‘The cat is out of the bag’ – TechCrunch

Base10, a venture company founded just four years ago, just closed its third fund with $460 million in capital commitments. Because co-founder Ade Ajao, originally from Spain, is half Nigerian, the new fund makes Base10, which now has $1.3 billion in assets under management, the largest black-led venture capital fund in the world. it says.

While that’s remarkable, much more interesting to us is how Ajao and firm co-founder TJ Nahigian are using that distinction to their advantage without making diversity an express part of their own investment mandate. In fact, the firm says it is, and always has been, solely concerned with supporting startups that help automate sectors of the “real economy” such as food, retail, logistics and fintech. Further, he says that simply by focusing on good companies and not approaching teams with some kind of ‘ideal’ founder profile in mind, he naturally finds his way to strong startups with very diverse teams.

It may be so. Something about his approach certainly seems to be working. Some of the bets Base10 has made include Brazilian fintech company Nubank, which went public late last year. (Ajao wrote a personal check early, but says Base10 formed too late to invest in the team until it was already a growth-stage business.) Base10 also invests in such noisy startups as Notion (now valued at $10bn), Figma (valued at $10bn), FTX (valued at $32bn) and Handshake (valued at $3.5bn), to name just a few of its 79 portfolio companies to date.

We spoke yesterday with Ajao, who helped co-found Madrid-based rideshare company Cabify before jumping into VC via Workday Ventures. We wanted to better understand how he and Nahigian, also an investor and former entrepreneur, built what they have in such a short period of time and how the market turmoil right now is affecting their outlook.

TC: You have long emphasized that while it is run by a minority, it is not minority-focused. Is this still true?

AA: That’s still true. One thing that is quite important to us is to show that if you only try to invest in the best companies out there and you try to do so with an open mind, which means you try to eliminate biases about background, demographics and geography, you you will end up with better financial performance and a portfolio that is likely to be more diverse. Other minority-led funds with the same focus are seeing the same thing. To me, that says more about the industry’s blind spots than anything else.

How diverse are the founders in your portfolio and when you use ‘diverse’ what are you describing? Geography? Gender?

We mean demographics and geography, and that’s gender, ethnicity, and where you’re from. At a higher level, more than half of the portfolio has a founder or co-founder who would be considered “underrepresented” in the company. Most of the portfolio is located outside of Silicon Valley or San Francisco.

How interrelated do you think these two pieces are? You are casting a wide net geographically. Is that why you think your founder’s makeup is more diverse or is there more intent involved?

We are investing in Africa, we are investing in Latin America, we are investing in the Midwest. But the single geography with the most investment is the Bay Area, where we all live, and even within the Bay Area, we have a higher percentage of companies founded by people with non-traditional backgrounds. I don’t know why, I don’t have all the data, but one thing we started noticing more was that we had to substitute in-person meetings. [with Zoom calls] was that when we had a founder introducing the whole group, he often said, “Oh wow, you guys look different.” I think it has an impact.

Regarding Latin America, SoftBank has done a lot to support the region, including, in some cases, marking its own investments in companies there. Is there any concern that money will dry up a bit as SoftBank slows its movement, or have enough other investors gone down that it shouldn’t make a difference?

I started Cabify in Latin America in 2011. And then my next three investments were [the Brazilian e-hailing app 99Taxis, [the Colombia-based on-demand delivery company] Rappi, Nubank and I passed those deals on to various venture capitalists in Silicon Valley who didn’t touch them. Back then, corporations didn’t want to invest in businesses outside the Bay Area; was considered a handicap. It was: ‘We’ll write a term sheet if you agree to move to the Bay Area.’ Now, in the last 18 months, I’ve gotten emails and calls from several of those associations saying, ‘Hey, we’re going to Mexico,’ ‘We’re going to Colombia, who should we meet there? ‘

I don’t think and never thought the story was just about SoftBank. I think that [former SoftBank exec] Marcelo [Claure] and his team did it was quite commendable. They really highlighted the ecosystem and what other people were missing. But I do think that enough people are seeing the light. [In the meantime] what I like is that you don’t really see many general partners in venture capital firms in the Valley that have had experience in Latin America, and the reason I like it is because it gives us an edge. [Laughs.]

Sequoia’s Doug Leone recently said startups need to be prepared because some of the money that has been circulating will dry up as market turmoil hits investor confidence. Meanwhile, we are already starting to see layoffs, negative rounds, implosions. How are you thinking at this moment in time?

If you look at the amount of money raised by venture capital and booked in the last eight quarters, I think it hit a record amount every quarter, that money has to go somewhere. The other thing I will say is that for the last two years basically every LP has seen record amounts of cash distributions from venture capital funds.

I am not a macroeconomist. I don’t know if we are about to enter a recession. I only remember 10 or 11 years ago when I was fundraising [for Cabify] On Sand Hill Road, and it’s day and night [compared with today]. I mean, like 10 years ago, if you were doing a company in Spain or doing a company in Colombia, like, good luck. And Nigerian? I mean, that was crazy. Now, I think that cat is out of the bag.

Leave a Comment