 We're gonna kick off with a quick round of introductions and I'm actually gonna ask our panelists to introduce themselves. I didn't prep you for that, but just you know your background best. Dustin's nervous, he can go last. Ask you guys to introduce yourselves and how you relate to this topic, whether that's through your professional job today, what you're doing, et cetera. So introduce yourselves starting either maybe at Claude and we'll come this way. Hi everyone, I'm Claude Grinitzky. I'm a diverse fund manager and I'm an asset allocator, so that's how I relate to this topic. I run the Equity Alliance, which is a VC fund of funds, but also direct investor that I started with my longtime mentor, Dick Parsons in 2021. And my background, I was a founder, I had created a media company called Trace when I was in my early 20s and Trace was funded by Goldman Sachs and I sold that company in 2010. After that, I started teaching at Harvard, but also mentoring a lot of young entrepreneurs and then I got a call from Dick Parsons who said let's diversify asset allocation. Let's do it, absolutely, that's all. Hi everyone, I'm Betul. I'm a principal at K-Port Capital. I am primarily focused on direct investing, especially in the economic mobility sector. So fintech, future of work, as well as justice tech. And as many of you may know, K-Port Capital's thesis is about investing in tech-enabled businesses that close gaps of access, opportunity, or outcome for low-income communities and or communities of color. And I guess how I relate to this topic is I come from those communities and I've kind of seen the products and services that are needed to really move the needle for certain communities and I wanted to be a part of moving money into the communities to where it actually moves that needle. Yeah, I couldn't agree more with the sentiment. So my name is Dustin Shea, I'm the director of the Impact Labs at the Sorenson Impact Institute. In that role I helped to build partnerships to support a VC apprenticeship program that's designed to create more equitable pathways into the field of investment allocation. I've come to this work actually as a student that went through that program about 12 years ago and then spending about eight years in the interim helping to scale up a group called Village Capital that really focused on the who, what, and how of venture, who's making investment decisions, how are those decisions being made, what kinds of capital structures are we using to enable companies that are starting to solve some of these really big environmental and social problems. And the reason that I've come to this work in this way is that I view those as kind of the major barriers that are keeping VC from harnessing the power of entrepreneurship to really address these problems. And if we are trying to invest in problems that disproportionately impact certain communities, we need to be investing in people from those communities who are most familiar with those problems and most familiar with the kinds of solutions that will scale within their community. Great, hi, I'm Liz Roberts, Head of Impact Investing at MassMutual. We're a large American life insurance company and in Impact Investing we have a sort of a two-pronged strategy that's addressing inequality and capital access specifically to advanced racial and economic equity and that's split between direct investments through a catalyst fund one and two that invest in companies and then also a first fund initiative that invests in first time diverse fund managers but funds zero through four emerging managers doesn't have to be fund one. And I came to this work, it was actually a really windy path but I was a tech entrepreneur myself in New York City in the early 2000s built and sold a couple small tech companies and in my experience with investors, with fundraising there was never anyone who looked like me there just weren't a lot of women and there also weren't a lot of LGBTQ folks either at that time. And so then once that started angel investing then got curious about venture capital and just access to capital, everything from built some accelerators on different models around that to doing some policy work with the Obama administration on access to capital, who gets it, where it goes, why which led me to my work at Mass Mutual where I've been about two and a half years leading the Impact Investing. Fantastic, thank you all. Really excited to share the stage with you. Also aside, I noticed while we're sitting here, Dustin are you wearing the same outfit as in your headshot? I always do. Every panel, every time. That's awesome. Taking a uniform to the extreme, I love it. He's got so much brain space today for other decisions everyone. Come up and talk to Dustin. Wonderful, all right, to kick us off, I know you all shared just a little bit from the personal side about how you got into this work just now, this question is more about the institutions that you've either founded or you work with. So many reasons why we might want to diversify. Who makes asset allocation decisions? What's your ultimate goal? What are you aiming at here? What are you trying to accomplish? Why do you do this work in this way? Anyone want to kick us off? That's cool. Yeah, I'll go first. So, I mean, I believe venture capital with all of its wealth and power really influences the ideas that are valued and thus the products and services that end up getting funded and ultimately the products and services we all use as a society. So I think in the simplest sense, if your team is not diverse, if your VC team is not diverse, if the folks that are, if the LPs are not allocating their money in diverse funds and there isn't that trickle down effect, there can really be missed or overlooked opportunities within this space. There can be poorer outcomes just for society at large and if you're not representative of the population that you are serving, I think that's such a miss. Amen to that. Is it less than 2% of female founders get venture capital in the country? It's not because 98% of the great ideas come from men, right? Crazy idea. But the reason that I come to this work and what we're doing at Sorenson Impact is a little bit different, right? Like we've been able to create a portfolio with, and just to call it like we see it, right? A not super diverse team that is over 66% women and people of color, which is very, very different from what you see in kind of traditional venture capital. That said, like the reason that I come to the work around trying to do, try like long term better outcomes for a society through venture and trying to change the system to make it work better is because when you look around politically, you see a lot of the challenges that we face as a society. We've got kind of deadlock on how we think we should solve them. Some people think deregulation, some people think new larger government programs. Similarly on philanthropy, you see a challenge of a lot of people doing a lot of really, really great work, but disparately and sometimes duplicatively because they wanna put their name on something and say, I did this, which is also totally fine. It's their money. Pretty much whatever they want, but if we have those two major tools kind of tied up in some kind of deadlock, then there's a role for business to be used to actually drive positive environmental and social outcomes. And unless we take the time to really focus in on harnessing the best aspects of this particular tool of business to address or at least reduce suffering and increase flourishing, then we're really missing out on incredible opportunity to drive the change and the development of the society that we wanna live in. Awesome, thanks. Yeah, go ahead. I have a slightly different perspective because it's very much driven by my own lived experiences. When I was 30, as I said, I raised the $15 million series A from Goldman Sachs and I was a first generation founder. At that time I was still a immigrant. I didn't have a green, I had a green card, but I wasn't yet an American citizen. I didn't really have anybody in my corner that I could lean on. And the kind of investors that I had at Goldman, where as you can imagine, very much focused on a specific type of ROI, but my media company, which I'd started in my bedroom, was very much driven by the power of hip hop as a subculture and the potential that hip hop had to change mindsets around the world, coming out of black