VC

One of the largest Black-Owned Venture Capital Firms just doubled in size. Two years after closing their debut fund of $150 million, Base10 co-founders Adeyemi Ajao and TJ Nahigian are back with a $250 million investment fund and a sense of vindication for their thesis of investing in startups making automation for the people.

For Ajao, an immigrant who grew up in Nigeria and Spain before moving to the U.S., the new fund is a confirmation that even without having an explicit focus on minority investments, it’s possible to create a portfolio led by a diverse mix of founders. Indeed, roughly 60% of the firm’s investments have been into companies led or co-led by women or minority founders.

Part of the firm’s diversity simply comes from the geographic diversification of the portfolio, said Ajao. “We like to invest in Latin America [and] we like to invest outside of Silicon Valley… We have always had the knack of look where others are not looking.”

And as part of that commitment, the firm is making a diversity pledge, including doubling-down on a commitment to diversity through its investment process, hiring practices and bias training; and a commitment of 1% of the firm’s profits from its management company and another 1% commitment of its carried interest to support organizations fighting for inclusion and racial equality.

Ajao and Nahigian have already enlisted firms like Precursor Ventures, Illumen Capital, and Plexo Capital in the new commitment.

Drawing on Ajao’s connections in the Spanish and Latin American community of entrepreneurs has meant that Base10 already has a geographically and racially diverse portfolio. Latin American companies account for about five of the firm’s 28 publicly listed portfolio companies, with other portfolio companies coming from the Netherlands and Germany.

Ajao and Nehigian have also spread the wealth pretty broadly across the U.S., with companies in Atlanta, Austin, Los Angeles, Stamford, Connecticut and Seattle, in addition to the traditional startup hub of San Francisco.

At Base10, the typical check size will remain in the $500,000 to $5 million range and the focus remains on experienced founders in industries as diverse as agriculture, construction, waste management, shipping and logistics.

Investments include Cottage, which is building adjacent dwelling units for the California market; Faber, which provides staffing for commercial construction; the Mexico City-based digital freight forwarder, NowPorts; birth-control delivery startup The Pill Club; on-demand staffing company Wonolo and TokenSoft, a platform for compliant token sales.

The new capital is a huge vote of confidence in both Nahigian, a Los Angeles native who spent years as an investor at Summit Partners, Accel and Coatue Management before founding the mobile job platform, Jobr; and Ajao, who only began working in venture as a corporate investor with Workday Ventures.

Previously, the serial entrepreneur launched several companies, including Identified, which was sold to Workday, and Tuenti, which Telefonica acquired for $100 million back in 2010. Ajao also has the distinction of co-founding Cabify, which raised at a $1.4 billion valuation back in 2018.

And he was Nahigian’s first investor in Jobr. The pair stayed in touch, discussed startups and potential deals, and ultimately decided to go into business together back when the firm was first getting off the ground.

These days, Ajao believes the public’s fears of automation coming for people’s jobs have been replaced with a realization that automation is “essential to survival for millions of people and small and medium businesses” looking to stay afloat amid the wave of economic shocks caused by the COVID-19 pandemic.

“Moreover, with issues of racial, economic, and gender inequality front and center, it is evident today more than ever that we have a collective responsibility to focus on urgently solving problems that are actually important for 99% of people,” Ajao wrote in a blog post announcing the new Base10 fund.

As the co-founder of what is one of the largest Black-led venture funds, with $400 million in assets under management, Ajao is taking this moment to situate his fund in a place that supports the development of technology for the 99%.

Examples of portfolio companies stepping in to solve real business problems abound, writes Ajao in his blog post, from a family-owned restaurant in San Francisco using Virtual Kitchen Company to transition its operations to a full-service delivery model; to restaurants across the Southeast using PopMenu. There’re also newer portfolio company investments like AMI, a Salesforce-style software platform for direct marketers.

As employers responded to the economic slowdown caused by the COVID-19 epidemic by slashing jobs, many laid-off workers turned to direct sales to support their families, Ajao said. Tools like AMI are helping these stay-at-home entrepreneurs continue to make money as their main source of income.

New investments in the firm’s second fund include companies like Wise, which gives online storefronts and gig economy workers a way to set up bank accounts online easily; Mimic, which is building a distributed kitchen network for Brazil; and Lana, the financial management service for gig workers in Latin America.

These new deals illustrate the firm’s belief that “the tech industry’s collective responsibility [is] to focus on the problems that affect 99% of people, and to work in tandem with communities, governments, and existing Real Economy companies to solve these problems.”

Ultimately, Ajao and Nahigian are attributing their success to what amounts to the old (and overused) investment cliche that investors go where opportunities are going to be.

“If the VC industry as a whole is overlooking minorities, you can generate alpha by simply taking steps to ensure that you don’t have this same blind spot,” Ajao writes.

Source: Tech Crunch