Meet Kristina Simmons, founder and Managing Partner at Overwater Ventures
Overwater Ventures recently announced it's $20M debut fund to invest in human and planet healthRead more...
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Michele Colucci is founder and managing partner at DigitalDx Ventures
Colucci is a lawyer, investor, serial entrepreneur, and philanthropist. She has authored five patents in the technology space and founded companies in the legal, technology, retail, and entertainment spaces. Her extensive experience operating in highly regulated verticals has focused on issues from management to legal (employment, corporate, International, litigation, torts, negotiations, business strategy, and marketing). Her most recent company focused on the application of big data and artificial intelligence in legal technology. She has worked at law firms including Hughes Hubbard & Reed, run her own media production company, owned and operated a chain of retail stores in the political space, run a political fundraising venue, and founded a legal technology company.
Currently, Colucci has served on both public and private Boards of Directors including Global Indemnity Group, Nephrosant, Optina Diagnostics, Prime Genomics, Delphi Diagnostics and Trayt. She is also an Advisor to eHealth Analytics (a digital health startup) and Quantellia (a platform powering decision-based analytics through artificial intelligence). She is a Huffington Post blogger on female entrepreneurship and an award-winning expert on E-Local. She has served as a regular guest lecturer and mentor at Stanford University’s School of Engineering focused on Global Marketing and Entrepreneurship and has lectured at USC’s Gould School of Law.
In 2017, Colucci was named by the Nobel Laureate Foundation as West Coast Ambassador for the Nobel Laureate Foundation to expand their global footprint and aid young scientists selected from around the world to attend their summer program where they can connect, learn, and interact with Nobel Laureates in their field of study. She has served on nonprofit boards including NOFAS (National Organization for Fetal Alcohol Syndrome), Hope After Divorce, and City Hearts.
The Silicon Valley Business Journal honored her as a ‘Silicon Valley Woman of Influence.’ She was featured in a cover article of the American Bar Journal as a ‘Leading Woman in Legal Technology’ and named a ‘Person to Watch’ by Silicon Valley’s Gentry Magazine. Colucci's accomplishments have been featured in a variety of media including NBC, Inc. Magazine, Redbook, and the San Jose Mercury News.
Colucci earned her Bachelor’s degrees in English with a minor in Philosophy and a J.D. from Georgetown University. She earned a Master’s in Fine Arts from the American Film Institute. She speaks three languages, and lives in Silicon Valley with her four children.
VatorNews: What is your investment philosophy or methodology?
Michele Colucci: We focus on AI and data enabled diagnostics. According to Accenture, in the next five to 10 years the two areas that are going to have the biggest growth are AI and healthcare, and the area that AI is going to have the biggest influence on is healthcare. So, we stand in the crosshairs of the future of healthcare, in many ways…. more specifically, diagnostics; I actually call it tech-nostics, I don't call it diagnostics anymore because it's really nothing like what diagnostics used to be. It’s now tech-enabled: whether that means AI modeling algorithms, sensor-based data, combining and running random forest calculations to increase signals; whatever the methodology or the implementation of technology is, it has changed the way we diagnose illness and target treatment. So, very specifically we are investing in an area that really only got 5 to 7% of funding but drives like 70% of the patient journey. So, AI and data-enabled Tech-nostics.
VN: Talk about that evolution and what's been happening in that space and the effect of AI.
MC: What we've seen is that technology obviously has wide ranging applications to many different verticals. We have seen it change the hotel industry with online booking, we've seen a change in the car industry. We've seen it change many different verticals, even the way you buy a house. It has really enabled industries to pull in massive amounts of data to inform their products. So, in healthcare, the way AI has really come forward is with the advent of things like CRISPR, where you can edit genes; that really was a tectonic plate shift in healthcare, the same way that the smartphone was for the telephone industry. So, we see innovations like this as having the ability to really impact new ways of identifying problems, and new ways of fixing them.