culture, but then permeating it to other cultures through the prism of music, film, fashion, art. And the investors had no idea what I was talking about. So in a sense, I'm doing this because I wanna be the investor that I wish I had when I was a 30-year-old founder, trying to find my way. And at the time, there really weren't any diverse investors in that VC space that we were operating it in New York. And I'm bringing the corporate perspective. So the work Impact Invest is doing is really deeply aligned with our business objectives and our customers. So we're a mutual company. That means that we don't have shareholders. We're actually owned by our policyholders and our customers. And that's been MassMutual's governance and structure for the last 170 years. And our tagline is to secure the financial future for all Americans. So we invest to address inequality as a systemic risk for our economy, our society, and our policyholders. And we do that by we like to focus on investing in generative social and economic mobility innovations that are built by and designed for the economic majority or everyday Americans. And so we really think about that in terms of, there's a, or to put a finer point, there's an over-concentration problem in venture capital. In the majority of the dollar, it's going to a small homogenous percentage of the population. Well, that really gives a narrow lens of perspective on market opportunities, problems to solve, and end users through your lived experience. So we really see it as an incredible advantage, especially if you take into consideration that by 2050, 54% of the United States population is going to be non-white. So you must have a diversity aspect to your financial, you know, your investment thesis and your portfolio construction, or you're missing out on key opportunities and you've got a risk. So that's the perspective we really bring. I love that reframing Liz. This is one of the moments when Liz shared that on our call that I almost stood up and cheered, you know, hearing someone say what has always been true, but is only just now coming slightly to the forefront, that inequality is a systemic risk in our society, right? We need to address it or society won't exist, right, we won't make it. And companies like MassMutual are really recognizing that and I love to see that. I had a question in my panel the other day about big companies and, you know, these huge companies have these efforts around equity or, you know, social kind of socially minded investing, like do they really mean it? And when I hear Liz talk about MassMutual, it's so clear that MassMutual really means it, right? This is not some kind of marketing ploy. This is de-risking a business for the future of all Americans. I really love to see that. Fantastic, we're gonna start here on an optimistic turn, but we're gonna pair it with where we see some gaps too. So, you know, I think so often when we talk about equity or inequity in the system, we can get really caught on what's going wrong and what doesn't exist yet and what didn't exist when I was an entrepreneur, when Claude was an entrepreneur, when Liz was an entrepreneur, right? But I wanna start with some bright spots. So where do you see bright spots? What's going really well? And then pair that if you want to or we can come back to you with where you see gaps. I know for some of you, those things feel like two sides of the same coin and in other cases, we can come back to you. But bright spots and gaps. Sure. I wanna say a bright spot for me that I've seen as a fund manager in fundraising is that there's an educational process that's taking place in communities of color. And by that I mean that the whole concept of investing is something that is still a process even for professionals and investing in the right way. And what do I mean by that? In my own personal journey raising fund one for equity alliance, I was able to raise in pretty short order around $28 million. Mostly, I wanna say 99% were white male investors. And then I realized I needed to diversify my cap table. So I reached out to my friends who were lawyers, who were accountants. I said, you really should think of investing in funds because that is potential wealth generation in the future. If you look at the returns that have come from venture over the past three decades, it would make sense. And I was surprised that even qualified certified public accounts would tell me that they would rather pay off their mortgage early than actually invest in funds. And I didn't realize there was such a gap in what I'll just call basic financial literacy between people who have grown up with wealth and have benefited from the power of investment and compound returns and people in the black community, Latino communities that I operate in who just weren't thinking that way. And so I was very proud that we were able to actually diversify our cap table by attracting some diverse investors as well, but it's still an uphill struggle. The battle is still being fought now because the mindsets that we grew up with were not necessarily about saving in the right way or putting money into mass mutual. It was a totally different approach to just managing money and thinking of posterity and what we now all call generational wealth. Awesome, so do you see that as an ongoing gap or you see that more as a bright spot? I think it's a bright spot because those conversations were certainly not taking place. When I was a founder, literally no one ever told me about QSBS, I had never heard of it, right? And so I would have saved when I sold my company, I would have saved a couple million dollars if I knew about save QSBS. And just very basic things that are not commonly shared in these communities because sometimes money is still taboo because the fragility of just existing and surviving is still something that is very real to many of us. And so as a result, projecting long-term and thinking of building wealth through investments and funds and different kinds of asset classes is still a pretty new conversations and certainly the communities in which I operate. Yeah, so maybe two sides of the same coin, right? Starting to happen, that's a bright spot and you're still seeing a gap at that level when you go to these. A huge gap, but maybe it's not as huge as it used to be if we're gonna be positive and optimistic. I love that, I love that. The bright spot may be small, the gap is huge. So lots of opportunity out there, fantastic. Anyone else, bright spots and gaps? Well, I think one of the bigger bright spots is like the amount of intentionality that we're seeing across high level LPs on focusing on diverse managers and across the manager spectrum including an inclusive approach in their own thesis and explicitly reaching out to communities like accelerator communities and other kind of centralized hubs of sometimes regionally or industry or demographically driven entrepreneur support organizations to be able to explicitly drive that community connection that many venture funds just don't have. I mean, at the end of the day, I know that we're trying to make really strong progress and our program is part of trying to make that strong progress, right, in terms of increasing demographic diversity, but even when we're looking at venture funds that don't have that representation already or seeing them reach out to groups like the Black Innovation Alliance to say, hey, I know that there are entrepreneur support organizations that are around that are sourcing and supporting and de-risking these early stage investments that I'd really love to take apart and I just don't know where to find them. Can you help me actually engage and you start to see people overcoming their own perceived pipeline risk? Now, we all know in this room, the pipeline risk is not a real thing. There are many founders of color. There are many founders from underrepresented backgrounds that we can and should be engaging with but for the folks that have used that as a pretty thin veil for a long time to not really stretch themselves to be able to get that actual deal flow, there's new systems in place to help them navigate that ecosystem. That's on the kind of tops down approach on the bottoms up. There's our program, the VC apprenticeship program which has been going for about 12 years but there's also this plethora of newer programs that are around. Some of them are six years old. Some of them are three years old. Some