Lo Toney has some ideas about how to (really) bring VC into the 21st century – TechCrunch

Lo Toney has some ideas about how to (really) bring VC into the 21st century – TechCrunch

Last week, we suggested that for a truly diverse venture industry, limited partners that fund VCs – institutions such as the university and hospital systems – need to incorporate a diversity mandate into their work. It is said that a venture firm wanted to become affiliated with the University of Texas Systems. This will need to be agreed in writing first, so that a certain percentage of your capital will be invested in startups set up by obscure groups.

The idea of ​​how fragmented the world of institutional investment is may seem impractical. But Lou Tony, One of the small but growing numbers of black VCs in Silicon Valley suggests that this may indeed be inevitable. Tony says, for example, he points to pension funds such as the California Retirement System, which manages the assets of 1.6 million employees, many of whom “look like me.” Yes, “says Tony. Imagine what would happen if more questions were asked about who was managing their money.

It’s not that Tony is waiting for this development. It is not needed Former partner at Comcast Ventures, then GV Tony managed to secure Alphabet as an anchor investor in his own investment firm, Plaico Capital, whose first vehicles provide financial support to venture organizations as well as direct start-up investments.

Now, with a new focus on the lack of people of color throughout industrialization, Plexo has knocked on LP’s door once again, and Tony’s plans for this second fund not only include his current Fund managers are being helped, but also more investors of color. Their own venture firms.

This is an extension of the work that is already underway. Plex, which closed its first fund last year with 42.5 million – including the Ford Foundation, Intel, Cisco Systems, Royal Bank of Canada, and Hampton University – has already staked 20 funds. These include Pressure Ventures, English Capital, Condrad Ventures. , Equivalent Ventures, Bold Start Ventures, and Workbench.

Most are run exclusively or partially by people of color or color. “We have a lot of information from Harvard and McKinsey around the world,” says Tony. “We’re seeing better performance from companies with different boards, companies with diverse management teams.” We see better performance when there are diverse managers.

With his other fund, he hopes to turn the dial even further. More specifically, he says, Plexo aims to “develop an equator of all kinds” that enables “great investors” to turn into “great fund managers.”

Part of the idea is to create an organization that Plexo already helps managers create marketing materials, managing LP communications following this investor base. Has been established. He says these are just three of the many elements of fund management that Plexo can help.

Plexo is also looking to develop a strategy in its place [to] Help these many young GPs with working capital, so that they can bear the costs that the fund takes to start, [given that] It can cost an average of million 1 million. (This does not include the fundraising process, travel expenses, service providers, and the partner usually has to contribute to the fund.

This is a model that Plaico thinks he can use to move things faster than investing entirely in individual companies. Still, Plexo can’t do it alone. Nor do his friends and allies, including Venture Partners ‘Elliott Robinson, Hurricane Ventures’ Frederick Gross and retail startup Doll Kill’s Sydney Sykes, all run separate youth organizations called BLC’s VC, which is a black venture capitalist. Works to connect and move cars. .

Tony is particularly concerned about some of the people of the color of large and later venture companies – investors who would otherwise have a network and know that black businessmen can help because they Is completed.

That’s the decent thing to do, and it should end there. According to a 2018 report in The Information, there were only seven black decision-makers in 102 venture companies with a management of more than 250 250 million, and that number remains relatively unchanged today. This is especially true for black investors who are women.

This industry, gradually, over time, may become more involved in the groups offered. But it will happen faster if organizations that accept federal funding or manage government employees’ money decide to pay more attention to the issue. In fact, it is understandable that the components of these institutions – including donors and employees, through their pension fund contributions – should finally insist on it.

“Collective perceptions of power and influence are often lacking which can really affect the transformation of our asset class,” says Tony. “I doubt – and I don’t know, and I’m not part of any action – that we’ll see some more of them. [pension] Funds took a stand, and that [this shift] From below, their employees will come from the base.

It may not take long for the ball to roll. “They can put pressure on our industry and even ask questions [including]: ‘How many black partners do you have?’ ‘How many women do you have?’ ‘What does your portfolio look like? ‘

“Even just asking these questions as a first step – which in itself will affect change,” he says, “because who wants to look bad when answering these questions?”

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