Transcript
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Unpack what it means to be a good storyteller
as a general partner.
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Give me the numbers in a quick and in effective
way that makes sense to me.
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Make things less complex.
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Make it easier for me to understand because I
may not be a health tech expert.
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Inspire me, both tell me where the opportunity
is, but ground me so that I know the risks that
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I'm taking.
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And then the last thing is, I think there's
something about the personal touch, right?
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Like why do you wanna be a GP?
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Why not work for a large private equity firm?
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What motivates you to start your own firm and
make this investment in this particular sector,
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in this particular region, etcetera?
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Like, what's unique about you?
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So how do you advise that your GPs invest their
time?
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So you wanna make sure that everybody's
aligned.
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You joined Visa Foundation roughly 4 years ago,
and you built a program from scratch.
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How do you go about building a program from a
foundation from scratch?
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It's been very exciting.
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So when I started, the endowment was invested
on only on public markets.
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As I said, the goal to bring me on board was to
think about how can we align a 100% of the
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endowment with the mission of the foundation
and naturally on the impact on the from an
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impact perspective, our private market
investments are the ones that squarely align
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with our mission to support entrepreneurs,
whether in emerging markets or in developed
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economies.
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So what we did is we started with with that
first, you know, like, challenge, which was how
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do we align it strategically with the mission?
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And as I mentioned to you, we're really focused
on women entrepreneurs.
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So by focusing on women entrepreneurs, we're
really thinking about how to invest in
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diversified managers and then are more likely
to invest in entrepreneurs.
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So that's kind of like at the at the macro
level.
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And then by region, because we also have, we
invest across 5 regions.
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The 5 b's are regions, essentially.
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Each region has nuances in terms of what
matters from an impact perspective.
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So we started at the macro level.
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We took additional lenses from a SEAM as well
as a sector perspective by region.
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And then lastly, obviously, we layered
everything from an investment perspective.
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So the building the investment policy, thinking
about the asset reallocation model, thinking
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about our target per asset class.
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I've done quite a lot of business in Sub
Saharan Africa.
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I took a Senegalese company, public on Nasdaq.
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I was involved in the team Nigeria Olympics
team with coach Mike Brown.
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Amazing.
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Talk to me about the the reason I mentioned
that is the these are just, like, very, very
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different worlds.
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How do you get smart in a new market quickly?
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And talk to me about how you go about entering
a new market and picking managers.
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Yeah.
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How do we get smart quickly?
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We live in a lot.
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Right?
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We think about kind of like both bottoms up and
top down approach of how do we learn.
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As I said, I think one of our superpower is our
colleagues on the ground as well and our co
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investors.
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So we tend to when we enter certain markets, we
wanna see both at the macro level, and that is
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work that my team is doing from a research
perspective, and then at the the micro level.
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And the micro level is I'm on the road.
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And when we're thinking about investing in a
fund managers, we're going and meeting with the
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companies that they're investing in so that I'm
seeing firsthand how they're approaching this
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diligence.
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What are some of these customers on the ground?
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So, like, one of the companies that, you know,
like, a firm of ours has has invested in
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Nigeria.
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They're digitizing small kiosk in Nigeria and
making them, you know, to kinda, like, enter
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the formal economy.
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Spending time around to, like, you know, like,
to understand where and what are some of their
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needs?
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What are some of their challenges?
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Is what they're offering is the right product
and solution?
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And then because we have this bird's eye view
where, obviously, we are not only investing in
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Nigeria, but we do similar work in in India and
in Colombia and and in Brazil, we can start
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thinking about market archetypes and what is
like, what works in certain markets and what
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can be replicated in others, knowing that, of
course, the local nuance is is really
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important.
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We're q4 2024, one of the most challenging
venture fundraising markets, really since 2001,
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even more challenging than 2,008.
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How does that go into your decision making?
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Are you somehow picking different managers
given the macro environment?
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We are bullish with our strategy of
diversifying across, I would say, maturity of
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fund managers.
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So as I'd shared earlier, we've done quite a
bit on the first time fund manager side.
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And then we've balanced that with more
established fund managers that have the track
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record that we can essentially analyse and feel
strong about.