of them are like last year, right? There's groups like the Black Venture Capital Consortium. There's groups like HBCU VC. There's groups like Black VC, right? That are really focusing on driving that demographic diversity by giving people the perspective, the skills, the network access that they need to be able to achieve at least the first rung kind of entry point position into eventually becoming the decision makers that understand where capital is actually going to go and make that decision as they continue in their careers. Not to put too sharp a point on it but this is why we called it tops down bottoms up you hear Claude talking about education at the level of the LP, right? Walking into rooms where people are saying I don't think venture capital is for me even if they're qualified investors even if they could and doing education at that level and then you hear Dustin talking about educational college students who thought I don't think venture capital is for me, right? They're saying the exact same thing in different settings and saying, hey, let's take you through a training program. Maybe it won't be for you, that's okay but maybe it will be and if you have exposure to it connections within the industry it might be the right route for you and so diversifying from the tops down and the bottoms up. Go for it, Patu. Yeah and just to add to kind of what Dustin said I mean, so I think there so I'm just gonna talk about the bright spot but I think in the last few years there have been a lot of conversations around what kind of structures or frameworks can we have to add more people to our team that can have a diversity of experiences, thoughts, racial diversity, all the things and I think, I mean, it's really interesting so Brian, Brian Dixon partner at K-Pore so he wrote an article about two to three years ago just talking about how folks you need to have more diverse check writers and that's really going to make a dent and so first round capital actually for the first time hired their first and credited Brian to this had added their first black partner to the team for an open process so they put so one of the things that Brian had mentioned in his article was no one's gonna know about these positions whether partner principle whatever it is if you don't have an open process you know a lot of venture is you know like I'm gonna talk to Dustin and I'm gonna tell him hey I have an opening on my team but it's just gonna stay within us, right and so if you're not publishing that and opening it up to other folks who are who don't have those relationships and don't have those networks it's really hard to get diverse folks you know who otherwise would want to be adventure but don't have the opportunity to be in to get in those doors and so I would say like there's a lot of conversation structure in place for that there's more scout programs that help train folks you know to get a faster I would say track record than otherwise they would have there are more I would say community organizations Black VC, LatinX VC that are also helping train their peers there's NVCA, there's EVCA there's so many other groups you know for to help you know with the training and mentorship that's needed because venture is an apprenticeship model and the one other thing that I'll say is and I'm also a product of this at K-POR is you know a lot of groups are starting to have a summer associate program and really expanding that to include other groups that are not from the Harvard-Sanford War and Bunch right and so you know K-POR Capital I'll just plug in ourselves here we've had a program for over 12 years now a summer associate program so Brian Dixon he was a summer associate back in the day and now he's a partner at K-POR Capital Ooh Lily who's our other partner actually hired Brian when she was an analyst and she started this program 12 years ago and so I you know joined the summer associate program in 2019 and then now I'm principal and so it's really allowing black and brown folks to get into tech and now venture capital right and that's kind of the bigger mission and we have over a hundred alumni that are in different I would say VCs but also in places like the Ford Foundation or other you know groups that we like to co-invest with as well. Awesome love that as a bright spot I'm getting excited are you guys getting excited it's 9.27 now so we can start to wake up a little I've had more coffee thanks to Martin bringing me a chair Liz bright spots. Yeah I think bright spots are just the sheer size of the opportunity and volume right the talent is particularly on our first one side of these emerging diverse GPs is unbelievable we are swimming in deal flow from incredibly talented diverse managers with incredible backgrounds who are starting funds and that influx has just been awesome so and it's also an answer to one thing I you know I probably respond to at least weekly in my work is people say well are there even enough you know talent for filling what you're investing and what you're trying to do and I have to smile and nod and say you know what it's actually it's not a pipeline problem it's a process opportunity right so that equity is as much about process as it is about the outcome I really love you know listening to their panelists talking about the different processes that are needed because in the status quo process because it's either you're just talking to your friends that tend to all be homogenous and also have a lot of money or what happens in venture is that you really open up those opportunities and being really intentional to widen the gap and so we've unequivocally proven at this point there's a very robust pipeline for example in our scope of what we're looking for for funds we had an initial just 50 million that we were hypothesis testing and in that we said we've identified 300 funds in scope for exactly what we're looking for that represent 15 billion in investments they're seeking right so then we rewarded another hundred million MassMatch was like yeah keep going and so it started as a small hypothesis proving the pipeline because you know crunch base pitch book they don't really or some of them just recently ask demographics right they'll tell you where you went to business school but they won't tell you anything else about the founder and what that looks like and so the excuse of well the reasons the numbers look so low for diverse managers and GPs are because they're just not out there it's just unequivocally false and so we've really seen that bright spot and so many fund managers coming into market so that is incredibly exciting to us and I love what you said earlier about you touched on process and how the actual deals get in front of the seas and that's something that I think is really important to sort of double down on a lot of us have been talking about the allocators as opposed to the allocation and how we are actually deploying capital but K-POR is actually a group that completely normalized a totally different approach which is obvious when you think about it right but just having an open application on your website to say we are investors we are looking for these things if you fit these things please submit something a deck an overview of your business model here so that we can evaluate it and I remember when you guys came out with that in 2018 or 19 or something it was like everybody was like oh my God how could you possibly deal with all of this deal flow it's like literally that's your job you're an investor like sorry you have to do your job we copied what you did by the way yeah and we do that now too right we're a financial corporation and if you go to massmutual.com slash impact investing you can directly apply or find out more if you fit the criteria as a company or a fund as I can't tell you how excited I am to hear that as an impact entrepreneur years and years ago I can't tell you the sleepless nights I had figuring out who I knew who knew somebody who knew somebody who might be willing to introduce me to this person who I thought was an amazing fit and should meet me right their job depends on meeting people like me and I still couldn't always find the right connections despite having two white male co-founders who went to Stanford you know that it's a challenge so I love that from across the board guys thank you fantastic well a couple of you touched on bright spots without talking about gaps and I do think talking about gaps in