

the space and attraction. That's really more about how how much the founders thought about the problem and the clarity they have around the solution. I'm Will Lucas and this is Black Tech, Green Money. I'm gonna introduce you some of the biggest names, some of the brightest minds and brilliant ideas. If your black and building or simply using cut to secure your bag, this podcast is for you.

Candice Matthews Brokine is the founder and CEO of Lightship Capital, the Cincinnati Bays portfolio service firm including accelerators Hillman and New Meat, an adventure capital fund Lightship where she serves as managing partner. Lightship Companies work together in support of underrepresented, early stage transformational businesses. Candice has a huge focus on investing in the Midwest. Her own statements where other investors

he fly over country, She's he's a gold mine. I aska, why then other vcs aren't paying attention to the Midwest opportunity? Quite certain? Why we are overlooked. I think it's really, um, A bit of it is just not doing the work right. So um. You know, there was kind of an uproar on the internet off the CEO of Wells Fargo UM saying that they've had a very limited pool of black

talent um to kind of draw from. That's just lazy, right, So the Midwest is considered a fly over country, so folks are flying from San Francisco to New York or San Francisco to Boston to look for deals. Now, of course, are there a lot of great deals in those areas? Sure, because UM exits bring more activity, you get more mentors, you have more dollars, so all of those things spin up UM. But there are also great corporations that have been built in the Midwest. You've got Eli Lily in Indiana.

You've got Procter and Gamble in Ohio. You've got in Michigan Quicken and Rocket Like. You've got some amazing organizations throughout the Midwest where there's incredible you know kind of like minds share and talent UM. So so why fly over here when we have in credible talent here and so we're just we're fishing from upon that no one's interested in fishing it and we're taking advantage of incredible deals. Yeah.

And part of going back to you know, your your bio which I read, and you've impacted state, local policy. Part of the issues that happened in these communities is the eco systems are broken. The things around the spirit of entrepreneurship that go to support it, local gain, local government, university UM. Again, those big organizations, they're not UM working together for that entrepreneurial community. You didn't have that feeling of powerlessness to not being able to change it, but

many people do. What is it UM that you did as those initial steps to be able to impact that ecosystem? Sold that these people can come to the table and work for the betterment of entrepreneurs. You know, I think I just didn't know any better. Um. So, I mean I've always been taught from a young age, like stick up for yourself, Um, you know, let people hear your voice. Don't take no for an answer. Um. You know, I think we all walked uphill in both directions with you know,

poor bad shoes in the snow. Like, you know, it was just kind of raised from a humble upbringing. And so like I've always gotten what I've what I've needed and wanted because I asked for it, I worked for it. So as I've been building an ecosystem here and continue to kind of attempt to build additional ecosystems elsewhere, it's just a matter of having hard conversations with lots of different people. Um. It's just it's not been easy work,

but it's been consistent. So I'm consistently going and knocking on doors and then if they're not open, like I opened it a little bit and then we have a conversation. So it's just been a continuous process process, and and part of that kind of affecting, um, you know, kind of legislation and law. It's it's really just starting with a conversation with someone in an office and then introduces you to someone else and you tell them that story.

So it's just been consistent storytelling of these Um, it's been consistent storytelling and sharing the data around the issues, and um, you know, it got us to this point and now the entire world is looking at these issues with a with a greater lens. We were all though doing this work previously when you talked about, you know, sharing data around the issues, and so many of these communities that data is not available, so it may be anecdotal early. Um, how do you how do you make

that case when it is anecdotal? You just search for either you you create your own research and that's where that's where all out of our work, as you know, will happen in Ohio. Right Like it was anecdotal, Um, it was qualitative, and so we felt the problems, but we didn't we didn't necessarily and we knew how to verbalize it. But folks just don't listen to anything other