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As you said, it's been a challenging year, but
we feel that the fund managers that we've been
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selecting, to date have been performing pretty
well and have the the conservatism out there in
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them to know how to navigate this up
environment.
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Where we think quite a bit is, I would say,
rethinking about their sizes and rethinking
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about their fundraising journey for those that
were in the fundraising journey.
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What are some best practices for emerging
managers navigating the current economic
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landscape?
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I would say a couple of things.
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They need to have the perseverance and the
agility in them to know how to manage this
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economic cycle and the fundraising journey.
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They need to really be smart, I would say, in
with their fundraising strategy.
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And this is, you know, like not rocket science,
right?
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Like, they need to have a few scenarios of the
fund sizes.
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What we've seen a lot, David, is a lot of fund
managers come to us and they say, we wanna
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raise a $100,000,000 fund because a
$100,000,000 fund is where institutional
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investors come in.
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While the reality is it's a first time fund
managers.
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Given the current environment, you probably
wanna rethink about the fund size and you
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probably wanna build your track record first,
and you probably wanna go and align with
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smaller ticket investors.
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So then the next, you know, like in a few
years, you can come back stronger and raise
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that funds.
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The advice that we're always giving early stage
fund emerging fund managers is to calibrate
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their fund size, rethink about their
fundraising strategy, really think hard about
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who their first LPs are around the table and
whether they can make connections to other LPs.
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We've been doing this a lot with our emerging
fund managers.
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And then just, you know, like, I mean, they
need to show professionalization of their firm.
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I put a lot of effort on thinking about not
just kind of like taking the right deals, but
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do you have the right back office in place to,
you know, to become institutional ready?
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A lot of GPs are meeting with LPs and trying to
prioritize which LPs are more likely to close
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into their fund.
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What are some leading indicators that an LP is
interested in the fund and is likely to invest?
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Maybe I'll speak about, you know, like myself
and what I see with some of, my closest LP
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peers.
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We never ask for data room access, if we're not
serious about it.
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So that's a good indicator.
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So that's one.
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The second piece is really getting quick in
answering where you would come at in the sense
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of, like, from a ticket size perspective,
because that helps, like, LPs know how much
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they can allocate to that particular fund or
not, or whether they have the room to make that
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particular investment.
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And then the 3rd piece is like, it's like kind
of like some of the sauce nuances, etcetera.
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Depending on who you speak to, are there other
folks that are coming on board?
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So like, if they come and speak to me, I
usually have a conversation with, or 2
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conversation with a fund manager, and then I
pass it on to my team or vice versa.
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If it is my team, somebody else on my team will
come and take a look at the opportunity.
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So those three ones come, you know, to mind as
good indicators.
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Why would you have initial interest in a fund
go into the data room and not really want to
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diligence more thoroughly?
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What are the most common reasons?
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A lot of LPs talk about, like, you know, like a
great presentation in terms of like, get to the
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punch line quickly.
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Tell me what is, you know, like how you
differentiate yourself from another fund in
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that particular sector or into that region.
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So just being very quick, simple language to
the point is critical.
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Understanding really early on what
differentiates you is one of the things that I
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look at, and then being able to articulate your
track record.
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And and I know that most of the times, emerging
front managers say, well, that's hard.
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Like, that's what I'm trying to do.
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I'm building the track record.
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But there are there are ways to show that you
have the experience to manage this fund, from,
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you know, like previous activity, from, you
know, like work that you've done in other
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firms, etcetera, that maybe it will be harder
to, you know, kinda like import exactly the
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track record, but, like, just give me that,
like, that understanding that you know how to
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do this.
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I said earlier about, like, the operations
front for me, making sure that there is a team
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and a bench, or at least, you know, like kind
of like an initial understanding of like, who
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will do this work?
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And where is the bench?
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And then like the back office is quite critical
as well.
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We see a lot of like first time fund managers,
they make it or break it on the back office
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side.
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You have a very privileged vantage point in
seeing 100 of emerging managers, fund 1, fund
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2, fund 3.
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Where's the opportunity today?
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We're all taking the bets on the fund 1s and
fund 2s.
