By Q & A with EC Alumna Julianne Zimmerman
Congratulations on the creation of your new fund. How is it going?
Thank you! Like any start-up, it has required a protracted effort to launch, and my partner David Matias and I have been grateful for the generous and thoughtful feedback we have received from many people in the Presidio community and beyond.
What can you tell us about the fund's focus? Would you call it an "impact investing" fund?
Vodia Ventures Fund I (VVFI) is structured as a pure seed vehicle. Our focus is early-stage companies with compelling business models framed to address one of the major challenges of this century: clean air, water, and energy; food security; public health; etc. As Presidians recognize, these are all large, poorly addressed global issues with increasing economic value over time. David and I believe that as a group, companies which offer strategically sound, market-grounded commercial value propositions in response to those challenges will achieve financial success and also enjoy expanding — rather than contracting — market opportunities. They also seem to have much less access to capital than companies with "conventional" business models, and so we see an opportunity to make relatively uncontested seed capital placements. The rationale is an organic outgrowth of the work I have been doing for the past decade or so, and I am thrilled to be pursuing it.
We don't use "impact investing" or "social investing" or other widely used terms because we've found that, like "sustainability," those terms can be freighted with all kinds of unintended or unanticipated connotations, depending on the audience and context. We initially experimented with the phrase "societal good" but we found that was problematic as well. I think that language remains a very real challenge, not only for this fund, but for many people working to re-imagine deeply entrenched preconceptions about what constitutes real value creation.
You know, there was really no single epiphany. It was an organic process. David and I had been conversing for more than a year about our respective experiences and perspectives, and we found that we saw lots of the same problems, but we also both saw opportunity as well. Concurrent with that conversation, David was looking for ways to expand the investment opportunities available to his clients, and I was seeing an increasing number of start-up companies with well-formulated business models designed to deliver concrete value propositions in response to steepening "downward societal trends" (that term was coined by a friend of ours). Last spring we started exploring how we might formulate a seed fund to invest in companies counteracting those downward societal trends, and over six months or so it became clear to us that this was exactly what we both wanted to do, and that it made a lot of sense for us to do it together.
I imagine your fund concept has undergone a pivot or two. Has your concept for the fund evolved at all since you started?
It has all been evolution! One major pivot came in response to investor feedback on the fund structure. When we started, we expected that many investors would have diminished appetite for risk, and so we designed the fund around a hybrid model that would employ a variety of investment vehicles to reduce overall risk. In that model, the seed investments would be a portion of the overall fund — in principle, it was kind of like a mini hedge fund. We were really amazed by the response we received: again and again, we heard back that prospective fund investors wanted access to a pure seed fund, and we were delighted to oblige.
Any big insights so far about investor appetite in these strange financial times?
I don't know that I can claim any big, generalizable insights, either on investors or on the times. Our insights have been very targeted to a fairly narrow subset of investors and investment opportunities. That said, I have been profoundly encouraged by the enthusiasm we have encountered. Naturally our fund is not a fit for everyone, but the majority of prospective investors we have approached have responded enthusiastically. Since all of our investors are individuals and family offices, the opportunity to invest in a seed fund is a fairly novel proposition in its own right. And many of them tell us that the fund's investment thesis resonates strongly with their values and desire to create a real legacy for their children and grandchildren.
On the other side of the table, of the companies we have been actively tracking in preparation for commencing due diligence, all have expressed a preferential desire to work with the fund because of our investment perspective. We just completed our first transaction, and the founder was very proud to be our first deal. As word of our launch has started to disseminate, other founder teams have started reaching out to us and citing our investment thesis as a strong draw to work with us.
Taking those narrow observations together, I would say that there is evidence of some investor appetite for unconventional investments, and equally importantly, some founder appetite for unconventional investor perspectives. I find both deeply heartening.
What's the thing that has surprised you the most about the experience so far?
Maybe I'm too cynical, but the most surprising thing has been the positive response we have received! I expected to encounter a lot more rejection, and I'm sure there's plenty of that to come. So far, however, it feels to us that there is real pull, and that a moment has come for funds like this one.
Any other projects you're working on that we should be looking out for?
Well, I hope that the companies the fund invests in will become big news! In the nearer term, I'm also working to finish a book on entrepreneurship that I've been working on for more than three years. I can't wait to announce that it is finally in print — look for that later this year. Both the fund and the book are outgrowths of my love of the entrepreneurial community, and my conviction that new solutions are always possible.
What advice would you give current Presidio students interested in starting a fund?
That's a tough question. I'd feel a lot more confident answering that question a few years from now. But from where I stand today, I guess I would advise fellow Presidians to approach creating a new fund as diligently as launching any other start-up: figure out the value proposition, differentiation, demand, opportunity, etc. And definitely find a great attorney you trust and feel good about working with, because you will spend a lot of time with him or her! Most of all, I would advise anyone founding anything to go out and have lots of open conversations with prospective partners and customers, ask loads of questions, and refine continuously as you go along. Of course, seek out other Presidians, myself included. You never know: we might end up doing some great work together. Good luck!
Julianne Zimmerman is a graduate of the executive certificate program. She is an avid member and supporter of the entrepreneurial community, with over twenty years of experience guiding technology-based companies to deliver novel value propositions in the US and abroad. She has provided strategic guidance to clients in diverse sectors, including medical devices, telecom, transaction services, education, mobile diagnostics, and defense. She currently serves on the advisory boards of Resolute Marine Energy and Flocktory. View her profile on LinkedIn.
I am excited to highlight Mary Solecki as our October featured alum. Mary recently co-authored the Advanced Biofuel Market Report...
Wangari Maathai. Katniss Everdeen. Buffy the Vampire Slayer. There are many different types of heroes, but it is generally agreed...