than data. Right. So, UM, you know, part of the work that we did here in Sincy and throughout the state of Ohio was that Minority Entrepreneurship Connectivity Assessment, which was really like taking a deep dive into our tech ecosystems throughout the state and figuring out, Um, you know, while we are a super diverse state, we are not all that inclusive or equitable with our dollars. And so once you bring that to life for people, they really get it, right, um, at least they get it a

little bit. Now, do we still have issues in society, absolutely, um, But we are tackling this one particular area. So I just really believe that it's consistency. It's also just creating things that don't exist, um, and spending the time to do it. There's nothing like a survey, right. You can Google form yourself into anything, um and send it to a whole bunch of friends. You can get a ton

of information. We could do a survey for the entire Midwest based on our our inboxes and using the context that we have and really, you know, really form something big. That's how Project Diane Dot started. That's like how lots of other things got started. I love that. Um. I've written this blog post that I have published LinkedIn several years back, and it kind of caught fire put me on the radar of a lot of people, and it was titled, Hay Startups, you don't live a Silicon Valley.

And part of the issue was a lot of at least at that time, a lot of the insight in education on how to build a startup and how to get funded was coming out of Silicon Valley. It wasn't coming from other places, right, And what I learned was a lot of that stuff doesn't work outside of Silicon Valley, right.

And So, what is the difference in your mind, from a couple of different angles, from you know, being an entrepreneur, which you are an entrepreneur, from being an investor today to somebody who's just worked in the machine to make

things happen. What's the difference that people probably too often overlook about, um, the insights they get from the Silicon Valley or traditional known notable tech hubs, tech ecosystems versus nascent ones ones that are growing, you know, so and be having fund I'm finding other investors to invest in me, and it's a it's a huge interview process. So, um, if somebody has given you a million dollars, let me

tell you the interview process is like rough. There's a background check, criminal and and personal, and they're they're checking

every single thing. But through these conversations, many of our our LPs are limited partners and the fund are investors from the coasts, and they ask us lots of questions about like, so, how much money you're getting put in this company and what percentage of ownership are you going to get and and we're explaining to them Midwest valuations and we're explaining to them how much money I have to put in to get a meaningful amount of ownership percentage.

And you know, at first we were letting them know, Okay, we're putting in this much, and they're like, there's no way you can get ownership percentage with that amount of money. And I'm like, folks, did West valuations, Like I don't know what you guys are out there doing, but like we don't start million dollars. We started like five to eight,

So like, I'm right there doing something way different. So they can't even wrap their minds around the fact that like a company that's generating revenue right in market, has been in the market for a few years, is making a few million dollars a year, like still has like an eight million dollar valuation. They just can't. They just don't get it. So they struggle in that aspect. They struggle with the fact that, like Midwesterners love to help

each other. Like I could text some people pretty high up at lots of corporations that are like fortune one hundreds, and that's just because all of those people are like just really down to like get it moving for their city or their state. And so I think that that's what they overlook. They overlook the fact that we're all connected and that we genuinely have care for what we do. UM. Yeah, there's there's all sorts of differences between but like and

they also fight for deals. Do we fight for deals in mid West? There just aren't enough funds right for us to fight against each other. So there's just there's just a difference in the way they do things out there. I'm glad you you talked about the stage at which you come in because I get interested in I remember listening to you do an interview where you talked about, you know, you've had you have very little room for error,

and that's why you don't invest super early on. UM talked about that here, like why can't a fund by a black woman the biggest one in the middle, you know, period first fund? Why can't you write checks super early in the company? Be just because you believe? Yeah, I

have to show my investors the path to exit. So if it's hard to show the path to exit on a dream right, um do I have talked to some amazing founders, um and before delaying Parnell like what he is now with play versus like I saw that at the dream stage, right and you know, as an investment committee, now I wanted to invest right there. It could not get me wrong, But like the entire committee was not interested,

right because it was just too early. Unfortunately, I have to return at least half of the fund on every single investment. So let me break this down for you. So it's a fifty million dollar fund. Half the fund is twenty five million dollars. If I own ten percent of a company. This is just like rough Man, I owned ten percent of the company and it exists for two fifty million dollars. I've returned half of the fund.