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And with those, as we know, is we're hoping
that we're making the right choices because
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they can significantly outperform the more
established fund managers.
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And so it's both an art and science there.
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And you're, we're, as I said, we're bullish on
the first, 2nd and 3rd time fund managers on
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the venture side.
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And we're hoping that the choices that we've
made will match our lives.
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To your point, as you do this multiple times,
you start taking up on trends and
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opportunities.
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That make sense.
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And and what I mean by trends and
opportunities, like trends are like what a good
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first time fund manager looks like and what are
they doing to get to that next stage.
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What are some good predictors of a first time
fund manager that will be a success?
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I think 2 things.
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1st is it's both the money in and money out
piece, right, in the sense of like a fund
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manager that knows really well, their market
and what they're trying to, where they're
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trying to invest in, and can quickly and
effectively convince us, that that's where the
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market opportunity is from an investment
perspective.
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And then on the fundraising side, you could be
the the smartest, the most connected investor.
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But if you do not have a smart fundraising
strategy and you cannot lend the fund to at
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least, as we said, 2 2 thirds of what you were
thinking.
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That's challenging.
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And what we've seen is you need to have a
diversified fundraising strategy.
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You cannot be banging your head to get out,
like, institutional piece on your fund.
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You have to go after the family offices, you
have to go after the high net worth
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individuals, you have to go after, you know,
like, the folks that have been successful
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entrepreneurs, so they can, you know, like,
kind of, like, back your fund, but also make
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further connections for you.
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And then sometimes go for those organizations
that are taking more risk, like some of the
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foundations on the emerging fund manager side.
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And then if you can get 1 or 2 institutional
investors towards the end of the fundraising
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journey, that's great.
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And that's what we've seen with a few very
successful fund managers that we've backed.
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My mentor, Eric Anderson, when I was starting
my first startup said, never wait for
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investors.
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Always keep on executing.
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Always keep on achieving milestones, deploying
capital, getting founders that will back you
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and give you references.
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Never wait.
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Never rely on somebody else.
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Always take ownership of the process.
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That's exactly it.
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And that's what we say as well.
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Like you need to do, like, you need to get to a
first close.
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It might not be kind of like the traditional,
you need to get to a first close, at least 30
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per like 30% of the fund.
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Like, if you think it's gonna take longer to
get a couple of other larger ticket investors
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close the like, you know, make the first close,
making the investments, show how you do it.
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Like, I mean, as you know, a lot of LPs wanna
see the memos that you're writing, the IC
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discussion that you're having.
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They're gonna be, you know, like, interviewing
your team.
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They're gonna be interviewing, some of the
founders that you've backed.
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So be having all that buttoned up helps with
the fundraising challenge.
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Hey.
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We'll be right back after a word from our
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Come see the new standard in private fund
management at z.carta.comforward/10xpod.
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That's z.carta.comforward/10xpod.
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You've been investing in an endowment style for
a decade and a half.
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I don't wanna aid you.
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But, you've had quite a bit of experience in
the space.
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You've seen GPs that come in with a contrarian
thesis.
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How long does it take for LPs to, quote,
unquote, catch up to a GP thesis that ends up
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being correct?
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Naturally, endowment tend to be more risk
averse.
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Right?
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Does, because and especially endowments are
foundations.
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So it takes some time to kind of like catch up
on, as you said, contrarian thesis.
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However, again, I feel that all of us, whether
we are an LP or a fund manager, it's it's the
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power of storytelling.
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Like, there's been certain cases, and I've seen
it, you know, we've been convinced that the
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opportunity is there, and we've done it.
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I can't speak to others, but but endowments and
and and, you know, some they've they sometimes
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move flow and they need additional data points.
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The reason why I'm excited about the role that
I took at Visa Foundation is because the board
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of the foundation saw this opportunity to
actually push the envelope, be a little bit
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more catalytic and take some bets.
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So for us, we've, I think we've caught on a
little faster.
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You mentioned good storytelling.
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Unpack what it means to be a good storyteller
as a general partner.
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Give me the numbers in a quick and in effective
way that makes sense to me.
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Make things less complex.
