Allocations CEO & Founder Kingsley Advani, sat down with Olga Yermolenko to discuss her background as an entrepreneur and founder. Olga is a member of the Allocations Angels group and currently a Partner in Portfolia's Green & Sustainability Fund focused on investing in sustainable startups across energy, real estate, mobility, supply chain and CPG.
Tell us how you got started in investing.
My first job out of school was at a Hedge Fund with 3 partners, CEO and myself where we grew $15million to half a billion in 4 years. I got to witness the glory of the 2008 crisis from the comfort of a trading floor and realized I did not want to be in the public equities market so I switched over to the private equity side. I got to work at a few different funds including Insight venture partners which is a $90B growth stage fund here in NYC. After Insight, I wanted to get operating experience so I started a few different companies including a quantum computing company which is called Rigetti Quantum Computing. They actually just went public on Nasdaq a couple of months ago. I’ve been fortunate to have both the investing and operating experience.
Now, I wear a few different hats. I offer Venture as a service for family offices by helping family offices do direct deals. I focus on sourcing and diligencing attractive opportunities depending on what the clients are looking for. I also love platforms like Allocations that democratize access to venture. I am part of another one called Portfolia which is democratizing access to venture specifically for professional women. The platform is about 97% LPs who invest into women fund managers who then invest into diverse teams. We’re investigating some of the diversity issues that exist within the venture ecosystem. The fund which had 13 different funds across different thesis and the fund that I am a partner at right now is a sustainability focused fund.
Tell us more about going from entrepreneur to investor and what that was like.
I went from investor to entrepreneur back to investor. I think these 2 are completely inter-related. As an investor, it's important to have been in the entrepreneur space and have empathy for how difficult it is to get something from 0 to 1. Similarly in the entrepreneurial seat, it's important to have a long term investor perspective and be very strategic about the decisions you are making on a day to day basis.
We have a lot of family offices on the Allocations platform. Tell us about what trends you're seeing in the space.
I’ve had my practice for about 8 years and I was a bit early to the trend of family offices not wanting to pay the fees to participate in venture through VC funds so I was pretty early to the direct deal venture trends. I would say I have 3 types of investors I work with.
- One investor type is purely financially driven. The trend amongst them (up until about a month ago) has been into the pre- IPO type deals.
- I also work with strategic investors. These are folks that have an existing operating business and are looking for their venture portfolio to be an M&A pipeline for their existing business or have some sort of strategic angle.
- The third type of investor I work with is impact investors. These are folks that are looking for double bottom line opportunities and climate tech has been one of the big areas there.
We are in a shifting environment at the moment- we’re in the midst of a pretty significant correction- both in the public and private market. There has definitely been ‘foot to the break’ within my investor base in terms of allocating at this point and time. I do think generally that it's a positive trend because it's going to shake out some of the less attractive deals and concentrate capital that is solid.
For a family office- how do they think about due diligence when they are looking at a deep tech investment?
This is why I have diligence as a service offering for my clients. Family offices will oftentimes be reluctant to make a decision unless they feel like they have a significant enough understanding of the tech side of the deal and so I have a team of 20 different pHD level experts that I reach out to and do very technical diligence on behalf of family office clients. It is hard to generalize all family offices. There are some that are more comfortable making deep tech investments without necessarily having sufficient enough background. I am certainly of the school of thought that you want to be as cautious as possible.
Two months ago I did diligence on an AI based, no code platform. I had about 4 CTO level experts review that deal and it was unanimous that the product was not addressing a big enough problem that could be monetized. In that scenario the client was extremely happy because we saved them a significant amount of money they otherwise would have invested.
I am a big believer in the power of due diligence especially when it comes to deep tech opportunities.
You mentioned community before. How important is community to you as a fund manager and building your community?
Coming out of covid, we’re seeing a big trend around people coming together and wanting to be a part of different types of communities. I am also seeing a trend of a clash of culture and values such as the types of jobs that people are willing to take, the consumer decisions they are making and the investing choices they are making. It's a super exciting trend and I am part of various groups that are focused on impact investing or specialized areas that are aligned with interests and values.
Tell us more about some of the missions that Portfolia is focused on.
Portfolia was started by a woman named Trish Costello. Trish was the founder of the Kauffman Fellows Program so she understands venture at this very foundational level and she created a very scalable model at the intersection of crowdfunding and venture investing. Each fund is capped at $10M and we allocate it within 12-15 months. We have 5 partners who are working together to make 10-15 investments across different stages.
We’ve had different funds. The first fund she started out with was actually the first dedicated fem tech fund and that fund has performed very well. We’ve also had an active aging fund, a food ag fund, a Raising America fund and sustainability fund. We are looking for pre-seed to pre-IPO opportunities at the intersection of sustainability and energy, real estate, building materials, transportation, logistics, consumer fintech and so on. We’ve had a pretty broad mandate but we've built out a pipeline of about 150 different opportunities in the space and we see some very inspiring founders that are solving some of the more pressing problems today.
How does the market further empower diverse fund managers?
To throw out some statistics- only 2% of venture capital goes to women founders and only .2% goes to people of color. Very staggering stats.
On the fund manager side I believe less than 5% of fund managers are women.
So how do we change that?
I believe platforms like Portfolia are really addressing the inequities at every point in the value chain from LP to fund manager to the founder level.
One additional exciting thing about Portfolia is that their minimum check size is ten thousand dollars so it's very accessible. It's really solving the access issue to this asset class for 50% of the population.
What do you see as the future of tech given the current market conditions?
I think what we've seen in some of the other downturn periods is that's actually when some of the most promising startups and unicorns come out- everything from Airbnb to Uber started during a downturn. Again venture is a long term game. It's a 5-10 year timeline that we’re usually looking at. So the interim volatility to me is not terribly concerning and overall I think it's a positive sign that the valuations are shaking out and that is going to leave the more compelling and more solid companies and more sustainable companies to thrive.
I think there will be a lot of exciting new companies that we’ll see coming out in the next year or two.
How your investors are reacting to the current market conditions and how do you guide them through these more tumultuous times and get them to see opportunities?
I’ve definitely been getting a lot of interesting requests. For example, investors looking for some revenue generating old school businesses such as gas stations or laundromats - so i think those are becoming really attractive and people are seeing them as a bit of a downturn hedge. But again, I'm certainly bullish on the tech sector and innovation companies so I do think that we'll see a lot of exciting innovation coming out of this downturn. I think that the downturn is actually a very healthy rebalancing vis-a-vis the bubble-like environment we’ve seen the last couple of years.
What is your advice for first time investors?
I think it's important to give back so I do quite a bit of supporting first-time first-time managers and mentoring folks that are maybe a few steps behind me. I think one of the biggest pieces of advice that I’ve given is around finding ways to add value.
Whether it's for founders- connecting them in a meaningful way and understanding what their pain points are to see if you can leverage your network or your skill sets to help them is a really great way to build some of those relationships.
Similarly connecting with other investors, accelerator programs, really creating those pipelines and channels through which you’ll be able to share deal flow down the road. I definitely have a philosophy of giving and supporting others.
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