this room is super important because we wanna know where those opportunities are where those action points are and I know you know Claude you started with a small bright spot and a huge gap but if you have other gaps to add feel free but would be curious to hear you know what you all think about where the gaps are today there's still a huge perception problem like and across the field when you start thinking about or talking about either if it's about impact or a demographically driven investment thesis immediately the first question that comes up is like why wouldn't you consider a white guy investor well like maybe there are other funds that will consider a white guy founder for X, Y, or Z problem right but that perception of that as an additional risk instead of the acknowledgement of that as a strength of an understanding for the target community for a problem that you are looking to solve is a really stubborn problem that we're still struggling with even though we see K-Port Capital and others putting up top or top quartile returns from 2019 and then from other vintages of their funds right like you're still seeing people saying well I don't know if you can possibly invest with an inclusive thesis and be able to drive high returns even though the Sorenson Impact portfolio 66% women and people of colors beating VC benchmarks by 1% right even though we don't have a demographic focus at all we're just looking for the best deals like there's still this really stubborn perception in the community that either impact or inclusive approaches are concessionary models. I love that I think we heard that across everybody's commentary the perception and the reality are different right you know Liz is hearing well is there really enough out there you can do a little test she's swimming in deal flow right there's so much out there so perception versus reality is a really big deal across multiple axes of this problem. I do want to say though as you know I have to I am and I have to be the cheerleader for the equity alliance for the fact that we only invest in women and people of color but I do have to say that over the past couple years a lot of fund managers just kind of jumped on the bandwagon what do I mean by that I have met with over 300 fund managers and you know I'll just say it many of them are just fly by nights because they kind of just see an opportunity to get management fees and then when you start asking them what specific skillset they bring to the specific thesis you know some people just get stuck and it just became a really fashionable thing to start a VC fund in the last couple years specifically also for diverse founders and just because we are repping diverse founders and repping women and repping people of color doesn't mean that we just have to open the floodgates to this anybody who wants to start a fund and so the work that we do collectively is really about being extremely discriminated so that we can identify the people who really do have a specific skill set and who actually want to build an institution not just a fund you know who want to get to fund three fund four, fund five as opposed to let me hop in and hop out and make a quick buck and then somebody else might be left holding the bag. Yeah, I love that. I double down on that so much and if I see like another seed stage generalist fund and when you ask a fund manager like what are you actually looking for in a company? Like, oh, it's my process, I have to do my process I'm really excited. It's like, well, what is the process, right? They're like, and then you find out it's the feel good only fund, right? And it's like, I don't know I don't really think that that's like a really strong investment opportunity. There are absolutely undervalued, overlooked, untapped founders and fund managers that are out there and there are also fund managers and founders that are out there to your point that are just trying to build on the popularity of this particular moment in time and it kind of undercuts the whole idea that we're going for because a lot of investors are going to, LPs and allocators are going to invest in some of these funds maybe even first time LPs who are trying to say like this is my shot, I believe in this person because they showed me this really idealistic vision and then they're gonna have a bad experience and then they're going to, it's the same thing that happened in early impact, right? They're going to attribute the problem to the full asset class or the full demographic of founder instead of that they had a bad decision making process, right? And then I'll just maybe just really quickly just share perhaps a little factoid. I can't tell you how many fund managers I met in the year 2022 who said they were solving for the future of work. I mean, it's like the number of decks that we're about we're gonna solve, I'm like what do you, what specific angle do you have on the future of work? Is it future of income? And then now they're stuck because future of work is gonna be the elder out of the holy grail. And yeah, so Liz onto you. I know you have stories to share. Your turn. Yeah, I mean, I think there, I mean there always is a lot of noise in every market. I think what we really look for and one thing I get frustrated with is, you know that perception, right? And that, you know, impact investing in general people here, concessionary returns. And you're like, no, I'm seeking risk adjusted market rate returns, a nice mile. And then they hear race and they say, that's so fantastic, you're out of community responsibility or philanthropy. And I say, no, we sit in investment management or investing, you know, under the general investment account because when you start to bring in race, that's sort of a race, that's all they sort of think and then bring their own judgments to that. And that's one piece of the demographics for all the reasons I sort of listed of like we believe the best talent can come from anywhere where we know if our portfolio doesn't look like the US census we're missing that talent. But there's so much more that goes into a very thoughtful investment process, right? What is their differentiated thesis? What is the unique lens these founders bring to their background? How are they sourcing deals? How do they relate to entrepreneurs? What is their back office skills and portfolio management? What's the team they put around them? Are these, because we also want to seed the, you know, the financial institutions of the future. This isn't a one and done charity product. We are building a platform. We write our smallest check we can write is five million dollars. We write five and 10 million dollars into these fund managers and they go through the same operational due diligence process as anyone else at MassMachel whether you're a black rock coming in or something else you have to go through the same process. And so that's intimidating and for our sub 100 million dollar funds we invest in funds from 25 million to 250 million. And why that's a big range for a financial institution like me you're typically completely invisible if you're under 250 million because we're not gonna bother to write a check less than 25 million. So you go through this but we have a workbook with our ODD that goes to it and it's a laborious process. You can ask any of our first fund managers but at the end of it they sort of have a workbook that's so you beat SEC compliant for a hundred million dollar fund but it's a lot of things that aren't expensive to do. It's like what do you do when you're gonna wire cash? We're like, well I call my bank. Well no, you email a partner it's so much about cash control and compliance to make you really institutional ready but most institutions don't take the time. So we go deep with a very small handful of funds unfortunately that's our process. We probably work with four to six funds a year we actually close on because it's a very laborious process but for all the right reasons we're an insurance company we're 170 years old. We have a very high risk threshold but what's been good about this process is that if you get our stamp because it's our cash but we also leverage our reputation, right? Our social network, sometimes even our intellectual capital and all of those things to tackle this problem. So the going deep and demystifying the fact that we're just like giving away money is like no this is a very intentional process and how do you empower them for