Specifically, we have enabled things like sensors on a nanoscale, and we have been able to take massive amounts of data and make correlations, sometimes causal, sometimes not, with AI and algorithms. We are really able to predict things that could go wrong for you personally, and diagnose things that are actually going wrong earlier, less invasively, more accurately, and also we're able to identify a path forward based on someone's personal genetics, epigenetics, microbiome, and other kinds of data like their lifestyle, their zip code, their family history, and electronic health record. So, it's an aggregation of a bunch of different data sets that are relevant depending on where illness comes from within your body. Is it from your proteome? Is it from your microbiome? Is it from your genome? Your communicome? Illnesses that start in each of those places have different kinds of datasets that are relevant for diagnosing and targeting therapeutics or treatment. And that's where data has really come into the picture. To be able to aggregate data sets is to be able to project risk or identify the existence of illness, and then predict the right path forward for you personally.
VN: So, one of the things you’re investing in is the social determinants of health?
MC: That's one of the elements. Social determinants of health are the zip code or where people live, learn, work or play. Specifically, we are investing at the intersection of biology, chemistry, and technology. So, biology: what is this illness? What is going on at the molecular level here? What is in this person's body? And then chemistry: how can we tease apart and identify and pull out different things in a more productive manner that gives us information that we then analyze with technology. If you're using wearables, or if you're using electronic health records, I can aggregate information into this pot that's relevant for this specific person at this specific time with this specific problem or propensity. How can we give them the best value so that their patient journey is as successful as it can possibly be?
VN: Do you actually invest in wearables?
MC: If the wearable has an element where we can collect data and also they use the wearable piece, sensor data, etc. as one of the components of their diagnostic, or of their targeted therapeutic, then yes. It could be a traditional diagnostic, it could be wearables, it could be digital health, it can be targeted therapeutics. It can be anything where technology really gives us insights and helps a doctor make a better decision. That's our goal.
VN: What's the big macro trend you're betting on?
MC: Our philosophy is to invest in companies that diagnose illness earlier, which is really critical because not only are reimbursed based on outcomes, but the patient journey is better if you diagnose illness earlier. We invest in solutions that are less invasive, which is where we see a trend; certainly that was exacerbated by COVID, where people didn't want to go into clinics and didn't want to have their blood drawn, so they wanted to be able to get that test done in the home and then transmit it to the doctor with insights. So earlier, less invasive, and less expensive, to really augment population health; there's people all over the world that can't spend $15,000 on a PET scan, they don't even have a PET scan in their county, so we really want to be able to expand it to everybody because healthcare should be for everybody. More accurate is the last of those four elements, and more accurate because we really desperately need to give the doctor the confidence to be able to use these tests with their patients, and in a way that's really going to make an impact on their recovery, or their analysis, or direct them to administer certain tests because, for instance the patient has a risk score that creates a propensity towards something. Whether it's prognostic, whether it's diagnostic, or whether it's predictive, that's where we play.
VN: What is the size of your current fund and how many investments do you typically make in a year?
MC: We did our first close at the end of 2019 and then, of course, COVID hit in March. Investors that were interested in investing in our fund had their GPs come back to them earlier for more capital. So, they said, “Come back in a year or two. We're really excited, we want to invest in you,” and I’m like, “but my companies are growing so fast.” Our fund had a 30% portfolio value increase in the first 12 months, so I couldn't sit around and wait, so I brought in what I could and we continued to do that. Our final close is at the end of October.
So far we've invested in about seven companies in this fund, we'll probably have another two or three by the time we close it out, and then we will start a new fund next year.
VN: What stage/series do you invest in and how much is that in dollar amount for you?
MC: We invest in the early stages. So, that could be pre-seed, seed, or Series A. Usually valuations are either sub-$10 million or maximum of $20 million. It's our goal to write between $100,000 and a $1 million dollar check for the first investment and then our goal is to maintain a 10 to 15% ownership of the company through exit. Given the loss of one year of fundraising because of COVID, I'm not sure if we will get there but we should be able to get there; so far, we've been able to do it with our companies that have increased so we are on a path to continue that strategy so far.
VN: What kind of traction does a startup need for you to invest? Do you have any specific numbers?
