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On this week's episode of the L.A. Venture podcast meet Austin Clements, co-founder of Slauson & Co, a L.A.-based pre-seed and seed-stage venture firm focused on sustainable economic inclusion. The firm is backed by PayPal, Ashton Kutcher, will.i.am, True Capital Management and Alpaca VC. Previously, Clements was at TenOneTen Ventures. He was also the founding chair of Pledge L.A. and the managing director of Grid110 South L.A.
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Clements has created his newest endeavor with Ajay Relañ, founder of #HastagLunchbag and co-founder of Hilltop Coffee + Kitchen. Relañ has previously partnered with Issa Rae, creator of HBO's hit show "Insecure" and the musician Nas.
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Their fund aims to invest in founders from underrepresented backgrounds, tools and platforms that support small businesses and culturally relevant tech. As Black co-founders, it's important to Clements and Relañ to create community for underrepresented groups in the VC space, and they do so by leading investments on startups run by Black and Brown creators.
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Hear Austin talk about how race impacts his business models, how his previous work has prepared him for this role, and how he hopes to make an impact on people of color trying to break into the venture industry.
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<strong>"I feel like there's just some misconception. Like people feel like if you're doing this or looking at founders from underrepresented backgrounds, that it's charity work. And and I was trying to make the argument that it's not. It's an opportunity. And what I think will ultimately happen is firms like mine will produce really great results and then ultimately inspire other people to get involved."</strong>
</p><p><strong>Austin Clements </strong>is the co-founder of Slauson & Co, the founding chair of Pledge L.A. and was the managing director of Grid 110 South L.A.<br/></p><p><em>dot.LA Engagement Intern Colleen Tufts contributed to this post.</em></p><p><em></em><em>Want to hear more of L.A. Venture? Listen on <a href="https://podcasts.apple.com/us/podcast/la-venture-venture-capital-vc/id1471701230" rel="noopener noreferrer" target="_blank">Apple Podcasts</a>, <a href="https://www.stitcher.com/podcast/la-venture" rel="noopener noreferrer" target="_blank">Stitcher</a>, <a href="https://open.spotify.com/show/2syPj1jttbIHjHIEwSrApH" rel="noopener noreferrer" target="_blank">Spotify</a> or wherever you get your podcasts.</em></p>
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MaC Venture Capital, one of the few majority Black-owned venture firms to focus on increasing the woefully slim number of non-white founders, closed its first $110 million fund.
The two-year-old firm came into being when Cross Culture Ventures, co-founded by Marlon Nichols and Troy Carter, merged with M Ventures. That united Nichols with former Washington, D.C. Mayor Adrian Fenty; former William Morris Agency talent agent Michael Palank and MACRO founder and CEO Charles D. King, who was the first Black partner at a major Hollywood talent agency.
<p>Their two previous firms had funds in the $20 million range and wrote smaller checks. Now with a bigger vehicle, and more star power, MaC aims to start investing in seed-stage upstarts at the million dollar level – going up to two million in some cases – in return for a 10% stake. </p><p><em>"</em>We haven't had to do anything different from what we were doing before," said Palank. "Now we just get larger stakes in the company and have a louder voice because we are on the board<em>."</em></p><p>Just 2% of VC investment partners identify as Black or Latino and less than 10% of VC-funded companies are led by women or people of color in Southern California, <a href="https://www.pledgela.org/" rel="noopener noreferrer" target="_blank">according to PledgeLA.</a></p><p>MaC Venture Capital, which has already invested in 25 startups – including <a href="https://www.pipe.com/" rel="noopener noreferrer" target="_blank">Pipe</a>, <a href="https://www.stoke-space.com/" rel="noopener noreferrer" target="_blank">Stoke</a>, <a href="https://goodfair.com/" rel="noopener noreferrer" target="_blank">Goodfair</a>, <a href="https://www.finesse.us/" rel="noopener noreferrer" target="_blank">Finesse</a>, <a href="https://www.purestream.com/" rel="noopener noreferrer" target="_blank">PureStream</a> and <a href="https://getsote.com/" rel="noopener noreferrer" target="_blank">Sote</a><em> – </em>says 76% of its portfolio is run by Black, Latinx or female founders.</p><p>"Given our varied backgrounds and the different types of communities we're a part of, we're able to see opportunities in places many of our venture colleagues aren't able to see," said Nichols. "That's a superpower that allows us to get into some amazing deals pretty early before they start to become competitive."</p><p class="shortcode-media shortcode-media-rebelmouse-image">
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<small class="image-media media-caption" placeholder="Add Photo Caption...">MaC founders left to right: Marlon Nichols, Michael Palank, Charles D. King, and Adrian Fenty.</small><small class="image-media media-photo-credit" placeholder="Add Photo Credit...">Image courtesy of MaC VC</small></p><p>Like many industries, the notoriously clubby world of venture capital <a href="https://dot.la/lots-of-talk-but-little-action-how-can-venture-capital-solve-its-whiteness-problem-2646188887.html" target="_self">faced a reckoning when protests erupted after the killing of George Floyd last year.</a> Investors tripped over themselves to preach the importance of diversity on Twitter or issue feel-good statements. Some firms, including Softbank and Andreessen Horowitz, even launched new funds to focus on diversity but that too seemed more symbolic.<br/></p><p>Andreessen's <a href="https://a16z.com/2020/06/03/talent-x-opportunity/" target="_blank">Talent x Opportunity Fund</a> launched with just $2.2 million in donations from partners, a drop in the bucket for a firm with $14 billion under management.</p><p>Of the $150 billion in venture funding hauled in by U.S startups last year, only $1 billion went to Black founders, <a href="https://news.crunchbase.com/news/highlighting-notable-funding-to-black-founders-in-2020/" target="_blank">according to Crunchbase.</a></p><p>"There were a lot of things said, but a lot of checks still need to be cashed," said Nichols. </p><p>Still, Nichols said the newfound awareness helped attract limited partners to the fund, which include Foot Locker, Inc., Goldman Sachs and Bank of America.</p><p>"We have a few major corporations that are investors in our fund that invested in us because we're good at what we do, but also because they recognize that there is a disproportionate amount of funding that goes to people of color," Nichols said. "We've been pleasantly surprised by the attention and the follow through. But make no mistake, there's still a ton more work to do."</p><p><em>This story has been updated to include the fund's new total of $110 million. </em><br/></p>
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The 46-year-old poet-turned-financer Taj Eldridge is raising $250 million to support Black and brown entrepreneurs and investors.