the future. That was a lot but my problem is or my downside of the gap is there aren't enough other LPs alongside us in the market. Despite the fact that hundred million dollar funds this size perform really well regardless despite the fact we could paper to the moon and back that diverse teams outperform the cash doesn't follow, right? And so I think that's our real frustration is finding more LPs to help finish these rounds and that's gotten worse in the economic environment recently. So to any allocators in the room who are curious we'd love to open source our process. We'll tell you how we do it. It's not a pipeline problem. It's a process opportunity and so we're just really excited to bring more folks along. And we're actually hosting an LP only power hour tonight trying to collaborate with more folks to think about this alongside if you're an LP or you're an allocator who are diverse manager curious go see my colleagues Tamash or Chris right there they'll help you get there. Fantastic quick follow up question Liz after you go through that long laborious process with the first time fund manager you make them institution ready. Are you seeing follow-ons from other institutions? I know you just said that was your gap but also like We are we're actually seeing a very good what we call sort of graduation rate because that's our goal and even something like a family office will add a zero to the end of the check because now they're going through if their mass means will compliant this kind of goes to a different echelon of readiness and credibility. So I love that. I love that. You see a million dollar check go to a $10 million check to help fill out a round. Exactly. That's awesome to see. As a reminder if you have questions for any of our incredible panelists here feel free to just turn your head around. David's in the back in the purple shirt. He's got cards and pencils he can pass them out he'll collect them then from you and bring them up to make sure we get a chance to oh we got lots of questions coming in. Fantastic. Keep keep writing your questions if you have them. Wonderful. One last question from me before we turn to these questions coming in from the audience. What are some unexpected challenges you faced while implementing your strategies? I'll just say quickly you know trust. Right. It sounds really obvious but there's a lot of distrust of financial institutions for good reasons and under allocated communities. And so a lot of communities particularly after you know the murder of George Floyd who started these funds or these initiatives and then didn't deliver right or didn't know how to or weren't thoughtful about how to service these kind of managers or CEOs. And so I think really walking the talk and building trust takes time takes intention takes purpose and it's not that we didn't know that but just how important that factor is. I double down on trust being essential to be able to go through the process of building a bottoms up approach to creating access to this industry. There's also something insidious that's kind of happening even at institutions that are making direct allocations and have been very forward about their commitment to investing in people of color. And that is that there will be newly somebody on their investment team that is like, this is the person who handles deals that are led by people of color. And then you end up with this like very strange problem where their ability to evaluate companies that are led by people of color is limited by the capacity of that one principle or that one senior associate. And anybody else at the firm, it's like a two-sided problem because anybody else at the firm who tries to evaluate these companies that person's like, hey, no, I'm the person that does diversity. And it's like, what? And then on the other side of the coin, the problem is that all of the entrepreneurs that are looking to actually engage with that firm, whatever firm it might be, are sort of shuttled over to that one person. You get this like extended timeline where all of a sudden their next call availability is like three months out and your round is closing in like six weeks. And you've got this terrible challenge and not one that it immediately would come to mind if you see like the public announcement. So, oh yeah, we're here, we're ready, we're making allocations, right? But it's a really big challenge that you see in the space. Yeah, I'd say, I mean, I have two things, one for top down, one for bottom up. I mean, when you're direct investing, I feel like sometimes the words impact investing can be so buzzwordy and they mean different things to different people, right? Just depending on who you're talking to and I've had folks tell me like, oh well, no one's competing with you guys, right? Like you know that, like you are the nonprofit of VC, which is not true at all considering we just raised $125 million traditional fund and as being stewards of capital, like I have the same metrics and benchmarks and I feel like I almost have to scrutinize a deal even more because I'm looking at positive outcome but I'm also looking at is this venture scalable? You've got extra that you have to do. Yeah, so just from that side, it's like how do you build a coalition of partners that actually believe in what you're doing and are on the same page as you and the cap tables that we're on and so I think from that side it's like really a push and pull between like what are we actually doing here and almost convincing other people of that goal and then just like a quick story on the other side, you know we just raised $125 million close last year and we raised on the I would say heels of George Floyd and Black Lives Matter, everything that happened the summer of 2020 and you know I think that was such a catalyst event for folks to start investing in and having mandates to invest in black emerging managers and folks of color and you know, as later as we got on in the process of raising, you know maybe our third close, fourth close, we had one of the LPs tell one of our partners like, oh well I don't have any more black money for you and she was like, well I'll take your green money, like this is the same type of fund that we're raising as everyone else and you can point to our impact report of Dustin mentioned like our investments are at the on par with funds of the same size and we're on our third fund. So imagine, I can just imagine when emerging managers are starting out, don't have that much of a track record like what an uphill climb that can be. I really want to build on what you just said and kind of dovetailing because as a managing partner, my job is to raise money and for fund one which I ended up raising in 2021, still writing that kind of George Floyd wave, it raised it in pretty short order because there was real demand. But again, that was a proof of concept fund one and as I said, we want to become an institution in this space and we feel very well positioned to become an institution. And then when I started talking to large capital allocators, endowments and very respected institutional investors who actually reached out because we had two separate full page articles in the Wall Street Journal about what we were trying to do to democratize access to capital, literally these conversations started in 2021 and around the spring of 2023, many of these conversations just stopped because after we went through the whole song and dance and everything, they just realized again that they needed to cut some asset allocations within the VC space and of course the diverse managers were the first to get cut and that was extremely frustrating because the only way we can advance to the next stage is if we get the imprimatur of these very large asset allocators. And so I feel like that was a moment and I'm just wondering if those people who just paid lip service to that moment, the racial reckoning and the movement for just kind of gender justice, if they will actually come back or if there was just something they needed to say as a public statement in that year in order to be on the quote unquote right side of history. Yeah, you saw a lot of those kind of ineffectual commitments where there was a commitment to say I'm going to develop this massive and particularly on the part of corporates, this massive commitment, I'm going to invest in all of these first time fund managers but there was no intention ever to have that go from first