It's really difficult to do that on an idea. How do I quantify that on this paperwork that's going to go to LPs that have put in a million dollars or more. So that's why Also I like you, like we've talked like, I have the weight of the world on my shoulders, and I feel that it is my responsibility to deliver a win. I really do feel that way. So, UM, we are trying to get the best mix of black and brown founders and maybe fun too, we can invest earlier.

Maybe the folks that come to our pipeline are getting investments from angel investors in our network, and we will work really hard for that. Um. But just in this fun one, I could not and I hate that. Sometimes what what has to happen so that or perhaps there's got to be more canvases, But what has to happen so that candices can make early her bets? We just we need um, we need more fun managers. No matter what. There are folks making earlier bets. UM. So precursor ventures,

they make earlier bets right now. They invest in all founders. Is not just um, women and people of color. UM, But they make earlier bets. UM. I believe Richard Kirby over an equal makes earlier bets. UM. Just I know for sure moniqu water makes some earlier bets. Um. But again, um, they're I think they're just has to be more of us. I think for many years the angel community, Angel investment community got burned, right, not by black founders in particular,

but kind of like all founders. Um. And I think we just have to get a resurgence of new people angel investing and being educated. Um for earlier bets to take place. But it's been it's been difficult to do kind of precede precede venture funding. Um, it's a difficult space to fund kind of no matter what. Season two in the Black Tat Dream Money podcast is brought to you by Lexus, known for celebrating driveway moments for over thirty years, Lexus invites you to create more with exclusive

offers on the most popular Lexus models. At the December to Remember Sales event experience Amazing at You. Alexis Dealing Canada set out to raise twenty million dollars for a first fund at Lightship. In the end, she became the first black woman to raise as much as she did at her first go, clearing fifty million dollars during a global pandemic. So how does that kind of overshot happen Canadas speak soon it okay, So like, I'll take it

away way back. So um, my co founders of Hilman, we originally were like, we're gonna raise just like a million dollar micro fund. It's going to invest in these Hillman companies. Cool that we raised it, great, And so then when Brian and I decided to raise this fund, you know, originally we're sitting down with our mentors and we're like, okay, ten million dollar fund. Our mentors were like ten million dollar fun? Do you know how that works?

Let's talk about the logistics and like management fee on ten million dollars and how you're that's just not gonna work. They're like twenty million dollars. I look at Brian, I'm like, twenty million dollars. That's not gonna happen, right Like. And then we started socializing the idea and in February we got our first investment, and so I'm like, oh, this is gonna go down. And then by March we had raised fifteen of the twenty million dollars and so I'm like, okay,

this is good. And then Covid hit um and I thought, of course this thing is gonna this is gonna shut all the way down. We won't raise it all. Fifteen is good, pat on the back, fantastic. And then um, a gentleman from Cincinnati who was working for a group called Second News or to M Capital, reached out to us and said, Hey, I'm thinking about doing X y Z. Do you have time to talk? And we're like sure, and we off to him. He's like, hey, I think my boss would really like what you guys are up to.

Would you like to talk to him? So we talked to this guy named Todd from to M Capital, and over like three meetings they decided to invest twenty million dollars and we were like, we're at thirty five. What just happened here? Um? And so we could see that path to fifty million was our hardcap for the fund, and so we saw a path We're like, maybe we

can raise fifteen more, but man, it's COVID. And then George Floyd was murdered, and suddenly some foundations, some other corporations like started doing some soul searching and realized that what they had been doing to date just wasn't enough and they should have done it a long time ago. Right, Those are the conversations we've been having and you know, we're it about. I mean, our cap is fifty million dollars, but we have a lot, a lot of interest. We

have more double all that and interest. So um, it's uh, Now, it's just going through and figuring out what's the right blend of people. It's a very interesting place to be. First time fund managers don't get this opportunity. Lack fund managers don't get this opportunity. And so for us, we're trying to find the right blend of investors that are here for the right reasons and that will stick with us through funds to fund three and beyond. Um we are. It wasn't all luck May and the timing of this