MC: Our companies are pre-revenue, so this is the art of the early stage: most of these companies don’t have revenue, so it's not like you can go to evaluate a company and say, “Here's the growth projection based on sales.” You can't really base it on that and that's why people don't like to go in at the early stage because they don't understand that; it's hard to evaluate. “Well, what is the valuation of that, really? What if this doesn’t happen?”
The key metrics for us in diagnostics are, well certainly we have to have IP that we think is defensible and solid and moated and so forth and there are different ways of doing that; I'm also a lawyer and I have patents myself, we probably have a few hundred patents in our team combined, so we really are focused a lot on that. And then the other two metrics that you're really trying to get past to to market is you have to get some form of regulatory approval, or something that enables you to have the clinical and analytical validation. And then we need reimbursement because about 70% of diagnostics are reimbursed by Medicare. So, you can have a private payer as well but Medicare approval is a really key issue and a key milestone for us to get in the market.
So, those are the risks that we take as an early stage investor and we do a number of things, obviously, to mitigate that risk. To be honest, my mentor, who was one of most successful investors in this area, and I created an AI modeling tool and we identified around 72 data points that we want to see in these companies that we use in our intake ontology. So, it depends on the type of company, and what they have achieved; obviously, a company with a breakthrough FDA designation status has a value to it; even if it’s not approved, it has a better value. So, there's all these kinds of incremental things, like the strategy that the company is going to pursue. Are they going to require FDA/CLIA approval? Or, can they go with a lab developed test? What's the risk with both of those? What's the corresponding market with all of those? And how do they plan to go to market? Who do they know? Who they are connected with, and who's going to do their early studies? Have they even had these conversations? There's a lot of information that goes into making decisions, so it's really hard to say, “I want to see these numbers, I have to se this and that.”
High level, I can tell you I want to see a diverse team. I want to see a team that is reflective of the population that they're serving, I want to see a board that knows what they're doing. I don't care how important that person is in society, I want to know that they are the most important person for that particular solution, because I'm not going to know all the details. I'd rather have the leading physician at this major university who’s an expert on this say, “Yeah, this is a great company,” or one of my Nobel laureates (I have Laureate investors and advisors) to say, “Wow, this is really interesting, this is really different and this is a great way to approach this problem that we haven't thought of and that could be really successful.” So, we try to do things to mitigate our risk based on all the data we have from the companies and based on, frankly, what we can bring to those companies. So, we’ll say, “Yeah, I’ll meet with these companies.” Maybe we wouldn't make the investment in them, but knowing that we have special expertise and relationships, we will do that because we know we can help this company and that's going to de-risk it substantially. And that's why companies come to us. That's why they come to a diagnostic-focused firm, because they know we have the relationships that they don't have to cross those hurdles and achieve those milestones that they need to get to the market and be successful then scale in the market.
VN: You touched on the team there, so what are the qualities that you look for in that person, or in that team, that make you want to invest?
MC: That's part of our algorithm also, but I can give you the high level on that: we don't want to see all PhDs, all MDs, or all MBAs on the team. We want to see a diverse skill set; that's probably the most important piece. And we want to see qualified people who know what they're doing in their specific area. We want to see a board that has substantive oversight, that really understands the solution, and is willing to put their name behind it. The credibility of the team is very important, the credibility of the oversight of the board is very important. If there's somebody on the team that's been through a successful company raise and exit, that's always helpful because there's more knowledge about what this company is going to face down the road and how they can prepare for that early. And so, we'd like to see some understanding or visibility into that.
Most importantly, we want people who are coachable because, if they don't have the expertise, we probably do, but if they're not going to listen, then it doesn't make a difference. It's very hard because you see these incredible companies, and you really want to back them but you realize they're thinking about the problem really in the wrong way, and you realize it's their way or the highway and it's like, “That's going to be a learning curve it's going to be too long.” As a VC, we're judged on how long we hold your money for, and how many multiples we make on it. So, if we think that's adding another three or four years to the investment horizon, that's a much bigger risk. That's why it's important. Then, of course, there's gender diversity: as a woman run fund, we're less than 2% of the VC world. That's challenging. We don't see enough women founders or diversity on teams. I ask teams about it: I say, “Well, where are all the women?” The bottom line is that women bring a different perspective, they have different skill sets, and both skill sets are needed, not just one. All women teams, all men teams, I'm not as excited about. Sometimes I'll do it but I would prefer to see somebody who understands the importance of these different viewpoints because, most of the time, the solutions are going to be impacting a diverse population. And even if they aren't, you have to think about the problem in different ways. So, if you can bring that diverse point of view, not only in qualifications, but in life experiences and perspective, to the team and the board and the considerations, then you shave off a lot of wasted time to get where you're going and you don't need as much money to get there, and that's a smarter way to go.
