Opportunities for Entrepreneurs to Take a Seat at the Wealth Table
The majority of founders I meet are building solutions to improve our lives and protect our planet. I wish I could fund each one. I wish our society would move faster to protect our planet and accept the demographic changes that have already occurred. I’m frustrated with just wishing, because wishing requires that the folks in power buy into my vision of the future. So often they don’t, or maybe they do, but we have different priorities. Maybe it’s time to add flair to the system. Working within existing structures seems safer. However, when I hear a person in power say, “Change takes time,” or when I watch a person in power take incremental steps to change, then it’s clear the status quo is acceptable. Progress certainly takes time, but there are ways to accelerate the time it takes to get from point A to point B.
My objective is to increase the number of women and minority-owned asset management firms. The percentage of women and minority-owned fund managers in Venture Capital is 6.2% and 4.0%. The percentage of assets women and minority-owned fund managers oversee is 3.4% and 3.8%. These scary low figures come from the Knight Foundation’s Diversifying Investments study, which also reports that a high percentage of women (29.4%) and minority (34.1%) owned funds achieve top-quartile returns. The women and minority-owned fund managers I know are all highfliers. Consider Noramay and me as an example. We have six university degrees between us from top universities, e.g., MIT, UC Berkeley, USC.
Noramay Cadena and I recently worked with Emanuel Pleitez, Jessica Herrera and other Hispanic Heritage Foundation staff on programming for their 6thAnnual Investor Forum. Our goal was to showcase talented minority-owned asset managers and get them capital commitments from Limited Partner investors. At the forum, eleven Latinx managers pitched their venture capital funds to Limited Partners that manage billions of dollars and collectively hold over a trillion dollars in assets. Seven of the eleven presenters were women, and a high percentage of them had multiple technical and business graduate degrees. More than 70% percent had raised at least one fund, and many of their funds are on track to reach upper quartile performance. Our lineup offered a comprehensive selection of managers investing in cross-border startups, frontier tech, food tech, immigrant founders, underrepresented founders, artificial intelligence, enterprise IT, consumer and more. One manager was an early investor in Beyond Meat, the most successful IPO in 2019 as of this writing. I was incredibly proud to stand with these managers, and I’m optimistic that our efforts with HHF and on other ongoing projects will translate into investment from Limited Partners.
Rosa Rios, Treasurer of the United States during President Barack Obama’s administration, closed out the Investor Forum and set my soul on fire with her speech. She shared a critical message: While it is not fun to have courage, increasing representation in wealth management necessitates deliberate action. She had a clear and compelling call to action for all in that room, and many leaders in that room have already stepped up to pave the way forward. Other courageous champions are prioritizing and advocating to increase the number of women and minorities in asset management. Their support is critical to progress in empowering women and breaking barriers. However, getting to the percentages previously mentioned has taken over a decade. That is way too long, given the top-notch talent that is ready and able to perform at the highest levels.
Beyond inclusivity, I think about our nation’s ability to lead in critical areas such as quantum computing. We should be following the example of other countries that are ahead of us in taking action on climate change. As a VC, I create wealth by investing in radical founders that are on a mission to make our world better. Embracing change thoughtfully more often than not leads to prosperity for all, so let’s go!
knight foundation report: diversifying investments: a study of ownership diversity and performance in the asset management industry
About the author: Carmen Palafox, a focused Venture Capitalist (VC) is a partner at MiLA Capital, a seed stage venture fund that invests in hardware startups across industries including Food and AgTech, Cleantech and New Materials, Biotech and Medical Devices, Advanced Manufacturing and Mobility and Aerospace. Her team has deep expertise in manufacturing, supply chain and asset management. Carmen has an MBA from Berkeley-Haas, an MA in sports management from USF and a BA in economics from USC.