Diversifying Venture Capital

a CEO at Genius Guild. Genius Guild is a VC cap VC fund, also a studio. Catherine joins us to be assumed from Chicago. She's also the author of the great book Build the Damn Thing, How to start a successful business if you're not a rich white guy. Catherine, good to have you with us. It's great to be with you all. We love the title. Well, can you talk a little bit about the title and and and and coming up with with something like that because it

certainly catches people. Yeah, you know, the title is what I say often when I meet with entrepreneurs, so kind of being out in you know, the talking conference circuit, I would often get entrepreneurs coming to me pitching UM and they would give these great ideas and you know, really well thought out ideas, and I would ask, okay,

well let me see a demo. Do you have something on your phone I could see and they would say, oh, well, I haven't quite built it yet, and they would go into all these reasons why I did, and I would say, well, just build a damn thing, like what are you waiting for? But that's but that's that's like what venture capitalists or

that's what I should say. Founders always say needs to happen, right, you need to have this minimal viable product in order to build on it and iterate right, yes, you have to start off with something um in order to get feedback and actually in building your minimal viable product, which is really the simplest version of your product that you can build to be able to put out into market or to show the people to get feedback, it allows

you to get information, get thoughts, get feedback before spending too much money in building your product. And that's very very important. Oftentimes founders, particularly founders who come from communities that are outside of you know, traditional communities in the startups will spend tons and tons of money tap into their four one k um to build these world bust prototypes without knowing whether or not there's a market for it. And it really goes back to this concept of product

market fit. Does your product have a market? Does your product have people who want to pay for it? And so your goal with your minimal viable product is to find out this product market fit without spending a ton of money. You know, It's interesting what I love also about this book and I feel like this mirror some

of the conversations. Tim and I were just back from Dallas, Texas UM at the Inside conference talking with financial professionals, but diversity inclusion came up big time, and one of our chats specifically was about how you have to have diverse investment advisors to reach out to the diverse investor spent public that is out there who are increasingly being

left behind. UM. Talk to us about that when you know, in terms of businesses that are being left behind and markets that are being left behind because we're not tapping into a more diverse consumer marketplace and not supporting diverse entrepreneurs who see the need for that. Yeah, I mean, you're leaving money on the table, right, UM one, and for new entrepreneurs or Latino UM, black women are one

of the fastest growing groups of entrepreneurs. UH, you are leaving money on the table when you're not reaching out to these markets. This is the new future, and so it's really important to be able to understand how to reach these markets and then in the world of startups, how to work with these startups coming from these markets, mostly because these startups are tapping into new areas and new opportunities for growth that you may not be able to access or even understand if you're not part of

those communities. So by investing in them and by getting to know these amazing founders, you're actually giving yourself more diversification within your own portfolio. All Right. I want to be provocative because I love that you lay it out there and thanks to kind of sharing some materials with us. UM. You talk about army readers with responses to investors who have told her quote, great pitch, but I just don't do black women. I mean, that happens. That's a reality, right,

it happened to me. We'll tell us, all right, so tell us about that. Well, I think you know and It's been well documented inventure capital about the pattern matching right of this idea of because every successful founder I've invested in was, you know, a twenty five year old white guy from Stanford, that means that every successful founder is going to be a twenty five year old white

guy from Stanford UM. What is interesting about that is the inherent fallacy, which is it also means that all your failed investments also came from twenty five year o white guys from Stanford UM. And so what happens is when someone like myself, for woman, or a diverse sounds nor shows up, it's kind of like, you know, this anomaly, like, oh my gosh, you're here. And so we often find, you know, in the our meeting we get with a potential investor that forty five minutes of that is just

explaining how we got into the door. They're so fascinated by us in our history that we only get about fifteen minutes to actually talk about our business, which is what we're there to talk about. And so it becomes really hard to be able to pitch when people don't see you as a business or they completely don't understand the business opportunity, and no matter what you say, no matter what type of data you have, your metrics, the total addressable market, you know, all those great things that

you know investors say they love to hear um. They don't hear it because they're so sort of distraught, distracted by you and your presence and so, and that definitely happens. I think as a diverse entrepreneur, though, the goal is always to redirect. Right, Hey, hang on for a second. We gotta a little bit of news. But we're gonna come back and continue with Katherine Finney. She's founder in

chief executive officer of Genus Guild. We're talking about her book love the title Build the Damn Thing, How to Start a successful business if You're not a rich white guy. I want to get right back to our guest, Catherine Finny. She's founder and CEO of Genius Guild as a venture capital firm. Uh, and she joins us once again via zoom from Chicago. Catherine, I want to get to Chicago here and talk a little bit about venture capital in Chicago, because when we think about VC, it's so often in

the context of California. And you mentioned that, you know, twenty five year old white guy Stanford Grad as being sort of the archetypal tech founder. Um or we talked about in the context of New York, what are would you say that venture capitalists who are isolated to those areas of the country miss out by not being in Chicago, You missed out a new opportunities in new markets, right, um.