VN: Maybe it's a difficult question to answer, but what do men bring versus women? I mean, obviously, that's going to depend on the individual, but, in general, what do you find that men bring, and that women bring, to a company?
MC: We know that the area of femtech is exploding, and when somebody has had an experience themselves with an issue, that makes their perspective all that much more valuable. So, the first thing I would say is there's half the population that are women, and half that are men, and whatever the illness you’re addressing, as users, as people who need that solution, they both bring different perspectives and experiences about how they experience that illness. There are different considerations: it can impact the user interface, it can impact the way you take the test to market, it can impact the segregation of different types of users, from age range to gender to propensity. There are different ways you can slice that data and you need to have all those in that algorithm, both as your patients and the considerations on the board and the considerations on the team, to really be able to deliver your solution to a larger population and to address a bigger market. If you just look at it from a very basic level, you have experiments that were done for many years with all male mice. Well, female mice are different than male mice and there are different ways their body interact with different solutions or tests or whatever it is. So, at a very basic level, it's important to have the gender experience, both from a user's point of view, from a scientific point of view, and from a go-to-market point of view. So, that's one way gender is manifested.
The other way it manifests itself is that women and men sometimes, not always but a lot of times, have different skill sets. Whether it's reading a room, whether it's focusing on one metric, whether it's recognizing there are other issues here that we need to bring in, or other points of view we need to consider. The sensitivity of different aspects, which are all critical, tend to be sometimes different in men and women. So, I like the idea that, by having these diverse viewpoints on the board and the team, they’re more challenged to create a more inclusive experience and solution, which will then create a larger market, and a bigger opportunity.
VN: I want to ask you about valuations, which you did touch on earlier, and how they've changed over the last 18 months, especially being in the space that you're in. As you said, the companies that you were investing in were basically exploding over the last thanks to COVID. So, how have you seen valuations change since March 2020?
MC: That's a good question because when I started this fund I would go around and say, “This is really important stuff! Look at this: we’re doing earlier, less invasive, more accurate diagnostics. Let's fix this major problem. We have a huge impact on outcomes, look at how important this is!” and the response was like, “Oh, yeah, that's interesting but crypto!” Now, all of the sudden, people understand what sensitivity and specificity are. I mean, it's a completely different world for us. And, all of the sudden, it's like, “Oh, what companies are you investing in?” and I’m like, “Hmmmm, I didn't know you were that interested, and now you’ve become very interested (laughs). This is great!” The more attention, the better for all of us. That's why we're passionate about it, we want to improve outcomes, we want to help people, and we want to make money for our investors. So, the emphasis has been fascinating to watch, and the more emphasis there is, the more other funds are shifting to our strategy, which we created many years ago, when we first started this.
What I noticed in terms of the valuations is two things: number one, the deal flow has increased by about 30%, which is fascinating. That's across the board; I talked to my friend at a16z and they have also seen a big increase in the deal flow intake. Number two, interestingly, the valuations, yes, they have gone up a lot and that has something to do with SPACs, and the direct investment into the vertical now. So, everyone who has a family office or their own investment vehicle, also angels, etc, they all feel like they're experts on healthcare now and they can all invest in this area, but they're paying retail prices, whereas venture pays wholesale. The deal looks great to them, but they don't see 80 or 100 companies a month that we see in the same space doing the same thing. It's driven up valuations, not in the most promising companies, per se, but in the vertical as a whole. And so, companies that might be really promising might expect bigger valuations, but I've found is that companies who really understand, who are really doing something game changing and recognize what we bring to the table, they're not as caught up on valuations as they are on the quality of their investors.
