We Raised $50m+ To Back New Venture Capitalists Who Don’t Look Like Me
It’s weird to try and help fund people who are going to compete with me, right? Well, I couldn’t be more excited to do just this.
Ok, the headline is announcing Screendoor, a $50m+ collaboration of some like-minded early stage investors to back new VCs from underrepresented groups (basically people who don’t look like me). Alex Konrad/Forbes covered the announcement and has some good details, plus our own blogpost. This initiative matters a lot to me because we’ve purposefully designed our fund (Homebrew) to not grow in partnership size and not be multigenerational. So in some ways, alongside the companies we’ve backed directly, Screendoor represents the best way for our values to live on beyond our firm. A few additions to the links above that I think are worth emphasizing or sharing our thinking.
Satya and I have been thinking about ways to punch above our weight in this area since we started Homebrew, but in order to have the credibility to do so, needed to get our own firm built first. We want future “Homebrews” to be started by all different sorts of people and believed adding capital commitments to mentorship would be the best way to accomplish this. It can’t just be about supportive tweets or ‘office hours’ — write the damn check.
Besides hitting a point with Homebrew where we felt like we could add on Screendoor’s responsibility, the events of the last few years galvanized our desire to work on economic inclusion. And frankly, much of the venture industry is moving too slowly, making incremental hires or diluting the impact of their diversity statements with self-serving content marketing efforts. I know this is ‘apples and oranges’ comparison, but it always makes me laugh when I hear my peers say “diversity is important but it takes time to implement” while also watching my industry quickly embrace any new way to make money (SPACs! Crypto!).
Screendoor is 100% an economic vehicle, not a philanthropic one, but we decided to make it ‘no fee/no carry’ so that all the profits flow back to the investors, not us middlemen. And we’re all LPs (investors) in the fund itself, which means we have skin in the game.
Partnering With Other VCs To Get This Done
It was important from early on to get some of our favorite other firms involved. Homebrew may have helped catalyze and structure Screendoor, but it’s bigger than us. It’s stronger because of the people involved and their relationships within our industry. It proves that firms which often compete in the market can come together for a bigger purpose and mission. And it augments the lived experiences that Satya and I possess with other men and women from different backgrounds, cultures, etc to create a broader value proposition for the firms we’ll be backing.
Making Sure The Capital We Raised Was Additive
This one is a bit subtle, but for us, meaningful. If the $50m+ raised by Screendoor was pulled from sources of capital that was already earmarked for underrepresented emerging managers then all we’d be doing is transferring it from one allocator to another, not growing the pie. This is specifically one of the reasons we fashioned it as an economic vehicle, not a philanthropic one. The LPs backing us are all heavily committed to the venture ecosystem but have deployment models which often make it difficult for them to invest in smaller, first time funds. Why? It’s typically an issue of their check size vs fund size. A first time manager might be raising a $5-$50m fund but large institutional investors write $10m, $25m, $50m+ checks into venture funds. Also, they are looking to back mangers who have track records, etc. Screendoor hopefully will help solve the ‘chicken and egg’ issue of “you want to back managers with track records but I need to raise a fund to get a track record!” And over time, I believe many Screendoor managers will create direct relatonship with our institutional LPs.
Honoring Others Doing This Work (and Hopefully Collaborating With Them Too)
I call it “Columbus’ing” — the tendency in tech for individuals new to spaces already inhabited to pronounce “look what I discovered!” as if they’re pioneering something completely radical despite the fact others have already been there doing the work. We honor and appreciate everyone tackling diversity in tech. We want to collaborate with them, learn from them, go to *their* spaces to talk about Screendoor. We’re going mess some stuff up probably. We’re going to be slow to respond to everyone while this gets started (did I mention we’re hiring) but we’re 100% committed and going to hopefully make this an evergreen effort, not just a one off fund.
I’ll try to add new questions/answers here as they occur to me or you ask them. And please visit Screendoor for everything you need to know about applying for backing from our group.