has just been incredible. Yeah, it's I'm glad you said that because I've had this conversation with a couple of folks and people who are working on recognizing the moment that we're in, that we're still in with COVID and George Floyd and the social prisings and people starting to wake up to your point of like we haven't done enough. And I always think about it's romy manual quote from back from two thousand and eight. I don't even know if he's the first person to say it, but he said,

you never let a great crisis go to waste. It's an opportunity to do things you otherwise couldn't have done. Right, And you just talked about in this moment when COVID hit, I'm sorry, when George Floyd hit specifically, people woke up and say, hey, we need to do more, and that

obviously lended itself to getting you guys some checks. Um, what do you say two entrepreneurs would be investors about this moment um and and how to take advantage of this moment when people are saying, hey, you know, maybe we should be doing more. How do you take advantage of right now? Well, you still have to recognize that all money is not good money, right um, And there are folks that are being predatory in this moment, So make sure that you still are looking at your deal

and making sure it's a good deal. Right. I've seen people try to put a hundred thousand dollar check into a company that's doing really well for seven percent equity. Well, I don't know what that's about, Like, I just don't understand what that's So we're we are still seeing that Um. But but use the moment to get ahead, because it's going to end. This window will close. They've forgotten about us before, they will forget about us again. So now is the time to structure everything that you need to

to get it done. UM. I mean, I don't know if I have much more to say about that than that it's it's Um, it's a unique moment. It is. It is an incredibly unique moment. And but it's a moment that's deserved, right. We deserved this stuff a long time ago. This isn't charity, right when people are investing, I think it's our responsibility though, to remind people that investment in this is not charity, This isn't philanthropic. We are at our fund looking for market rate returns. All

of the founders that surround us, they aren't. They aren't doing it for social impact. I'm not a social impact investor. Um. There are people making an impact on the world, but we're also like generating revenue and we're looking to build generational wealth. So now is the time to do it. And I think it's everyone's responsibility to make sure that these good stories are being told, um, and that we're highlighting great founders doing great things, not necessarily just the

I raised around, right, because raising rounds aren't milestones. Generating revenue is right, So how do we highlight the people do actually doing the work. How are we putting up those people who really need an investment? UM, That's that's how we have to capitalize on this whole movie. Season two of the Black Tech, Green Money Podcast is brought to you by Lexis for over thirty years, Lexus May Driveway is the place to celebrate with the December to

Remember Sales event. Find exclusive offers on popular Lexus models now through January four. Experience amazing y alexis dealing. I want to talk about the education you guys do UM in a couple of different ways, how consequential. First was the new Me acquisition, right, and I were just talking about this this this morning. UM to be completely candid, and I'm fine with this, Like it's not easy, rate like running a nonprofit and UM grants hum and grants go,

and they are not always smooth. And for us, there were two reasons for doing the New the acquisition. One, it generated revenue to smooth out those bumps because there were times when I couldn't make payroll right because we're a nonprofit right and sometimes people people say they're gonna give you a hundred thousand dollar grand and suddenly it's a fifty thousand dollar grand, and like, where am I

supposed to come up with that? Bunny books like and so there were plenty of times where like I deferred my salary for my employees. So one, it was a revenue generator so that we would not still be We would have had a very difficult time being around without a way to make revenue. That's number one. But to it gave us access to a fantastic brand and people love, love, love, still love Angela Beton Right and the program that she created back in two thousand twelve New Me Class two.