The fund will be split in two buckets, $125 million will go toward direct investments in clean tech, healthcare tech, media and fintech, as well as follow-on investments for companies that its affiliated fund managers make investments in. The rest of the funds will support fund managers raising at least $5 million that are majority-owned by Black or Brown individuals with an environmental social governance focus.
"What we like to say is we like to see funds that impact how you work, how you live and how you thrive," Eldridge told Minnie Ingersoll on the LA Venture podcast.
Eldridge, senior director of investments for the Los Angeles Cleantech Incubator, said the idea for the new fund began in 2019 before last summer's racial reckoning when he had a conversation with a "high net-worth individual" about reducing the racial wealth gap.
<p>For Eldridge, the answer was ownership. </p><p>"If a person of color has ownership in the company, if they're vested in the company, if they're hiring in C-suite, that creates wealth, that creates ownership," he said. </p><p>Founders of color have long had a harder time raising funds. That's because traditional funds have been dominated by white men. Last week, the National Venture Capital Association released a report by Deloitte that found of the 378 top venture firms with a total of $256.4 billion in assets under management, 3% of investment partners are Black and 4% are Latino. </p><p>Eldridge said he is still raising money, but has a target for $250 million. His support has come from individuals in the sports and entertainment industries in Los Angeles and outside of the state.</p><p>Eldridge partnered with Keith Spears and Bahiyah Robinson — founder and CEO of VC Include, which is an accelerator for fund managers that provides training and platform services — to build up a fund. </p><p>Since VC Include already has relationships with emerging fund managers, it made sense to start something like Include Ventures to provide funding for them. </p><p>Include Ventures is an offshoot that will be run by Eldridge out of South Los Angeles. </p><p>"The opportunity gap is incredibly massive when you think about the changing demographics in the United States, and where we're headed," said Carmen Palafox, a partner at MiLA Capital and board member of LatinxVC and of the National Venture Capital Association. </p><p>Underrepresented founders and funds have seen more dollars come in, she said. But so has everyone else. </p><p>"I think what's important to keep in mind is that the bigger, more traditional funds are raising billions and billions of dollars so 2020 was a record breaking year for funds raising VC money and the asset class is thriving," Palafox said. "That's what leads to this continuous lack of progress because the bigger funds are raising more money. And even though we have these new funds, it's just allowing us to keep up with the existing ones." </p><p>Eldridge will remain with LACI, a Los Angeles city-sponsored incubator for clean technologies, where he focuses on bringing in new investors. He sees major changes ahead in that space. </p><p>"Clean tech is going to be normalized," he said. "We're going to have a situation where it's not going to be in a separate space, similar to how I don't believe impact is going to be in a separate space."</p><h2>From Poetry to Spreadsheets </h2><p>Eldridge didn't always want to be in finance. He studied poetry and literature in college, hoping to become a rapper. While that didn't happen, he learned the value of storytelling and connecting with people. </p><p>He said some of his investors come from the music industry. </p><p>Eldridge is also involved in philanthropic endeavors, sitting on the board of Homeboy Industries, an L.A.-based gang rehabilitation and re-entry program. </p><p>One piece of advice he has for the next generation is to be authentic. Eldridge said when he was at his first banking job, he used an American-sounding name rather than his real name, which is Arabic. </p><p>"Your self, your full self, is what's going to be valuable for you and for whatever company you're at," he said. </p><p>Eldridge said he seeks inspiration from immigrants who come to this country with $1 in their pocket and who work hard every day to create a living for themselves. </p><p>"People who've raised themselves up, that inspires me," he said. </p><p>A Stage 5 kidney disease diagnosis in 2018 has given him perspective about what's important in life. </p><p>"That was a calling card for me to focus on sustainability and to focus on really, really just trying to support founders that are trying to make a difference," he said.</p><p>"Alpha means nothing if I'm not here," Eldridge said, reflecting on his diagnosis and treatments that last four hours a day, three days a week. He often thinks about a saying in the Black community, "find a way or make one."</p>
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