We are thrilled to announce that we have just published the first episode of our new podcast, The Venture Equity Project Podcast. To listen, click the play button below. We encourage you to subscribe so you are notified when each new episode airs.
The Venture Equity Project Podcast is a storytelling platform where we bring on the world’s most incredible entrepreneurs, forward thinking academic, nonprofits, and venture partners to talk about how we can take steps to fix the complex problem of inequity in venture. Host Weilyn Chong will help us gain insight on everything from how we can increase access to capital for underrepresented entrepreneurs and tips on getting in front of VCs and angels.
In this first episode, Nicola Corzine, the Executive Director of the Nasdaq Entrepreneurial Center, lays the groundwork for Season 1 by detailing the ins and outs of the Venture Equity Project. From the project’s origin story to the importance of data in understanding the current state of capital flow to entrepreneurs of color, Nicola shines light on the Venture Equity Project’s short term and long term vision. The full transcript of the episode is below.
The Nasdaq Entrepreneurial Center is proudly hosting and producing this podcast. The Center is a non-profit that is building a better path for entrepreneurs worldwide by improving inclusion, access, and knowledge in entrepreneurship.
Weilyn Chong: Hello, and welcome back to the venture equity project podcast. Today, we are delighted and honored to be joined by Nicola here today to help us lay the foundations of the venture equity project. Nicola, thank you so much for joining us on the podcast today.
Nicola Corzine: It’s such an honor to be here. Thanks for having me.
WC: Let’s dive right in and give me in a nutshell: What is the Venture Equity Project?
NC: Yeah! The Venture Equity Project was born out of a realization that the flow of capital to our entrepreneurs of color has remained at that small single digit 1% number for far too long. And then as a result of that, everybody is losing, right? Our communities are losing. Innovation is not happening. We are not seeing diversity in solving the world’s greatest challenges because it’s not inclusive, currently. So the Venture Equity Project really has come together in a radical collaboration phase to say, “Well, let’s not have that be the forever state. How might we apply really radical thinking into system level change work that needs to be done in this domain?” And it’s not that people haven’t been trying it for a while. [The] unique aspect is [that] we’re bringing minds together across the globe – organizations and academic institutions, nonprofits, for-profit settings – that are all committed to realizing this change in our lifetime. And more importantly, in the next couple of years, rather than sort of seeding the same realization year after year, where statistics remain the same.
WC: 100%. What does that end goal look like for you? And what does that end mission or end reality look like?
NC: Hopefully the end reality is systemic racism no longer plagues access to capital for anyone, and this project’s no longer needed. I think where we know we’re heading towards is open data accessible environments, where people on the bell curve between “I don’t want to make a change” – and those are the hearts and minds that we’ve got a long commitment towards working with – but then there’s a lot of people that want to make change, but they don’t know how to, and they feel really limited in their scope of knowledge of what it takes to start to make incremental movement in the right direction here. So we want to see in two years’ time data environments that bring forward more awareness, more opportunities for emerging fund managers, for entrepreneurs of color domestically and internationally, and honestly [to] have measured a significant increase in the amount of interest and deal flow that’s happening across those domains.
WC: You mentioned a focus on data. What does data look like and what does data mean for the Venture Equity Project?
NC: Data is I think the critical backbone and foundation for in many ways, why pattern matching has continued to play in this industry it feels like, for so long. And it’s the worst of all worlds, because to get new opportunities forward where you see a new data set being realized means that you have to have had positive change of more funding flowing to entrepreneurs of color. But the reality is our current data environments – and we don’t believe this was ever done with intentionality – have really not even [properly tracked] demographic information and the nature of what we’re talking about.
There’s an incredible researcher that we’re inspired by out of UC Berkeley, [Carol Mimura], and Carol had to go out and look outside of a well-regarded industry norm and say, “What is the change in the norms when a woman is a founder of those companies? None of that data exists.” And what is awesome is when that was actually studied, they found that exits actually happened earlier, or the opportunity to exit was happening earlier.
So it’s, in the investor mindset, [in their] best interest to have a woman co-founder and the return profiles are more prominent – a lot of data is starting to emerge around that. So that’s an agenda. But we’re even 10 steps removed and looking at the entrepreneurs of color layer. And again, not that anyone is saying this was intentional, but the problem is by not being able to say, “This is in everyone’s best interest, it’s a science best interest, innovations best interest, your returns, best interest as a VC managing other people’s money, and your own interests in that equation, you have a vested interest in being more inclusive, and the data proves that.
There’s really no open-ended accessible data environment right now that allows us to track the longitudinal effect of inclusion and the returns when inclusion is prioritized. So we really hope to change that. We hope to learn from that. It’s not just about forcing data environments together, but we really believe data is allowing us to make better and more informed decisions in the best of ways, and is one way that we can make that stride towards good for, for the best of sakes.
