by Frederick Daso
Breaking into venture capital is not easy. Starting a brand new VC fund?
Potential limited partners (entities that invest in VC firms) judge a firm on the past performance of the firm’s previous funds. The life of a fund is nominally ten years, which means the verdict on how well a firm’s current fund has performed takes at least a decade to be assessed. Given that only a small number of VC firms maintain stellar investment performances over time, it’s difficult to stand out and attract limited partners to invest in your firm without a pristine track record already established.
Therefore, starting a new VC firm (since one lacks a track record) is challenging for anyone. Even more so for women, since they are underrepresented in the venture capital industry.
However, female-led firms such as Forerunner Ventures and Female Founders Fund have had recent successes. The former has had notable investments in Dollar Shave Club (bought by Unilever for $1 billion) and Jet.com (acquired by Walmart for $3.3 billion), while the latter has just closed their second $27M early-stage fund.
These achievements by female investors helped spur the All Raise movement, an initiative started in 2017 by “34 senior female investors from institutionally backed venture capital firms based in Silicon Valley, Los Angeles, New York and Boston.” Their goal is to improve “the success of women in the venture-backed tech ecosystem” and “build a more accessible community that reflects the diversity of the world.”
Preeti Sampat and Jaida Yang have been involved in venture capital and are ready to take their work to the next level. The two are unfazed by the endless, arduous path ahead of them in starting and maintaining an enduring venture capital firm. These two MBA students from the MIT Sloan School of Management have come up with a novel way to enhance the current offerings of the venture capital ecosystem. Sampat and Yang are working together as founders of Infinite Road, their venture capital firm that seeks to bridge the geographical and diversity gaps in the current early-stage investing ecosystem.
According to All Raise, “9% of decision-makers at US-based venture capital firms are women” and “15% of US venture dollars in 2017 went to teams with a female founder.” Geography wise, venture capital remains highly localized. Richard Florida of CityLab shows that in 2016, $23 billion, “more than a third of the national total” venture capital investment, occurred only in San Francisco.
Sampat and Yang didn’t see these statistics simply as problems in venture capital but as opportunities to enhance the ecosystem for all founders to raise money and build long-lasting companies.
November 17, 2017. Sampat and Yang meet after a long day of classes for dinner at Life Alive, a trendy, organic food restaurant. The two take time to eat and reflect on their individual journeys to MIT’s Sloan School of Management.
Sampat, 30, completed her undergraduate degree in Computer Science but got her first job in consulting, focusing on mergers and acquisition activity and transactions. She then transitioned to Flipkart, an Indian electronic e-commerce company, as an early employee. Sampat was one of the senior managers in the startup’s Lifestyle category for a little over a year. She had now experienced entrepreneurship but wanted to see the other side of the startup ecosystem in the form of venture capital, leading her to apply and enroll in the Sloan MBA program to facilitate the transition in 2016. Sampat interned with Bessemer Venture Partners during her first summer at Sloan. Her positive experience at Bessemer and encouragement from Sathya N.S., her close confidant, motivated her further involvement in venture capital.
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