We are still getting into valuations where we want to be because of our prominence in the area and because we see so many deals that nobody sees. Our deal flow is very unique, so that is one key differentiator. So, it hasn’t impacted us as much, but I see the large size investments from Tiger Global and Softbank and all these firms and it’s like, “Whoa!” (laughs). They’re just massive and they're coming earlier, which is interesting. Sometimes green is green, but if I were a founder, I'd be far more interested in taking intelligent capital any day of the week, because the ability to predicatively scale, and be successful, is much higher. When a person puts a lot of money into your company, their expectations for the return on that investment, and the rapidity with which they need to achieve those returns, is very different. An individual's ability to be patient with capital is very different from a venture fund, and their ability to contribute to the pace, other than just throwing more money at them, is not really there. Whereas, we don't need to throw as much money because we can get farther with what we give them because we help them with those things. So, that's why it's not really impacting us to the degree it is others, but I will say some of the valuations I see are crazy; I know what the companies do and if you really understand the numbers, which not a lot of people do, if you really look at their clinical data and you pull it down in great detail, you find that, in my opinion at least, very few have a true early diagnostic. And very few have such a leg up on their competition as to make them an outlier. Very, very few. So, finding those is really the key and having the right circles for those deals to come to you is also key.
VN: I’ve definitely heard that from VCs, that companies take these larger and larger rounds early on, at larger valuations, and then the next round comes along, because the valuation is so high, the expectations are even bigger, and they can't meet them and they wind up taking a down round and that's not a good thing for that company.
MC: Or they do a SPAC and the consumer ends up holding the bag because then the stock goes down. Right now, we're seeing a lot of shareholder litigation from SPACs, and a lot of a lot of problems with disclosures, because the incentives are not properly aligned between the people who are creating SPACs and the people investing in them. So, I feel we’re going to see a lot more problems that come out of these SPACs because, if you are a great company and you're doing really well, you don't need to do a SPAC. You just could do an IPO and you could do just fine. It's a process and you’ll have a great valuation and it will grow once you're out there in the market. So, the attractiveness is not as high when a company is really, really doing well with seasoned professionals, I would say.
VN: There are many venture funds out there today, how do you differentiate yourself to limited partners?
MC: First of all, I probably don't go after exactly the same LPs as other people because these are people that we know, that know us, and that are very knowledgeable in these certain areas. So, they are mostly an informed group, they understand healthcare, they understand AI and technology really well. We have some very prominent and very successful individuals in those areas, in private equity and in medicine, science. It’s a curated group from what we do, and that's how it's come about.
We are now taking that more broadly out by listing ourselves on platforms like Mercer and that is when we're going to be in front of a lot of investors that would traditionally be competing with other funds, but I don't think we compete all that much and I tell you why: there are not, from what I’ve seen, funds that do what we do, and do what we do as well as we do, and have a level of deal flow that is as unique as we have. So, it's the team, it's the strategy, which is unique, the timing, and the deal flow quality. My partner David Kirk was the Chief Scientist and Architecture at Nvidia for 15 years, so he has people that come to him. My Nobel Laureates in science and medicine, they have people that come to them. We’re involved in universities, like UCSF, Stanford, and schools all over the world; we do a fellowship with students from all over the world and at all the leading academic institutions. We get deal flow and relationships from panels, we’re on the AI World Conference panel and we were on the DXPX, all the different conferences. So, the deal flow that we get is unique because people are coming to us but not for money, they're mostly coming to us because this is our area. They want that validation from us, that they are the best in class in their field. So, we haven't had the competition and, as a result, we have that unique value proposition. Other funds come to us and say, “Can you look at this for us?” or, “What are you investing in? Can we get in your next rounds?” We've had strategic investors come in now to two or three of our companies out of our small, little portfolio. So, it's attracting enough attention that we don't have to compete as much because there isn't anyone doing what we're doing the way we're doing it.