WC: I love how the Venture Equity Project right now puts data at the forefront of solving that problem, because it is so much of a backbone when you talk to investors, LPs, and to have that data there and present and to have those numbers is a very powerful thing. To move us all the way back to when the venture equity project started, what inspired it and what were some pivot points that were key to the growth of the project?
NC: Well, I’m actually going to take it to the pre-chapter to this chapter.
Once upon a time, a few years ago, there was an incredible funder that came to us and said, “We really want to support a new portfolio where the work of prioritizing emerging fund managers can be realized. We know the center is committed to inclusive entrepreneurship. Would you be interested in being a part of this inaugural portfolio around this work?”
And we were one of five organizations that were brought into it. And our unique thesis, our unique hypothesis at the time [was]: With the exposure that we had to realizing limited partners have all gotten a critical aspect and role to play in this domain, if we could find mission aligned limited partners who by the very nature of their work cared about ensuring a greater flow of capital to entrepreneurs of color, then we would be able to put the right encouragement, the carrot at the front of the conversation with VCs, because the LPs, they would be hearing directly from their funders: “We care about this, this matters so much to us.”
It was a year-long study, and our priority was saying we were going to concentrate on institutional endowments, specifically academic institutional endowments, where there was that mission alignment at the forefront. And we learned a lot, as one always does when you’re in these sort of new spaces and these hard places, and the messiness of it was that we learned not all limited partners are of equal power in the dynamic.
And a lot of these limited partners have the very real struggles of trying to sustain themselves and get into the funds where they feel like they have no voice at the table other than hopes to get into the “top quartile funds.” The challenge in that environment is you realize there are so many layers and complexities, even around the LP domain, right?
You’ve got investment committees and their whole world that they need to manage their fiduciary responsibilities into. And then usually very limited models that can support an investment team within these limited partner environments that can go source or find new fund managers. And above all else, they are then restricted into realizing that a lot of emerging fund managers by the nature, again, of the challenge of that world, are raising smaller funds such that the limited partner cannot be a majority stakeholder in some of those small funds.
So it becomes this really complex, gnarly problem, but there was hope all of that. We absolutely validated care, passion and purpose behind those types of limited partners. They wanted to be able to make movement in this direction. They were curious to learn from others – thus, again, the criticality of open and accessible data networks and pure learning environments. And equally and critically, they said, “We want to know that there are others beside us who want this change so that we can really go at it in a collaborative nature.”
We also saw major change happening inside of family offices, and I know we’re not the only ones that have realized this, that the first movers may not have been the original environment that we were thinking of in the limited partner space. But family offices, especially ones where generational changes happening often are the ones that are saying,
“Yeah, we know there’s no rules as to how we evaluate a first time fund manager, but we care so much about this, that we’re going to figure it out and we’re going to do differently around evaluation metrics. And we’re going to think differently around experience. And we’re going to think differently around performance and the ways in which we build up a portfolio.” Not the easy answer, but really inspiring.
So we started to realize there were case studies that we could point to where positive change was being made. Great funds were being supported. Emerging fund managers were rising. All within a different spectrum of players than we’d originally identified.
So now fast forward to Chapter Two – our current story, if you will. And what I’ll tell you is this. We realized as a result of this portfolio experience that the only way change was going to happen within radical collaboration and also looking across different sector states. So part of the philosophy and thesis of what we’re doing is, how do we learn from other sectors who have also had to go ahead and deal with some of these very same issues? And a great example of that is in ESG, right?
So ESG, actually not that long ago, just maybe five to seven years ago, struggled with a lot of these same issues. People going, “Well, where’s the data to really prove that this is anything other than window dressing, or that there really is a return to be had here. Double, triple, [and] bottom line weren’t really on anyone’s lips at that time.
And then you get into the state of, like, all of those individuals were emerging managers of sorts. They didn’t have past portfolios. They didn’t have past track records yet. We all got beyond and saw how we could evaluate individuals behind these philosophies very differently. So if we can learn from where those types of alignments have happened, we can propel through some of these barriers that are persisting around the current state of venture and the effects that they’re trying to deal with and just uncertainties of this nature. And then equally the global representations. I would say the US market, especially in venture is of course a leading market, but not necessarily when it comes to looking across limited partners or fund formations or differentials of where policy, for example, has had a positive or a negative effect in driving change in this regard. So by having more of a historic output where we’re looking across other geographies for intelligence that can help us improve our odds of accomplishing what we’re hoping to accomplish here: One, hopefully we’ll avoid making those same mistakes that may have happened in the past. And two, we should be able to leapfrog ahead in the direction that we’re really wanting to. So that’s where this came from; the origin story was seeded a few years ago, the funder came back and said, “Everyone has made incredible incremental outcomes and learnings. Now, how do we catapult that to another level?” And we leaned in and said, “That sounds like an incredible opportunity. How could we not want to take that on and take it on with incredible partners too.
