This is Bloomberg Business Week with Carol Messer and Jason Kelly on Bloomberg Radio. As tech Crunch reported last month, or next, guest Low Tony has some ideas about how to really bring venture capital into the twenty one century. That story caught our attention. He is was, excuse me, a partner at Comcast Ventures and g V which is of course formally Google Ventures, and he now is founding managing partner of his own firm, Plexo Capital, and he
joins us on the phone in Los Angeles. Low, it is nice to have you here with Jason and myself. Welcome to Bloomberg Business Week. Well, thank you so much for having me. It's an honor to be featured. Well, you know, we have been talking a lot about the investment world, obviously the impact of the virus, but we've also been talking a lot about the need for you know, diversity and inclusion within the investment community, and we've done a lot of stories about what's been going on in
Silicon Valley. First up, what's been your experience working within Silicon Valley Because it tends to be still a lot of white men making decisions, that's true. I think it's a commonplace for someone like myself black Mail. I grew up in Oakland, California, went to a historically black college in Hampton, came back to go to cow and I got used to being the only black person in the room. It's just common. So I think that's a common experience
that many of us have. But I've been increasingly hopeful about the changing complexity that I've seen in some of the generations that are coming up behind me, and I believe that we're at a point where we've reached an inflection point where we've been able to shine a light and visibility, and I'm I'm pragmatically optimistic about the prospect
moving forward. And so there are a number of aspects, as you know better than we do, low in terms of the investing landscape to venture capital landscape, sort of where the money comes from, who invested, and then where it goes. I know you've been working on all aspects
that I do. Wonder if you could tell us a little bit more about what you're doing around the general partner level, because I think you are rightly very focused on that piece of making the investors, not exactly that, not just what Carol described, which is you know, a bunch of rich white dudes making decisions about where the money goes. Yeah, it's interesting. When I was a partner at Google Ventures g V, one of the things we wanted to do was to get access to more deal flow.
So we had this really interesting thesis that when we started to look at some of the smaller earlier firms that were investing at that initial check level, we saw
much more diversity than at the larger firms. And so we came up with this thesis that, wow, you know, the the indirect path that many black venture capitalists have, like myself, produces really interesting networks and provides a different lens to be able to evaluate opportunities and entrepreneurs that might not have the same understanding traditionally on sand Hill Road. And so we decided to make investments into these venture
funds to get access to their deal flow. And I took that one step further and created Plexo Capital and expanded to not only black gps, but other gps of color and female gps. And really it was an alpha strategy right to identify inefficiency, use and information and identify
opportunities that others were missing. And what I also noticed was that well, you know, actually, this has a much broader implication to the to the vertical ecosystems for black for black entrepreneurs, for people of color that are entrepreneurs, and female entrepreneurs, which is, if we can get capital into the hands of a diverse set of investors, the data tells us that their portfolios end up being diverse. So if they've got diverse portfolios, those diverse founders are
going to hire diverse teams. And if there's a successful exit that creates wealth generation for those employees, well, lo and behold, you have a diverse set of execs that are going to write angel checks. Likely to diverse entrepreneurs. They'll have the financial stability and comfort maybe to take that risk and start their own company, or maybe some of them will even become venture capitalists themselves. But more importantly,
it starts a wealth creation pattern. And then wealth is also transferred back successfully to those initial investors, and if they were diverse, they go down the wealth creation and then capital is returned to the original limited partners for the investors into those venture funds, and once those limited partners see that positive signal of dollars coming back, they say, wow, this is working, Let's deploy more capital and so that
creates the flywheel within that vertical ecosystem. I mean, it's not dissimilar to how we see geographic ecosystems develop outside of Silicon Valley in places like Seattle, New York, and Austin. But in this case, it's vertical around black entrepreneurs, female entrepreneurs, or other people of color. So I feel like our our model, even though at the outset the purpose was to deliver alpha and returns, it has this additional benefit of being able to help to accelerate these ecosystems on
a vertical basis. We're going to talk more about that. And I love this idea of wealth creation because you know, we talk about this being ultimately a financial and you know poverty, you know issue in terms of bringing more blacks and minorities kind of into the existing structure. We're going to continue talking with Low Tony h He is the founding managing partner of Plexo Capital. Below Tony is with us. He is founding managing partner at Plexo Capital. He joins us on the phone in l A. It's
a good sign. Low, by the way, when we're fighting over a guest. So that's how you know we're excited and not just like sitting back me like you go, you go, I don't get. So what's interesting is you just described kind of this strategy for identifying opportunities, creating wealth, wealth creation, and you talk about creating this fly wheel. So what are the signs that it has really worked
in kind of what you envisioned. Yeah, the key signs are, without question, the increasing the dollars that go into the black entrepreneurs, entrepreneurs of colors, female entrepreneurs. You know, the numbers are so low that you know it's really not hard to to increase them. But we are seeing promising signs. You know, we're seeing more firms led by black GPS, people of color and women at these venture capital funds, and we're seeing more dollars go into the companies that
are diverse led. Ultimately, the barometer of the yardstick, the best way to measure is when we start to see companies that are getting acquired or that are going public. I mean the staff, like the stepping stones are you know, get the initial investment, get some follow on investment. Companies start to grow in scale, hire more employees, increase their red the news. But you know, ultimately what we need to see our companies achieving liquidity via the public markets