That having been said, other funds are now very excited to get into this area. So, massive funds that are everyday blue chip names are saying, “Yeah, we're going to get into this area of digital health. We're going to start a fund in that,” and it’s all right in our wheelhouse. So, to that I say, “Great, more the merrier.” I meet with them all and I’m like, “I’ll call you if I see something interesting.” It's to my company's benefit to partner with some of the big funds in town and I set up meetings for them; they do the next round and we invite them to come in and be one of the investors, or they come in with and co-invest in my pro rata if I don't want to put it all in my fund. So, it's a good thing they're out there in the ecosystem and the universe but I don't think it's a competitive thing for us, it's really just a community that supports our companies and helps them grow.
VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?
MC: What they look to us for are three things: money, strategy, and relationships. And maybe the fourth one is knowledge, because sometimes they want to run scientific stuff by us. One of our board members is working on the Random Forest calculations on the AI front for one of my companies, really getting involved on a granular level. Another one is making great suggestions to the company on ways to go with their algorithms and their data set. We really bring a lot of knowledge to the space. Another one of my EIRs who’s on the board with me now, she ran a large unit in a company and one of our companies is doing something in that area but that's 10 times better, so the knowledge is very relevant. So, it's the knowledge that we bring, it’s the capital, it's the relationships; we can call private payers, we can get someone who’s an expert in Medicare or at the FDA or other people to say, “Hey, what do we need to do here?” or, “How should we do this?” or, “What can we do?”
I talked with a woman this morning who is doing incredible business in the senior care space; our company, Optina, identifies Alzheimer's with an eye scan 10 years before dementia. So, it's totally relevant, and she's like, “Maybe we can do a focus group at one of our clinical sites, or something.” So, just those relationships that we have enables companies to get better IP, scale faster, run the company better with talent, and get into tremendous relationships. Then we have the exit; we’re doing a strategy session on one of our companies on exit strategy, and we’re identifying all the players and who we should talk to now and who to talk to later. So, it's a mixture of all those things that a company CEO needs from beginning through exit that we bring. And that's what they come to us for.
VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?
MC: One company is NephroSant. I heard a presentation and I think I was the only person who walked up to her and said, “I love this.” So, that's a company that has a urine test for kidney transplant rejection and kidney health, with over 95 or 97% sensitivity and specificity in the high 90’s compared to the competitors in the field that do it with 60 to 80% in blood. So, this is a game changer.
So, what did I see in her when I came up to her and said, “I want to work with you”? I saw an incredibly passionate founder, who knew this area better than anyone, who had a test with the level of accuracy that would give doctors the comfort to order it in a non-invasive manner, so people can actually do it. When I saw that combination of somebody who’s a world expert on this, the amazing test accuracy, the non-invasive opportunity, and earlier detection, I was like, “Okay, this is my bullseye.” It turns out, so far, that's our fastest growing company. We had DaVita Venture Group join us in that last round and we're going to be doing another much larger round down in the coming months, so a very exciting company.
Optina Diagnostics is another very exciting company we saw a number of years ago, and then stayed with. We did a small investment and then followed up with them when they achieved a breakthrough FDA designation. I actually called her up and said, “I really love what you're doing, how can I own more?” So, we bought out some early shareholders and we did another little bridge to the next round with a cap and then we got involved in the next round as well. So, we scaled up with them. They have a two second eye scan that identifies Alzheimer’s up to 10 years prior to memory loss, so prior to the onset of dementia. So, it's multispectral imaging in the retina; they take 100 points of light, about a gig of data per person, and correlate it with PET scan data. It's the back of the retina, the fundus, so they're really getting interesting information. Now they're building out the platform to other types of brain health and we have a large strategic interested in coming in for their next round, so it's very exciting. We've really supported them in their growth and hopefully that adds a lot of value to both of those companies, which are probably our fastest growing investments and are doing quite well, I'm happy to say.
VN: What are some lessons you learned?