time managers to their second fund, to their third fund. That's one of the things that's been so exciting to see about mass mutuals approach and your ideas of making sure that as you're investing in these first time fund managers you're also following them for fund two because that fund two to fund three before you're no longer considered an emerging fund manager after fund four and you're still getting started. That's such a challenging spot. It's like the same challenge that you see for direct startups as they're going from kind of their friends, families and fools or really pre-seed kind of round right to their series A, that opportunity gap or the valley of death depending on your like level of optimism, right? It's the same challenge that you're seeing just at the fund level. That leads right into our first audience question that I'm going to get to and we're going to be picking and choosing so I apologize if we don't get to your question or to all of your questions because some of these cards have multiple questions on them, please keep turning in questions. If you have them, David's at the back he's got more cards, pencils, pens. This is difficult because you all just said this was a major challenge but how do so many funds that raised their first fund on the heels of George Floyd how do they raise their next fund when those allocating capital no longer care about diversity? Any tips or tricks? I don't know if this person is a fund manager but I'm just be curious. Anybody has thoughts? I think it's going to be difficult and I'm in it right now. So our fund one is doing very well from a multiple and invested capital perspective and our very first direct investment in a SUSU became a newly minted unicorn within six months, 15X return in six months doesn't happen every day but what I'm finding in conversations with LPs as I raise fund two they're asking me about distributions. Like we only close the fund in December 2021 and you already expect distributions in September 2023 and the bar is that high so it's just a very polite way of saying no and I accept that but I feel like there's a bit of a double standard still and it's really frustrating so unfortunately because there haven't been as many exits as we would have hoped or wanted or expected I think a lot of people are not going to be able to raise their second fund it's just the reality of what's going to happen. And unfortunately it's hitting at a market time where I think people are becoming more anxious for liquidity I'm hearing that across the board folks who are very committed and all in in 2020, 2021 are now saying I kind of need some of that cash back so that makes it a lot harder to be going back to the market anyone else have thoughts or advice other than it's just going to be really hard? I mean it is going to be really hard I think everyone's going to say that it's like obligatory to say it at this point, right? Raising a fund is always hard it will be harder Harder It is hard already And it's only going to get worse but like the opportunity that we have or that I've seen for fund managers is to talk about other metrics of success you talk about multiple and investment capital which is a great very standardized way of measuring success but how closely are you tracking your planned disbursement? How closely are you following that? How many deals are you seeing that are actually spectacular that you're able to get into? How much are you improving your process because one of the biggest things that I think LPs are looking for when they're looking at a fund too is what did you learn during your fund one? And how are you improving as a manager in order to be able to warrant a follow on investment? And while I know that many of those kinds of things are basic questions I think a lot of them are getting lost with the idea that like oh you're no longer interested in diversity that's fine you don't have to be interested in diversity you're interested in the metrics of my fund that show that I am a better and better and better investment for you I would just quickly say because it's specific advice just from a corporate perspective the liquidity issue and the macroeconomic environment is really real you know ventures and ventures sort of going to suffer and PE and general equity investments are you know they just have a higher capital charge when we look at sort of our whole portfolio and risk and how we evaluate it so they're just gonna be less dollars going into the asset class as a whole but I was really encouraged I'll reference another session in case people missed it yesterday of capital on the sidelines I was like you're gonna have to replace some of those LPs but what Fidelity Charitable is doing right they have 300,000 DAFs those donor advice funds they have five specific impact buckets they gave out 11 billion last year right and so looking for if you're impact aligned or what are those things some of those other capital sources that have are gonna become more crucial as you replace some of your LPs Can I just interject really quickly I can't imagine that mass mutual has liquidity issues is that a reality are we living in a world where mass mutual would have liquidity issues well no but it's a risk issue right it's liquidity you need to keep certain so how the insurance industry works right so we have we do we're large we have about 300 billion in market cap the vast majority of that almost 70% is in fixed income because this is insurance right we have to make sure we have liquidity to pay our policy holders there's also when you look at the commercial real estate this is any financial institution this isn't unique to us right you have to take into account all of that that's a stuck market there haven't been transactions in commercial real estate post COVID like there's so many other macro factors here right and where prices look at inflation you know look at the macro problem of anything any corporation or business has to consider that in their their foundational portfolio and what that looks like then from an insurance company we have a risk charge how we're rated by like Moody's and everyone else we have to keep these bands at certain percentages right and as valuations dropper are unknown like what's that a commercial office space worth downtown no one's selling any of them no one knows right now so you have to be extra conservative to make sure you've got your products less risky and you know this is a long horizon investment period to your case what's truck troubling about raising fund too is you're not harvesting till seven to 10 years out you're not having returned so how are you gonna do that raise so it's not a liquidity issue that is over simplification but the need for keeping more liquidity in uncertain times when there's so much volatility it's a volatility issue that the macro economic situation is demanding different balance exactly and before yeah and that's true for all anyone raising a fund right now but then of course it's even harder for diverse folks right because all asset allocators are rebalancing right now which means they have less liquidity they're not having a liquidity crisis they're responding to the macro economic situation by rebalancing which gives them less liquidity for this type of investment overall so very real challenges question to go to you next would anyone have thoughts on how to diversify LPs systematically how to address that we've talked about a lot of systematic approaches to investing in diverse GPs to training up the next generation but how do we think about systematically addressing the diversification of the LPs I maybe touched on that a little bit earlier in the conversation the approach to attracting diverse LPs certainly at the equity lines is very different from the approach to attracting what I'll just call traditional LPs and you know literally we're having to go on specific road shows and organize specific dinners and events that actually do as I said earlier have an educational component because we have to start with some of the very basic questions that were asked as to the risk that is associated with these kinds of investments what is the risk-reward ratio how have different investments in this space performed in the past because it's still very new to diverse managers this whole approach to VC there are very few of us in the game comparatively to the people who've been in the game for a very long time and so a lot of the work