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Make it easier for me to understand because I
may not be a health tech expert.
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Inspire me.
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Give me kind of like both tell me where the
opportunity is, but ground me so that that I
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know that the reset I'm taking again, kind of
like back to the I'm not losing money here.
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And then the last thing is, I think there's
something about the personal touch.
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Right?
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Like, why do you wanna be a GP?
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Why not work for a large private equity firm?
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Like, what motivates you to start your own firm
and make this investment in this particular
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sector, in this particular region, etcetera?
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Like, what what's unique about you?
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But start with a number.
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When I look at GPs or even startup
entrepreneurs are the best storyteller, they
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have this paradoxical mix of on the ground
blocking and tackling with the ability to sell
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a large vision.
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I think founders and GPs tend to have over
apply one of those 2.
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Either their entire stack is about, this is
what I'm gonna do next, and this is what I'm
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gonna do next, and I'm gonna hire this person.
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Or they say, you know, page 1 is this is a
$10,000,000,000,000 market.
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Yeah.
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And if we only get 0.1%, we'll be billionaires.
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Right.
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That's that's the other extreme.
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Yeah.
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In the end, OLPs have their own personalities.
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Right?
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Like, I mean, we all invest depending on, you
know, like our and and that's why it's
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important to have even tying it back to our
strategy, the reason why we made the decision
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to invest in what we call diverse fund managers
is because they bring, you know, like they
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bring different perspectives around the table
and look at problems in a different way.
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And so me as a around the table and look at
problems in a different way.
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And so me as an IATA, I'm sure I invest very
differently than somebody else that is a CIO in
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an endowment, in a foundation or a university.
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So a good storyteller gets back to understand
who your audience is as well.
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When you advise your GPs on where to focus
their resources, should they be spending more
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time with the true believers, the people that
resonate with their story?
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Or should they be being more persistent with
the people that may not believe on or may be on
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the fence?
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How do you advise that your GPs invest their
time?
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Yeah.
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I would say for, you know, like the first
effort are on the one that are the true
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believers, right?
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Like get them to sign the check so that you can
first the low hanging fruit, right?
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00:15:43,985 --> 00:15:47,184
Like, I mean, close the make the first close,
start making deals, 8.
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And then the second one, go through those that
need a little bit more, you know, like
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convincing.
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And then it's about why and who those folks
are, right?
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Like, because there's a lot out there that
might need more convincing, but you need to
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rank them, right?
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00:16:00,730 --> 00:16:04,910
Like in the sense of, are you thinking so we
see with a lot of like fund managers or GPs,
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they want LPs around the table that are aligned
with some of the exits and insights in
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00:16:10,585 --> 00:16:13,625
particular sectors that they're investing in
because they, they, they bring a different
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00:16:13,625 --> 00:16:14,105
perspective.
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00:16:14,105 --> 00:16:18,664
So think about the LPs, what will they bring to
you beyond just the check?
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And the check is important, but what networks,
what insights, what capabilities?
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LPs have a vested interest for the fund to be
successful.
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00:16:27,529 --> 00:16:33,049
So you wanna make sure that everybody is
aligned and incentivized in financial return of
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the fund.
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00:16:34,250 --> 00:16:37,049
There's a concept in psychology called
convincer mode.
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00:16:37,450 --> 00:16:41,314
Famously, advertisements, you have to see them
7 times before you Yeah.
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Into something.
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00:16:42,434 --> 00:16:43,495
That's actually a misnomer.
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00:16:43,554 --> 00:16:48,995
So 7 times seeing an advertisement 7 times
captures 98% of the population, but there's
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actually these people that are automatic
convincers.
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00:16:50,914 --> 00:16:54,294
They will actually watch watch an ad and
purchase right away.
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There's people that takes 2 or 3.
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00:16:56,410 --> 00:17:01,850
So rank ordering them based on their convincer
mode or how how many proof points do they have
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00:17:01,850 --> 00:17:02,429
to have.
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To use an extreme example, I don't think you
really have to sell Benchmark in Venture
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00:17:06,970 --> 00:17:07,529
Capital today.