MC: This is very interesting because I went from being a serial entrepreneur to being on the venture side, and so I've learned a great deal. I mean, what drew me to this is the constant learning; I will never stop learning, I'm always learning new things. What I did learn, which is different from an entrepreneur's approach, is when you're managing money, the way that the venture community judges you, as I mentioned before, is the time you hold the money and the multiple. So, your decisions might not be in the most amazing potential that you see, your decisions have to take place at that really very specific inflection point of where the potential and the curve, the hockey stick, lies. That point in which they're just ripe, not overripe, but just ready for what you have to offer them. And what we have to offer them, as I mentioned, are the relationships, the scaling, the expertise; we only have so much time, so it's really important that we're giving that to someone who is really going to be able to use it. We don't invest in what we call “science experiments.” That's what non-dilutive funding is for and thank God we have a country that funds research; it's amazing. A lot of our companies have had millions of dollars of research in them before they are spun out to start a company. And so, their value obviously doesn't reflect the amount of time that's gone into that and research, because it's learning, but it’s maybe not specific. It's understanding the vertical in general, it's becoming a leader, it's becoming part of the voice. But that is the reality. So, that's one thing I learned that was quite interesting.
The other thing I learned that was very interesting was how hungry women and minorities are for investment and investor relationships. I was in many verticals that are male dominated, but I didn’t see any glass ceiling; it never even occurred to me. I was in law, I was in technology, I was retail, I was in Hollywood, media, all these things. Yeah, there's issues, but venture was the first time I saw there was an institutionalized situation where the pipeline just wasn't there for diverse individuals who raise funds, or for founders that are trying to raise money for their companies. I look at us as a startup in a lot of ways…being female-run, we're less than 2%. So, I was surprised to learn that. I was also a little surprised at the fact that you have to do it all on your own, and there's not other people who will reach out and say, “You're doing something great, let me introduce you to some investors.” Everybody keeps their investors for themselves, I see that all the time. There is a mentality that people don't really share in that way, which is sad because they should, because an investor who's in cleantech might really need a great balance in their portfolio by investing in healthcare. It's all about these portfolios that you need to create for these individuals to have a balance of risk and an upside. So, we all should be working more together with that piece but I don't find that it really happens as much. It was surprising to me because, as entrepreneurs, we all helped each other. It didn't matter if I was starting up a company in legal tech and someone else was starting a company in med and someone else was in retail or someone else was in beauty. We all just said, “You know what? I have investors here, maybe they’d be good for you.” So, it's just a little different in these two ecosystems. So, transitioning from a serial entrepreneur ecosystem to an investor ecosystem, I find that there's not as much collaboration and support as I would have hoped, except for when it comes to deals because everybody wants to get into the deal, so people are very collaborative when it comes to deals.
VN: What excites you the most about your position as VC?
MC: One is meeting all these entrepreneurs that are really changing the world, and knowing that I can be a conduit for them to help them do that. That is so exciting every day. I definitely wake up completely energized for founders and just really being able to share the knowledge and help them on their path is extremely rewarding.
The other piece is the ability to create an impact for people whose chances of surviving an illness, in a lot of cases, especially in cancer, goes from about 80% to like 20% if you go from early to late diagnostics. It's so impactful and meaningful for a person to know what's going on with them earlier. We really feel like there's no reason whatsoever that you should come out of a doctor's office not knowing a) exactly what you have and what to do about it, or b) what you could potentially have and what you've got to keep an eye out for based on your background, based on your genetics, based on everything. We're helping those doctors empower those individuals with that information because a doctor, at the end of the day, has too much information now with data. They really can't possibly assemble that data, in the same way that investors who don't know this area have the same problem. There's so much data, how are you going to judge? It's not easy. And I feel like the ability to be able to help doctors make those decisions, and help those patients' survival rate increase, is the second really exciting opportunity.
The third one, which impacts me, is that I'm a single parent of four kids. I want more women to think about their financial security and I want my kids to see my example. I brought a lot of women who are first time investors into my fund, they've invested with their IRA, their hard earned money. It's really exciting for me to help them grow their retirement, and help us all pay for our children's education; I’ve got three in college and one in high school. I want to be a good steward of people's hard earned money. One thing that always strikes me in the pension fund world is this money is what these people are relying on for their retirement. Some people treat it like, “Oh, it's a pension, they have this many billion,” but actually, no, it does matter because those are real people’s dollars, and those real people don't have the same opportunity in their retirement if their retirement goes down, so it's a tremendous responsibility on the part of the investors of those kinds of funds. So, the ability to return money to investors and show that, “You bet on me, and look what I've done for you,” and to feel that I've earned their trust is incredibly rewarding. When I see my companies increase in value, and get exciting people who really know what they're doing investing in them, in the strategic sense and otherwise, that's incredibly rewarding. Having calls from larger firms, which I get now all the time, saying, “We didn't know you existed. This is great. Sounds like you've already heard about this company,” that's exciting because we're small but we’re mighty and we're impactful. Being able to do all this and also bring up women and minorities in our Fellows program (we've put almost 100 through the program) and being able to put women and minorities on boards, being able to bring them into my fund, being able to just expand the universe of talent is really rewarding.