that we have to do is just explain the very very basics and it's a very very different conversation from again some of the very traditional investors who've built up so much wealth because they've understood pretty much how venture works and they've got to measure the game yeah, thanks, I love that okay somebody who's maybe a first time impact fund manager in the room I'm not sure but perhaps said you know how do we anybody have thoughts on dealing with this dilemma on the one hand you want to look the role keep it vanilla so that you can resonate with as many LPs as possible on the other hand you want to have a unique proposition and thesis that can differentiate you can anybody help that person you know how they might want to thread but the needle there I'll put it out there that one of the things that I've seen over the past couple of years has been this explosion of seed stage generalist funds that don't seem to have a thesis other than good vibes only which you know good job for you if you've made returns on a good vibes only investment strategy I don't know how you did it but that's especially during this time when LPs are paying more and more and more attention to the risks involved in investing in emerging managers or even any kind of manager being laser focused on why your thesis is going to outperform and how you actually implement on that thesis is so much better than coming in saying I'm gonna look everywhere and see the bright spots it's like no man you're not there's just too much deal flow that's out there there's no way for you to be able to effectively parse everything if you believe in your thesis that's going to come through so much more strongly and frankly when you're investing in a first-time fund manager a lot of LPs recognize that even though there's frequent data to show that first-time fund managers outperform a lot of times you realize that you're investing in a fund that is like the learning fund and they're going to create a better thesis over time you're really investing in the development of a firm not necessarily that specific first-time fund but at least that's been my perspective and what I've seen from LPs so far so other people who are actually allocating capital can talk about that much better well and maybe the summary there is that appearing vanilla to be appealing is a mirage it maybe gets you your second meeting or your third meeting with an allocator but you don't actually want a second meeting or a third meeting with an allocator who's not going to invest getting to know quickly is maybe even more important yes quickly so that you don't waste your time in rooms with people who aren't going to invest so being my advice would be being specific actually it maybe gets you more nose and so it doesn't feel as good but those nose are actually really really valuable so that the yeses really resonate yeah just like you would tell your founders you want aligned investors you want aligned allocators you want them to not just do a one and done in your first fund you want them to stick with you even you want them to open doors for you so as best you can be be authentic would be my recommendation and or multiple decks right you have a different deck for you know your audience you know which you know but as much as possible I just echo what everyone says know know your know your allocators yeah yeah and just to add to that just because we just raised I think for us it's like we could not raise based on our fund one and fund two you know like we had our impact report we had all our data there but we could not raise based on that and everyone wanted to know okay but what is special about you so we had like a Venn diagram within a Venn diagram you know just to get to what is our sweet spot right is that our gap closing thesis is that our like network effects like our summer associate programs like what is it about us and we really had to nail that down just to you know raise awesome thanks everyone come up and talk to us if you were that first time fund manager we're not quite done but you're welcome to clap at least I don't think we're done I think we have a couple more minutes is that correct yeah a couple more minutes awesome so two questions I'm going to weave together here and just would love to hear the audience answer I was in a conversation on this exact topic yesterday so I think it's a really timely one and my guess is many of us are having this conversation how are you defining diverse and there's some specific questions about racial or gender what about socioeconomic diversity what about neuro diversity someone wants to know why you may or may not include Asian as part of your diversity thesis when making investments so I know that can be sticky but I'd just be curious to hear now Claude you look like you want to answer I want to start with Claude I've spent so much time thinking about this because I'm an investor in the Fearless Fund I'm pretty sure some of you have heard about the attack on the Fearless Fund and their whole approach to investing specifically only in black women and giving grants only to black women and the way that I think about it now is I define diverse as underrepresented and I thought it through and that's kind of like how I see it because there's certain people who are just underrepresented people like myself we are just underrepresented and diversity just seems a little bit too broad because sometimes in my educational process when I'm on these road shows you know there's so much confusion between diversity, equity and inclusion and people ask what's the difference between DEI and CSR and ESG now I have to kind of break it down like that people just get confused and I feel like people can understand the concept of underrepresented because some people are just not in the room and you just have to look at these websites and they're playing vanilla right yeah I love that as a lens you know the conversation I was in yesterday somebody said well then let's count immigrants and I said well that sounds great I love that if somebody just moved here from the UK and comes from you know a high economic status you know maybe white man from the UK is he's an immigrant does that count he may not be underrepresented in terms of people who are being funded maybe is maybe isn't I actually haven't looked at the stats on UK founders but underrepresented I think is a great lens anybody else yeah I mean this is complicated with the new fearless fund what I'm particularly proud of is that I think the future is continuing this work we've built this work but there of course is a risk analysis that's going to happen as those laws change and we don't know where it's going to go but intentionally the roots of where this program was started was in response to the murder of George Floyd so we specifically on the fund side which I think is you know what most folks are into are investing in black Latino and indigenous led fund with they have to have also significant ownership so we look at two steps so if you look at 4% of GPs across the US are black, Latino or indigenous despite those three groups making up a third of the US population so we look for at least one third ownership in the GP of those three groups so it isn't excluding other groups but because that's the ownership in the census and then we also look by mandate or just by practice that their portfolio also looks like the US census and it's not hard and fast and every one of our eight funds far exceeds those goals I will say that but that's how we sort of do a quick honest filter of are you is this going to help us with our long term theory of change, of changing the ratio of who's funded sort of shortening the time period of a diverse fund managers raise getting more products and services out there and then as a life insurance company a 170 year old company that wants to be here for another 170 years are we seeding black, Latino and indigenous generational wealth and that commitment so that's really how we define diverse but it's part of what we're trying to achieve and then we want the differentiated thesis, the alpha all of those other things but that's sort of the baseline before you add on a follow up for Liz, would there be a reason I am putting you on the spot so I would normally say in casual conversation not to put you on the spot but I am putting you on the spot so directly, is there Asian fund managers according to this question say represent 0.3% of the