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00:17:07,529 --> 00:17:09,150
I don't think you have to sell Sequoia.
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00:17:09,345 --> 00:17:13,904
You don't have to sell these top decile
founders fund because even the person that is
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00:17:13,904 --> 00:17:16,464
the most skeptical wants to invest in those
funds.
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00:17:16,464 --> 00:17:22,650
So it's all about rank ordering those LPs based
on how difficult or how much they resonate with
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your story from day 1.
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00:17:23,769 --> 00:17:27,289
And at the end of the day, what are you getting
out of them beyond the check, right?
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00:17:27,289 --> 00:17:31,450
Like, I mean, are do you like them as people to
advise you on the next fund?
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Are they going to make other connections for
you, in the future?
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00:17:35,365 --> 00:17:42,484
And, yeah, I think it boils down to the long
game as well, being smart about, you know,
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where do you sell me the first fund, but also
tell me, you know, where the opportunity is in
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00:17:46,884 --> 00:17:48,345
funds 3, 4, and 5.
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00:17:48,500 --> 00:17:52,100
In your 5th year as Head of Investments at Visa
Foundation, what surprised you the most about
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00:17:52,100 --> 00:17:52,740
your role?
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00:17:52,740 --> 00:17:59,559
I would say, the importance for me to, follow
the advice that I give to my own JPs.
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00:17:59,940 --> 00:18:03,865
And what I mean by that is be a good
storyteller, right?
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00:18:04,184 --> 00:18:10,984
Be able to articulate complex investment
concept to simple ones to my board, the board
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00:18:10,984 --> 00:18:14,684
of director of the Visa Foundation that are,
they're not investment professionals.
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00:18:14,904 --> 00:18:17,789
They do not have a background or expertise in
impact investing.
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00:18:17,789 --> 00:18:20,910
Where I came from, everybody was an investment
professional at Calvert.
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Everybody, you know, like, lived and breathed
impact investing.
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00:18:24,349 --> 00:18:28,109
When I showed up here, people had, you know,
simple questions about, you know, what is
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00:18:28,109 --> 00:18:29,950
impact investing and why should we do it?
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00:18:29,950 --> 00:18:33,684
So I would say, the importance of
communication, knowing your audience,
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00:18:33,684 --> 00:18:38,184
storytelling, and, getting the basics right, is
really critical.
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00:18:38,484 --> 00:18:43,285
And then that's why I was saying, get the
numbers up front to build your narrative.
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That's what I've been doing quite well to make
sure that the analytical part of our work is
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00:18:48,339 --> 00:18:53,940
understood and understood well so that we
influence and encourage others to, you know,
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00:18:53,940 --> 00:18:58,099
engage with Liza Foundation as colleagues, but
also the board to continue capitalizing the
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endowment.
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00:18:59,154 --> 00:19:02,134
A great analogy is a great presentation is like
an iceberg.
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00:19:02,595 --> 00:19:06,914
You have all the numbers, all the data, all the
experience, all the interviews on the bottom
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00:19:06,914 --> 00:19:07,075
side.
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00:19:07,075 --> 00:19:12,214
And the tip of it is this beautifully, colorful
presentation that everybody could flip through.
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00:19:12,515 --> 00:19:14,970
But but all the all the statements are deeply
rooted.
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Yeah.
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00:19:15,609 --> 00:19:18,250
And make sure you know the footnotes really
well.
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00:19:18,490 --> 00:19:22,490
On one of my first board meetings at Visa
Foundation, I remember exactly that.
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00:19:22,490 --> 00:19:27,049
We had done this great presentation, and then
our CEO at the time was just flipping through
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00:19:27,049 --> 00:19:31,994
the presentation, David, and he goes like, on
page 30 in the appendix, footnote 78, what
355
00:19:31,994 --> 00:19:33,194
exactly is that, Nayada?
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00:19:33,194 --> 00:19:34,234
How was it calculated?
357
00:19:34,234 --> 00:19:37,515
And I'm like, okay, let me tell you exactly how
it is.
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00:19:37,515 --> 00:19:38,234
Good question.
359
00:19:38,234 --> 00:19:42,015
But he was like, again, page 38, footnote 78.