Brian Bracken went through that class right, Freddie from Pigeon Ley went through it too. Marlon Avery, our director of technology, went through New Me Like New Me made a huge difference for Black Tech UM and continues to and three of our first seven investments were New Me companies. That time that we get to spend with companies physically together working through their business issues, like it's really helped us

to change our model on the accelerator side. UM but it's definitely a way to find great companies to invest in as well. So I don't know knew me was a really like big turning point for us. Talk about what the program looks like now for entrepreneurs. So yeah, it's a one week boot camp. UM. While it used to will be in a house, now will be in UM nice safe, clean hotel space and in conference rooms. Well, so founders at the end of the night can still

go back to their spaces. I used to cook breakfast, lunch, and dinner with a team of people, So now it's uh catering practices for sanitizing and of course you know I cleaned the kitchen like a black auntie, so um, you know, no worries there. But catering does help. And so that's how we'll run it. UM and we'll have NEWBEE programs in one in Cincinnati, Detroit, Toledo, Cleveland, and Tulsa, Oklahoma. Why why are those communities, UM, What's what's happening in

those communities? That's well, UM, there's a kind of a key inflection point in Tulsa, UM with the Tulsa Race massacre anniversary comes up in June of UM, and so that can. He has asked us to come in and figure out our little corner of helping to rebuild a portion of Black Wall Street. Right, there's a lot of work that needs to be done UM in meaningful ways.

So a group they're called the George Kaiser Family Foundation UM gave us a pretty significant grant to do work in Tulsa, and UM that same organization actually made a sizeable investment into the fund UM, so they've they've invited us there in Detroit, UM and actually in Michigan so Delta Dental of Michigan, Ohio and Indiana UM and actually this press release came out today, UM made a one point eight million dollar investment UM in Lightship and in

Hillman UH and new me for us to offer programming in Detroit, Cleveland and Toledo. So UM we'll also do some work in the Indiana area, but those dates haven't been secured yet. So as we kind of go into communities, we do say, yes, it is important to provide programming, but we as a people, as we stay over and over over mentored and under capitalized, So you have to invest in both. UM. You have to train people, but you also need to invest in their companies so they

can grow it in your community. UM. So we look at it from two lenses. As a fund um, you know, it's it's building great companies adding to the tax base. Um. But from a nonprofit side, we are an economic development engine. You mentioned this when I asked you about, you know, making impact at the state local levels. Um, that you kind of you know, you didn't know, so you just started doing stuff and it just kind of worked. You talked, you talked yourself on the fly. Um. Investing, how do

how do you learn to invest? So what happens in communities like where we come from. You know, you get people who ride at twenty five not a check because they got money, you know, into a startup, and that startup goes nowhere. Then they stopped investing, right because you know, Okay, this is not what I thought. This is not the next school. I thought it was going to be the next Google. Right, And so how do you get educated it to do this so that you don't fall into

that trap of hey, one didn't work and I'm tapped out. Yeah? So, um, really it's been a long game. UM. So this is not my background a degree in economics and statistics. So we were see Cincinnati. Um. I was incredibly luved that two families took me under their wing and provided a scholarship for me. And um, you know, that was the base of my knowledge for many, many years. Six years ago I got into tech, had a very small tech company here instance, then raised a few hundred thousand dollars,

ran out of a few hundred thousand dollars. And I think it was in while I was running that company that I built some of the strongest relationships that I have today. So I'll mention two people and these are both white males. Um. Mike Venerable, Uh, the CEO of since Tech, which is a venture capital firm that is supported by the state of Ohio. Oh. Um. I pitched him my company hello parent years ago and he was like, kid, come back to me when you got something better. And

I did. At some point I went back to him and said, hey, I got this thing called and accelerator. He was like, okay, I can get after this. And then when I said I wanted to do a fund, he was the person was like, ten million dollar fund. Oh no, no, no, twenty million dollar fund. He really helped me structure my thesis, so had I taken his no at no I don't like you or no you're not good enough UM and taken that in UM as a negative. I wouldn't be where I am today. So

you know, he really that relationship. He taught me a lot about venture UM. And and as I was building Hello Parent, which was the little tiny company UM, David Woolbrand from a law firm called Thompson him really walked me through really understanding my term sheet vertibal notes safe waterfalls, like really understanding the terms like it, Matt. It's it's a lot of reading. It's a lot of like repetition

