Base10, a venture capital firm founded just four years ago, has 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 venture capital fund led by Blacks in the world, he says.
While this is noteworthy, what really interests us is how Ajao and the company’s co-founder, TJ Nahigian, use this distinction to their advantage without making diversity an express part of their own investment mandate. . Indeed, the company says it is – and always has been – only concerned with supporting startups that help automate “real economy” sectors, like food, retail, logistics. and fintech. Plus, he says, by simply focusing on the right companies and not approaching teams with some kind of “ideal” founder profile, he naturally fits into strong startups with very diverse teams.
May be. Something about his approach certainly seems to be working. Some of the bets Base10 has made include Brazilian fintech firm Nubank, which went public late last year. (Ajao wrote him an early personal check, but says Base10 was formed too late to invest in the company until it was already a growth-stage company.) Base10 is also a startup investor. as dynamic as Notion (now valued at $10 billion), Figma (valued at $10 billion), FTX (valued at $32 billion) and Handshake (valued at $3.5 billion) to name but a few. a handful of its 79 portfolio companies to date.
We spoke yesterday with Ajao, who helped co-found Madrid-based ridesharing company Cabify before getting into VC through Workday Ventures. We wanted to better understand how he and Nahigian – also an investor and former entrepreneur – have built what they have in such a short time, and how the turmoil in the market right now is impacting their outlook.
TC: You have long insisted that even if you are minority led, you are not minority driven. Does this still hold true?
AA: That remains true. One thing that’s very important to us is to show that if you just try to invest in the best companies and you try to do it with an open mind – which means you try to eliminate background biases, demographics and geography – you will end up with better financial performance and a likely more diversified portfolio. Other minority-led funds with the same approach see 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? The sex?
We talk about demographics and geography, ie gender, ethnicity and where you are from. At a higher level, more than half of the portfolio has a founder or co-founder who would be considered “underrepresented” in venture capital. The majority of the portfolio is outside of Silicon Valley or San Francisco.
How do you think these two pieces are related? You cast a wide net geographically. Is that why you think your founder’s makeup is more diverse or is there more intent involved?
We invest in Africa, we invest in Latin America, we invest in the Midwest. But the one geography with the most investment is the Bay Area, where we all live, and even in the Bay Area we have a higher percentage of businesses 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 as we had to replace in-person meetings [with Zoom calls] was that when we had a founder introducing the whole band, they would often say, “Oh, wow, you look different.” I think it has an impact.
When it comes to Latin America, SoftBank has done so much to support the region, including, in some cases, scoring its own investments in companies there. Are there concerns about silver drying up as SoftBank slows its roll, or if enough other investors have gone down that it doesn’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 made these deals to several Silicon Valley VCs that wouldn’t touch them. At the time, partnerships didn’t want to invest in businesses outside of the Bay Area – that was seen as a downside. It was, “We’ll write a term sheet if you agree to move to the Bay Area.” Now, over the past 18 months, I’ve had emails and calls from a number of these partners who were like, “Hey, we’re going to Mexico”, “We’re going to Colombia – who should- meet us there?” ‘
I don’t think and never thought the story was only about SoftBank. I think [former SoftBank exec] Marcello [Claure] and his team did was quite commendable. They really shed light on the ecosystem and what others were missing. But I think enough people see the light. [In the meantime] what i like is that actually you don’t see a lot of general partners in the venture capital firms in the valley that have experience in latin america, and the reason i like that is is because it gives us an advantage. [Laughs.]
Sequoia’s Doug Leone suggested recently that startups should be prepared that some of the money lying around will dry up as market turbulence undermines investor confidence. In the meantime, we are already beginning to see layoffs, raids, implosions. How do you feel about this moment in time?
If you look at the amount of money raised by venture capital and recorded over the last eight quarters — I think it’s been at an all-time high every quarter — that money has to go somewhere. The other thing I will say is that over the past two years, virtually every LP has seen record amounts of cash distributions from venture capital funds.
I am not a macro-economist. I don’t know if we are about to enter a recession. I just think back to 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, 10 years ago if you were doing a business in Spain or Colombia, good luck. And Nigeria? I mean, that was a crazy speech. Now I think that cat is out of the bag.