WC: For sure. And I think at the core of Chapter Two is a lot of it is banked on collaboration and making sure a lot of voices are heard and being the solution of the problem. How did this group of partners come together and how are the partners chosen?
NC: A little bit of luck, a little bit of design, a lot of opportunity… Sounds like entrepreneurship to the core.
The funder had brought together the original portfolio. Many of the organizations that we’re partnering with were present in that. So incredible organizations like the Institute for Entrepreneurial Leadership with Jill Johnson, Camelback Ventures with Aaron Walker, Capital Enterprise from the UK – these were part of the original grouping. And these were the individuals that when we heard them share what they’d learned and what more they wished for when it came to action oriented mindset shifts and skillset shifts, we were like, these are people that we would be so inspired to learn from over two years.
And we think we could make really radical changes and differentials because the cornerstone of the project is research. Non-profits are really great at trying to do research, but we really need academic institutions to guide us in intentions on how we do that. Well, the Center has been partnering for a while with [Penn State University’s Evidence-to-Impact Collaborative.] They actually manage all of our data infrastructure and are incredible partners in realizing what we would call the behavioral opportunity when entrepreneurship rises. We had some great researchers that were inspiring us across a number of places like the Transition Design Institute out of Carnegie Mellon.
We had, Stanford University, Fanny Li over there, who’s been working a lot on looking at inequalities and opportunities within crowdfunding and the side hustle, entrepreneurship vein. And so we thought looking at the on-ramps for where systemic racism was actually starting to propagate and making sure we were building up really a systems-level stakeholder group that could help us see around those corners in ways maybe that others hadn’t done in the past state was important.
And so I haven’t named everybody, but we have 10 organizations, about a third of them. are in what we call our policy domain. So these are individuals that are helping us think through advocacy, insights, perspectives, data needs – a policy that can help improve the systems that we’re talking about here for all of the stakeholders involved in the capital spectrum.
We have about a third that are involved in what we would call the practice or convening space. So these are organizations like the Center, whose job it is to understand, what are the barriers that are present for entrepreneurs of color and raising capital? How do we really prioritize and protect the lived experience of those entrepreneurs?
And then equally we’ve got about a third of our organizations that are focused on the research layer. So this is purely looking at not only academic research for the sake of academic research, but research that will drive action and insights and awareness into the policy and the practice pieces too.
WC: Something that I’m curious about is, so you have all of these different voices from different sectors and different perspectives. Is everyone always on the same page? What is it like navigating those conversations?
NC: The administration lens is making sure that the trains have all left the station. They’re heading where they need to have they’re doing the incredible work, but then we’re all also. Learning in a collaborative nature as we go. I think what happens a lot – and this isn’t a slight on philanthropy for a moment, but what can often happen in all organizational management, non-profits no diff – is that you get incredible leaders together, incredible organizations who are passionate and driven with a purpose, and we’re all so siloed in the nature of doing the work that we forget to pause and lift up and reflect, “Oh wow, this learning is happening across multiple organizations” to exponentially grow beyond those barriers that we may be facing as well.
WC: 100%. Switching gears slightly. I’d love to learn more about what makes the Venture Equity Project different from other projects out there. And then also, what work can we look forward from the Venture Equity Project? Moving forward?
NC: Great questions. Well, I would start on the former by saying that it is trying to bring together, bridge together, near-term interventions that are on the horizon.
A lot of the reason why it’s considered wicked problem territory is … the ecologies and the ways in which these challenges face the world are really gnarly. I recently went down a rabbit hole with, and, and it is my current little bit of a soapbox, that the model of the model of venture is broken.
Now that’s been around for a while, but the nature of the model of venture is such that it’s really hard to give a fair footing for emerging fund managers or limited partners who are trying to make positive change in this space, and so it’s almost like you need a different model. But then you go into the model of venture in general, and you’re like, “What would be the other emerging models…”
So you can just spin tirelessly in the models. Clearly the model is broken, and we are so committed to saying, “OK, how do we say in the next three years that if the model is broken, what can we do in those three years to start identifying, seeing other sectors, other spaces, other models that may give hope and opportunity for us to experiment, to see alternative models emerge?”
So rather than trying to find the perfect solution, we’re able to break down in this very specialized way through the stakeholder assessment that we’ve been in for the last six months and look at near term solutions that can offer hope for a future state where the problem no longer exists. So instead of jumping to the state of, like, perfection or nothing, this really is looking to make sure the progress is even being measured even when we are wrong, because the learnings at being wrong, we’ll identify and highlight what more is possible and where those possibilities are.