whole asset management like population in the US would there be a reason that you didn't include specifically not that you would exclude them but that you didn't specifically include Asian it's really hard I have to turn down so many talented people people be excited you're swimming in deal flow except when you're dealing with capital inequity and capital inequity is not unique to black, Latinos or indigenous people there's Asian folks there's women of all races there's LGBTQ there's a lot of different ways to look at this and I think we have to we have to we have to we have to we have to we have to invest with a diversity lens matters and can have huge opportunity in returns and the pipeline exists so we started with black Americans we have been expanding in our programs we started with a hypothesis testing 15 million to address inequality and then another 100 million we announced in first quarter of this year this isn't a fly by night thing but we're building it slowly one one kind of thesis at a time so I would say and you know that's the situation of where we're starting it's not the limits of the opportunity of using diversity as a lens for investment awesome thank you this is a lot of top down this is really really exciting on the bottoms up how are we changing the future sort of makeup of investment decision makers in the country I mean the reason that we are thinking about diversity from a socioeconomic from a demographic from a gender perspective with the Sorenson Impact Institute and our VC apprenticeship program is because what we're looking to do is much like you just highlighted representation of fundamentally underrepresented people in investment decision making roles or at least on the pathway to getting there and so we are and have been based at the University of Utah for the past 12 years Utah's a really white place like we have to be very intentional about developing our relationships with not just schools that are focused demographically on other populations HBCUs, Hispanic serving institutions predominantly black institutions but we also have to be intentional about making sure that we are reaching kind of across the spectrum of socioeconomic diversity the University of Utah's MBA program is a top 10 public school MBA program that's awesome that's really really great it's also when you're looking at the field of venture capital allocators a lot of those people are going to very prestigious private universities a lot of those people are going to even higher tier top two or one public universities in the US where it intentionally looking to other organizations, other institutions of higher learning to build out the partnerships that we need to be able to pull more socioeconomic diversity into the conversation because there's a lot more that a poor white guy in a trailer park in common with another economically under advantaged person of any race then somebody has if they are a black Harvard graduate who is in the top 2% of earners has with somebody who shares the same sort of demographic, right at least in terms of the problems that affect the broadest swath of the population which is again what we're trying to build familiarity with on the investor side to understand these are issues these things that make life 90% better for 90% of people are shockingly the kinds of things where you can generate massive returns much better than making life 5% better for 5% of people and collectively Silicon Valley went oh that can't be true fantastic we are nearing the end of our session time here I've been so grateful for everybody as I understand it there's supposed to be 15 minutes for turnover is that right I actually haven't seen your cards we have 14 minutes left and then there's 15 minutes for turnover okay okay great yeah so just a couple minutes left I've got one more question here that I'm going to ask and then I'm going to release us Claude has an LP call he's got to take so we want to make sure that he's on time for that whoop whoop the rest of you I'm sure have things to get to also so our last question we're going to turn to says how are you refining your due diligence practices to keep in mind the barriers that are faced by diverse emerging managers how are you changing your processes maybe I'll start there because it's something that I've noticed a big change in our diligence process so as I said our fund one we raised it in 2021 and a lot of diligence was very much kind of virtual right because it was still kind of COVID times a little bit and now we are making that concerted effort to actually go and meet people where they are and actually understand really from a customer base from a real kind of thesis alignment perspective chemistry check whether it's actually happening and I feel like this face-to-face IRL interaction is actually going to help with our diligence when a lot of people are able to hide behind their Zoom screens for a while and it's interesting a lot of these distributed teams that we deal with we're also evaluating that as well to just really understand how people understand how they should relate to each other going forward versus just being isolated in these distributed teams and not actually dealing with the problems that never will come up so that's something that we check for people perspective. Yeah, that's interesting and that's a word out there to all the managers who are thinking they wanted to focus on the future of work your future GPs right your funds may be evaluating how you're thinking about the future of work and whether they think it can be successful right and that's awesome anyone else how you're changing your diligence process I mean we look at we you know are inspired by there's a lot of people have been doing this work a very long time well before corporate started coming into it right so level setting there and there's a you know something I personally like is due diligence 2.0 if you've ever Google that group it sort of really gives almost an instruction manual of how to think and we kind of in general also take a look twice sort of approach to both our direct investments and our fund investments and more less about diverse but emerging managers right because the thing is like where's their track record they don't have the track record what you do so alternatives of a lot of reference calls to founders right to different folks because if they can't attract great founders so it is a little more labor up front but we put the we put the time in the thing I'd love to see actually want to figure out is how do we get the introverts right because it's sort of this cruel irony of fundraising is a terrible experience right and it's also a very specific skill set it kind of reminds me of politicians you can be great at running but you're terrible at governing and so someone can be great at fundraising but does that mean they're going to be a good fund manager or the most you know sort of aggressive people who meet and follow up in those sorts of things so really thinking about or just their background where they're coming from the vernacular they might have an incredible lens or approach but no one ever said you should be a you know a GP and start a venture firm with your vision so how do we start to think and source for the brilliant introverts who just hate to fundraise right and what does that look like and how do we access them I don't have the answers but that's something where I'd really like to see us figure out and crack that code Liz I really wanted to riff quickly on what you said about reference calls as well because in the beginning we were very much as calling people who were suggested by the managers or the founders and now we kind of go out of our way to identify other people who were not suggested but we find neutral connections and back channel that way and that's been very useful because we've discovered a few things you know reference calls are great it's sort of like alternative credit scoring right if somebody doesn't have that track record how are you going to think creatively about what might be analogous to that track record and Liz I love what you said too about how do you find those brilliant introverts because fundraising is not really a representation of doing the job in the end and so how do we grade people not on their performance in a pitch but instead in there some things that make that you know that are really crucial to doing the day-to-day job of being that fund manager