looking at deals. Like. The nice thing about having accelerated the last few years is we see two thousand companies a year. Now do they fit? Are they all great? Absolutely not, but there's a there's a grouping that are incredible. So I've gotten a lot of reps and we asked a lot of questions. So just I've been curious. My business partner, Brian has been curious UM. And then we've

surrounded ourselves with other great people. So our senior associate, Alexis Alston came to us from a to maybe three billion dollar fund, right, so she was well trained Um, she went to Brown, she's been she's been investing for the last like five years. And it's some days I look at her and like, are you old enough to have been investing for five years? Right? But she's got it. Um. We have a venture partner at in Tulsa, Joey wick Garaga, Like, who helps us us? Right? Because we don't know what

we don't know? And our LPs are constantly helping. But we know we're emerging fund managers. We know we're going to make mistakes, and we just ask a lot of questions and I just I'm just I am. I'm still learning on the fly. But um, you know, one of our LPs like reached out last week and they're like, man, these first five investments are really good. We're really proud of you, and you know you're tracking better than some of your majority peers and that actually feels pretty cool.

So what do you say to those well healed people who just you know, got great retirements and um, have some money to play with and want to get into startup investing. But where do they go to get that education? What should they do? What should they do? I I'm a huge advocate of the Angel Capital Association UM SO a c A and I'm not certain when they were founded. UM provides fantastic education for Angels. Every year they do a summit I'm certain of this year they'll do it

online UM. But I've taken people to the A c A UM Angel one oh one boot camp UM and it's a great way to learn from other people of how to formulate their portfolio and how to read the terms and when to invest, how to carve out a certain amount of money UM. And so as a group,

they have chapters all over the country. Now they will be the first to admit that diversity has been an issue UM within a c A. So there aren't very many people that look like us in chapters UM, but it is a great way to get in there and learn UM. And I know that this year they're just like they do it every summit. UM. They bring in entrepreneurs from all over the country and they're always looking for great black founders at the same time they're looking

for other black angel investors. So I believe that education first before you write a check. Good UM. I kind of want to end here on there's a quote I found from you, UM, and you talked about your startup journey. Hello parents, and um, there's a quote It says I started a lot of businesses and I enjoyed the process of business creation. I've started lots of things somewhere horrible failures and some were great. This one is actually probably

my best one yet. How then, how do you encourage Because I'm talking my question is pointed towards the spirit of entrepreneurship and ultimately finding the thing that works. How do you encourage people to go after just the ideas and even if you hit a bunch of ten dead ends, you just keep trying things. How do you just, based on your trajectory and your journey, encourage people to just keep you know, nipping at that thing until you find

your success. Well, you have to surround yourself with like really great people. You know, family members aren't always going to support you in this crazy thing. So surround yourself with a group group of people who are going to encourage you, um and also going to let you know like when you are being an idiot. Um. I think

you have to start there. And a friend of mine UM said a few years ago to me, like you can do anything from ten pm to two am, Like try doing the work then like, spend your time growing that thing after hours, Um, still be great at your day job, um, and but work on that one thing every night. I don't know, this has kind of been being an entrepreneur. I think is the best thing like to be human is you know, you only have a limited amount of time. Um, and so I'm trying to

live my best one years. So I think if people to take that on, like, are you happy in your day job if you are doing and then after hours do something else, that's great, that is going to affect and change the world. Um. But yeah, there are plenty of people who are happy in making a difference in their day job and so maybe entrepreneurship isn't their path. Um, But if you've got a hankering for something, like do it because you only have so much time. Black Tech

Green Money is a production of Blackvity. Afro Tech is produced by Morgan Dubon and meat Will Lucas, with additional production supported by Love Beach and Ray veneer Born. Special thank you to MIKEAE Davis is the cars of you know like the Wine. Yes that's his real name. Learn more about my guests and other tech disruptors and innovators at afrotech dot com. Go get your money, Peace of love,