And there's a lot of VC firms now they're starting to pay attention, not just Genius Guild and what we're doing here, but also you know, Steve Kase and Revolution and Rise of the Rest has been for several years going around sort of Middle America outside of the cos um and and investing heavily in amazing startups in these sort of places. And so there's a lot of opportunities. Um. A lot of great companies are coming out, companies are

really solving some interesting challenges. There's a lot of cybertech companies here who are particularly in Chicago, who are solving cybersolution. There's a number of companies around food in the future of food that are also in sort of the Midwest region, which is also very interesting. It kind of makes sense

because we're the bread basket of America. But so there's a lot of emerging opportunities here that I think people tend to overlook because again we're in the middle of America and and sort of people are not coming here to see. But I welcome everyone that comes to Chicago and see what we have here. Where the founders that that you invested, or at least that are pitching to you, because you're not, of course investing in every founder that's

pitching to you. What are their backgrounds typically and are they coming out of school university, are they coming from established firms? What what's a typical uh startup founder who's looking for funding from you? Yeah, and so our founders have really strong domain knowledge and experience and what they're building. Um So, one of our companies, Health in her Hugh it's kind of WebMD for black women and experienced enormous

growth over the past couple of years. Was founded by a black woman with a public health degree who also happens to be UM what I have too, which is a public health degree as an epidemiologist. UM. We have founders who have working in the creator economy, who also were creators themselves or worked in the agency side, so they have experience working with creators and understanding the opportunities there.

We have companies that are working in supplier diversity chains and the supply chain and diversifying that who have tons of experience working in the supply chain. And we also have invested in a couple of other funds as well. There also are led by general partners who have experienced either in the sectors that they're investing in and or coming from really top nodge to venture funds. You know, I have to first ask you what is it about

Voldemort today? Because Tim O'Brien of our team, our opinion team, has quoted tweeted out a picture of him in connection with pardoning. And then I love in your book, Uh that says you've gone from standing up to the Voldemort's venture capital to leading around multimillion dollar fund. Um, I just love it. I mean, was it it was that bad? I mean that's very hard. Watched Harry Potter and been terrified by the evil villain of Voldemort, Like that's terrible.

It was that bad. And I talked about in the book, Um, you know what it was like in the early two thousand's and I think some of us kind of forget because it's so long ago, but they're really was not very many women and definitely not very many women of color, And so it was this atmosphere where people didn't have just low expectations, they had no expectations of me. And being a lifelong OVERACHIEVERMER, that was incredibly difficult for me to be in a situation where people didn't think I

just couldn't do it. And so I had to develop tools, um, and they had to develop ways in want you to get around that, and a lot of those ways I share in the book I love It You do. It's really great how to and really working people, walking people through all of the processes to our procedures to build their own successful business. It's interesting to you know, in venture capital and you know, like you said, it's this

isn't a new story. We've written about it a lot of Bloomberg, but even like women venture capitalists not investing in women led companies. And I find it funny because we just talked with Tory Birch Embrace Ambition. She had a big summit this week, but she also has been about specifically, you know, providing money for female entrepreneurs and um, what is it about though that women in Silicon Valley weren't backing other women. Was it just the pressure of

the firm. Well, there's almost a tax that you pay.

So if you're a woman investor and you invest in women, um, there's almost like a tax that you pay that perhaps you're not able to spot great investments, right, but the understanding thing that women are not great investments, right, And so it's almost a tax that is for any uh VC who falls outside of the norm that if you tend to over index your investments in whatever group that you identify with, that somehow you're creating favoritisms, somehow you're

not investing in them because you see opportunities um, that you're somehow not as greative an investor. And that's actually documented. There's been research has come out there's a penalty, um, not only for the VC, but there's also a penalty that's paid for female founders who raise for a significant

amount of their rounds from female investors. And so that penalty is true, um, and that causes marginalized investors so sometimes not invest as much as they would and the ups that they understand in the markets that they understand. All right, great book, as we said, great titles, So all right, we just have a few seconds left here. If you had one piece of advice for someone who wants to start a successful business, how should they what's

the first thing that they've got to do. Build it and get it out there, test it, take the feedback and build it again. All right, Well, listen, this has been so much fun. Stay in touch. Love to hear more too, about your VC investing going forward. Always UM to to hear about kind of where you're going. Catherine Finney, founder and chief executive Officer of Gina's Guild. She is a VC investor, She's built her own business and now

she's sharing what she's learned with others. It's all in her book, Build the damn Thing, How to Start a Successful Business if you are not a rich white guy. Great title, yeah, great title, but in great very you know, advice laying it out for you know, other people who are looking to start their business, women, people of color, minorities. UM, just trying to figure it out.