VN: Is there anything else that you think I should know about you or the firm or your thoughts about the venture industry in general?
MC: As we create these funds, and as we grow these funds, it’s our responsibility to bring others in and that's why I've done this Fellows program. The way I ended up establishing the Fellows program was I was looking for interns, and I put out the qualifications of what I was looking for, and apparently it got picked up at a ton of places, so I ended up having a ton of candidates. I looked at that and they were so amazing, each one of them, and a lot of them were women or minorities; it was a mixed group, which I love, but most of them were minorities. I thought, “Wow, this really tells me something about the difficulty they have to get jobs,” because each one of them was overqualified. So I thought, “There's something that needs to be done here,” and for like seven years I guest lectured and mentored at Stanford in their engineering school in global marketing and entrepreneurship and I said, “I know how to put this together. I'm going to accept them and I'm going to start this fellowship it for a larger group and we're going to find ways to make it more personal, but we're going to be open to more.” They've been wonderful. I just actually recently had some of my fellows come back to me and say, “You know, Michele, we thank you for really what is philanthropy on your part, but we want to give back. So what can we do?” We started talking, and they said, “You have a little LinkedIn group with all of our Fellows, so we want to grow that. We want to make that very special because the group that you've curated is amazing here. So, we want to take that job over.” Four of them are doing it pro bono and they're building it out and I'm very grateful.
It's been really rewarding because they send me deals. I mean, I never expected I would get anything back, I was doing this because I wanted to help, but the reality is, when you sincerely help, it comes back to in so many weird ways. Sometimes it's just the satisfaction, and we have a founders Friday presentation we put up on LinkedIn, where we show where our Fellow have gone. Seeing those, and when they send me an email going, “This really made such a difference and thank you so much for taking the chance on me and I now have a job here,” seeing that I know I’m including more people and being able to increase the numbers. Also, it sounds so funny, but I’m a parent; I have four kids, and I get that satisfaction and excitement about seeing them succeed and knowing that I played a small part in it. Seeing incredibly smart executives that are between jobs that want to help, that want to join our EIR program; even if they're in jobs, they still want to help, and they want to get involved. Seeing people who are so inspired by what they're doing, it's just a joy.
So, the fact that we can have this triple bottom line, which is financial returns, and being able to impact health care of the individuals that are struggling with illness, getting earlier diagnostics and improving their outcomes, and then being able to impact diversity, equity, and inclusion, people say that, but I don't think many have metrics. We can say, “Here's how many we put on boards. Here's how many people we added to the C-suite. Here's the patient populations that are served by this. Here's the Fellows we found.” We didn't set out to do it, we just started looking back afterwards when somebody was asking us for our metrics, and we started taking stock of it all, and we were like, “Wow, for a little small fund, we actually achieved a lot.” So, when you do things from your heart, and you do things organically and they arise because there's a need, it’s like the companies we fund: there has to be a need. You can't have a solution that you create looking for an audience; you have to have an audience needing a solution and then you're funding those solutions, the best in class. In the same way, we are really naturally creating a solution for investors who are looking to get into this area, for board members, for young people who want to get into venture or understand investing and for the C-suite, women, and founders. So, we're creating solutions for problems that actually exist. We discovered that going with your convictions and having the right strategy and having the right timing and the right team, and the right deal flow, and all that, the right relationships, is what really leads to that. And so, we've been successful in that. No matter how much money I raised, I've succeeded in my goals of creating value in the portfolio, of creating value in the people we touch, and the people we fund.
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