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00:19:42,075 --> 00:19:43,910
And I'm like, let me see which one that is.
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00:19:43,910 --> 00:19:45,190
And of course, I had the backing.
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00:19:45,190 --> 00:19:49,269
But that was that is one of those moments where
also, like, as an LP, when you're asking your
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00:19:49,269 --> 00:19:50,869
GPs, exactly, give me this number.
364
00:19:50,869 --> 00:19:53,269
Those are some of the strict questions that you
wanna see.
365
00:19:53,269 --> 00:19:54,549
Do you have all the elements?
366
00:19:54,549 --> 00:19:55,910
Do you have all your data points?
367
00:19:55,910 --> 00:19:58,069
Are you prepared to answer these questions in
detail?
368
00:19:58,069 --> 00:19:59,884
But don't give me the detail upfront.
369
00:20:00,505 --> 00:20:03,565
A lot of that is also subconscious trust
building exercises.
370
00:20:03,785 --> 00:20:08,184
You know, they ask you about 3, 4 footnotes,
and then you you answer them, and then you're
371
00:20:08,184 --> 00:20:08,744
you're set.
372
00:20:08,904 --> 00:20:10,605
You you don't get to answer those often.
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00:20:11,630 --> 00:20:16,369
You've been, endowment style investing for,
over 15 years.
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00:20:16,430 --> 00:20:18,529
What do you wish you knew when you first
started?
375
00:20:18,590 --> 00:20:21,230
So the the endowment style investing, we've
done very traditional.
376
00:20:21,230 --> 00:20:21,390
Right?
377
00:20:21,390 --> 00:20:23,549
Like, we do about 60% to give you a
perspective.
378
00:20:23,549 --> 00:20:28,804
60% in public markets, 40% in private across
private debt, private equity, venture, and real
379
00:20:28,804 --> 00:20:30,184
assets and absolute return.
380
00:20:30,404 --> 00:20:34,404
I would say on the technical front, and
especially like sitting where I am in Visa
381
00:20:34,404 --> 00:20:40,085
Foundation, the absolute return asset class is
the one that, like, I feel I had to, you know,
382
00:20:40,085 --> 00:20:44,529
build my technical expertise on, because it
feels a little bit sometimes as like, you know,
383
00:20:44,529 --> 00:20:49,569
like the catchall for, investments that don't
fall between private equity or private debt or
384
00:20:49,569 --> 00:20:50,049
venture capital.
385
00:20:50,049 --> 00:20:53,429
And so like really being smart with that
particular asset class from a diversification,
386
00:20:53,569 --> 00:20:57,174
from a non correlation perspective was one of
the things that I, as an investment
387
00:20:57,174 --> 00:20:58,795
professional, had to get smarter on.
388
00:20:58,855 --> 00:21:04,154
And then on the, on the strategic side, I would
go back to the point, on communication,
389
00:21:04,695 --> 00:21:10,215
storytelling, setting the strategy and the
vision and motivating both the leadership, but
390
00:21:10,215 --> 00:21:16,500
also my team, and the importance of, you know,
just being a good storyteller versus, being a
391
00:21:16,500 --> 00:21:18,179
great investment professional.
392
00:21:18,179 --> 00:21:23,619
I had to move from, you know, writing the memos
myself and learning how to let go, which can be
393
00:21:23,619 --> 00:21:27,215
complicated for people like me that love the
numbers and the analysis.
394
00:21:28,475 --> 00:21:33,115
It's also humbling to see when somebody else
could do something as well or better than you.
395
00:21:33,115 --> 00:21:35,969
That's one of the scaling challenges.
396
00:21:36,509 --> 00:21:36,989
Yes.
397
00:21:36,989 --> 00:21:38,909
Certainly, my team does it much better.
398
00:21:38,909 --> 00:21:40,909
Well, Nayada, this has been really enjoyable.
399
00:21:40,909 --> 00:21:42,449
Appreciate you jumping on the podcast.
400
00:21:42,588 --> 00:21:43,709
Thank you so much, David.
401
00:21:43,949 --> 00:21:46,049
Likewise, and look forward to keeping in touch.