So I think that’s a little bit different. A lot of the time in this space, it’s like, we have the perfect program or we’re really looking in just this one area. We are the messy middle. We know what’s not working today. We know future state is, everything is perfect and entrepreneurship is equal for everyone. What are the interventions? The opportunities? The policy, the practices, the research and the data that can be realized in three years, right, that will start to show and to measure real-time change? So that’s one of our biggest differentiators, I would say.
WC: Wow. I just got goosebumps. It seems impossible to go from zero or where we are now to a perfect state. But to know that there’s people working to reach the next three years and make the next three years look different, and then the next three years look different, I think inspires a lot of hope within people, which is exciting. What are we looking forward to in the next year, next three years?
NC: Yes! So much to do, so little time; welcome to entrepreneurship 101. Again, I would say we have a long journey ahead of us, right?
So we are collaborating with new data sets, coming together in ways that haven’t been done today [with] internal and external partners. So if you are out there listening to this and you are wondering how you can contribute and you are an organizer of data of any kind, we would like to be able to connect and work with you. And it is only through the integration and the thoughtfulness of data that we can start to make more informed decisions as we’ve talked about.
Equally, we’re looking to really make sure that we have a lot of open convenings where again, prioritizing lived experience realizing through, from other individuals who have been on this journey in one way, shape or form, even if it is in another sector, how we can learn from them, how we can work with them, how we can connect with them more intentionally so that we’re not feeling like we are alone in this. As I often say, and I can kind of say this from the investor lens for a moment: Even though we’re all in the risk business, we’re all risk averse, the best way to address the risk worry inside of all investors is to show them how we’re able to take meaningful and measurable steps in a direction that then feels less scary and less friction. And the best way to do that is by seeing others that have taken those steps alongside us. And I think if we can do that intentionally through this program, great outcomes will occur.
And then the third area, as we’ve talked about, is policy. Really, how can we start to make sure that we are bringing forward the insights, the research, the data, the connections, and the opportunities to our policy makers who are sitting there going, “What can we be doing in this [space], and how can we help?”
Sometimes the answer is “nothing.” But it shouldn’t always be defaulted to “nothing.” And so we really want to be thoughtful [in] making sure that we are highlighting and showcasing the lived experience of our emerging fund managers [and] our entrepreneurs of color, and letting them see as well what more can be done in support of those outcomes of equitable entrepreneurship.
WC: Wow. I’m excited for the next three years. But as you said, that’s a lot of work in very little time. As we begin to wrap up the podcast. For our audience who are really excited and feel ignited by the change that the Venture Equity Project is making, how and where can they continue to follow this journey, and how and where can they help?
NC: Absolutely. Well, I’m going to start with the latter, and it’s a conversation that I’ve been having. I have two little boys at home, and we talk about this all the time.
We have more power than we think. And I’ll go back to ESG for a moment. ESG became, I believe, the biggest movement that has happened in recent days because it mattered to the individual. It mattered to the consumer. It mattered to us at a personal layer and we then prioritized the dollars that we spent in support of those brands, those companies, those services, those outcomes that we were drawn to because of our personal beliefs. In many ways, that’s no different here. In many ways, if you are an individual and you’re sitting there going, “I’m not an investor, or I’m not, I’m not writing checks. I’m not a limited partner. I’m curious about this space, but I don’t know what I can be doing” – just know that the decisions that you make, the dollars that you spend, the choices that you have all are meaningful and they matter. And they’re a signal in the market. At the end of the day, our hedge funds, our capital markets, are supported by consumers. It is capital in support of those individuals, not the other way around. So to that degree, just make sure that we are able to sort of see behind the curtain. Start asking those questions yourself. Ask others those questions. The emergence of questions can often help people have a really great conversation. It’s certainly changed the dynamics, I would say, at a gender layer, when we look at some of those efforts around the wealth gap issues.
Secondarily, to answer your question around where to stay tuned on the research, on the findings, on the insights, on the convenings, how you can get enrolled: Well, our site, the center.nasdaq.org is going to be a home and a host for all of this, along with all of our partners and collaborators who will also be hosting and housing this information. So we would encourage you to follow us on social, definitely jump in and see us online, sign up for our newsletter, where all of these releases will continue to be posted.
And of course, stay tuned to this podcast. How could I not, too, right?
WC: Well, thank you for that shout-out and thank you so much for joining us on the podcast today. Just so many awesome insights and a really good foundation for what the project is doing as we continue the rest of this podcast. It’s been my pleasure.
NC: Thanks so much for having me.