are by a large scale em and a transaction. Well and Low, it's interesting I was thinking about as you were describing that flywheel in the early part of our conversation. Mean, that's the PayPal mafia model, right, I mean, that's exactly sort of what gave rise to this whole network of companies and angel investors that has been at the center
of basically the last ten to fifteen years of Silicon Valley. Right, yeah, absolutely, And you know again, I like using the relationship for the analogy to a geographical ecosystem, and that's absolutely right. You know, we believe that there are network effects inherent in deploying these types of strategies, and I think the PayPal mafia is, without question one of the classic case studies of you know, what happens when a group of super intelligent and driven people came together and then the
relationships that spawned over time. I mean you just see a lot of companies that came from that DNA. Right. So just to follow in that briefly, Low, I mean, one of the things that we know about Silicon Valley and I was just reading a long I believe it was on medium post about this is. You know, serendipity
has been at the heart of this. You know, these sort of like inadvertent collisions that happen either a company or a neighborhood or whatever it is in in what's a relatively small geographical area there in Silicon Valley, in this remote world, how do you ensure that all the right people are getting together? Great question. I think we need to be more intentional, you know. The good news is that there is no one geography that has a monopoly on the best idea. That we're seeing ecosystems develop
in other regions, which is a good thing. I think we have become more comfortable within Silicon Valley with distributed teams, and there are many companies that have a portion or all of their team distributed. So I think now everyone else is really kind of catching up. And for a while, my mentor, Kim Coleman, used to always tell me, if you want to be an actor, go to l A. If you want to be an entrepreneur in tech, you
go to Silicon Valley. And the good news is, as we begin to see more of the building blocks in place regionally, whether it be research driven institutions producing STEM graduates, whether it be kind of a few existing companies that have done well where there's a well trained workforce available to go and work for an entrepreneur at a startup um, and the availability of capital. So I think we're starting
to see more of those building blocks in place. And the good news is when you look at some of these ecosystems like Atlanta, for example, or even New York, right, they are they are, you know, more diverse by the numbers when you look at ethnicity than in in Silicon Valley. So I'm very encouraged by the fact that, you know, we're getting to a point where good companies with great entrepreneurs and great teams can happen outside of so a
current valley. You talk about pipeline, you talk about building blocks, but so much of this low has to start really kind of at the very beginning, in terms of where kids are born and getting great educations and kind of starting early on on a path that enables them to get into your pipeline eventually to maybe think about starting a company, to be able to make a pitch for money.
How do we improve that. Yeah, the thing that I'm also really passionate about are the historically black college, Black Camping University because even though they're only three percent of the educational institutions in the US, they make up about ten to fifteen of all of the bachelor's degrees earned by by black students. More importantly, of all the black STEM holders received them from an HBCU UM. HBCU grads make up one of of m b a'sumty three percent
of PhD holders with STEM degrees. And then you see that translating into the professional ranks as well. You know of lawyers of judges have an HBCU degree who are black. On the VC side, UM, this is really interesting, of black venture capitalists went to an HBCU. So even though by numbers absolute, the number of HBCUs are small, and even the number of earth percentage of Latin graduates, you know,
tend of that's not huge. But what ends up happening is those recipients of HBCU degrees end up becoming leaders at the graduate level and in the professional world. So I'm a big proponent of making sure that we can increase the endowments of the HBCUs so that they can keep producing um great leaders. And so how do you extend that mode of thinking to your colleagues across the venture capital landscape. Is it just sort of showing that talent pool and maybe sort of revealing it in a
more meaningful way. Yeah, you know, there's a lot of great initiatives happening. So there's been a great number of my colleagues from the venture capital world and the larger funds that have reached out trying to understand how they
can improve the diversity of their teams. And one of the things that we're definitely promoting is the availability of internships and even scholarships geared towards HBCU grads to be able to enter the world of technology, so either working for a portfolio company of a venture capital firm or actually even going and working at the venture capital firm itself. So the good news is, and I'm open if anyone wants to send me any recommendations around, Hey, we want
to host a student on an internship. I mean we're trying to organize as many of those as possible, working with great organizations like HBU UM, HBCU VC for example, and UH and others. So you know, that's that's how we're thinking of about this. Now. Look, there's great black talent everywhere, but you know, I went to a historically
black college, so that's where my focus is. And yeah, absolutely more than happy for others that went to that are black, that want to do the same thing, and you know their schools, whether it be the Cows or the Stanfords or the Harbors of the world, I encourage them to do the same thing. Well. So great to catch up with you, and I hope we can in a few weeks or so check back again. Um. Just
great to get your perspective. Low Tony he's the founding managing partner at Plexo Capital, joining us on the phone in Los Angeles. All right, for those of you listening in New York and San Francisco watching on YouTube, Bloomberg Business Week continues. If you're listening on Bloomberg, not even I want in d C Centum with Kevin Cirelli is next to hear more of his interview with Stacy Abrams. But what a great conversation and somebody who's actually doing
it right. We talked about being deliberate taking actions. Low Tony is doing it,