Sarah Kunst, Managing Director of Cleo Capital, Is A True Trailblazer #WCW
Sarah Kunst, managing director of Cleo Capital, is an investor and entrepreneur who has worked at Apple, Red Bull, Chanel & Mohr Davidow Ventures. In addition to founding Proday, a startup backed by the L.A. Dodgers, she has served as a senior advisor at Bumble focusing on their corporate VC arm Bumble Fund and on the board of the Michigan State University Foundation endowment.
After graduating from Michigan State University and starting her career in advertising, Sarah joined Sequoia Capital as a scout. She made the jarring realization that women were significantly underrepresented in the scout program and knew that there was an opportunity to empower female founders. After graduating and working as a startup exec, founder and VC, Sarah founded Cleo Capital in 2018 with the mission to fund pre-seed businesses. Throughout her career, she has fiercely advocated for diverse founders, investors, and operators. When interviewed by TechCrunch last month, she boldly shared, “The way to find, hire and fund black people in the tech world is the same as finding, hiring and funding any other group. You build relationships with people in that group, you seek out thought leaders from the community and learn from them […] It’s not about tokenizing one person or donating to a one time effort or writing it off as a pipeline problem.”
In this interview, Sarah shares what it was like to start her own firm, why the venture capital industry needs to change, and advice on how to break into VC.
This interview has been condensed and edited for clarity.
Aleeza Hashmi: What was the fundraising process like? What motivated you to start the Chrysalis fellowship program?
Sarah Kunst: Fundraising for a debut VC fund is incredibly hard. Fundraising as a Black woman is infinitely harder. My $3.5M fund was the second largest first-time fund by a Black woman VC in America…ever. Contrast that to the largest debut fund by a white man, clocking in at $1.3B, and you start to understand how big the chasm is. I had the support of amazing limited partners including some of the best venture funds and most successful CEOs in our industry and it was still a massive undertaking. My best advice to anyone starting that journey is to plan to take 300 meetings at minimum and hear far more ‘no’s than ever before and have a game plan for supporting yourself financially. It’s normal to go 12–18 months without a paycheck while fundraising.
In March 2020, as Covid was shutting down the economy and startups started laying people off, I decided that simply saying downturns are a great time to build a company wasn’t enough and that Cleo needed to roll up our sleeves and help make those new companies happen. Chrysalis was the result, we had hundreds of applications, over 100 people join the fellowship, and in 6 weeks, they came together to meet each other, share ideas. and collectively started working on over 20 ideas. Some have already launched. We’re so proud of the work these people did and we were honored to be able to support them in their next step.
Fundraising for a debut VC fund is incredibly hard. Fundraising as a Black woman is infinitely harder. My $3.5M fund was the second largest first time fund by a Black woman VC in America…ever. Contrast that to the largest debut fund by a white man, clocking in at $1.3B, and you start to understand how big the chasm is.
Aleeza: How do you believe that we can hold the venture capital industry accountable for its statements to “support and diversify”?
Sarah: Venture capital is an industry where we rate ourselves based on outcomes, so this area is no different. The question funds need to ask themselves is simple. How many Black and Hispanic founders have they funded and investors have they hired as of Jan 1, 2020? 2021? 2022? Most funds only hire a few people a year and make fewer than a dozen investments annually. These aren’t hard numbers to measure, there is a surplus of talent, the question we will answer in coming years is if there is any real commitment towards change. Given that we know diversity drives better returns, I hope my peers embrace this long-overdue change.
Aleeza: What are short-term and long-term action items that all VCs should do to meaningfully diversify their fund?
Sarah: The easiest thing has already been done by most funds and VCs: say loudly and unequivocally that Black Lives Matter. That’s table stakes and many have already done that and donated to causes affirming that. Now the real work begins. I’ve been heartened to see many funds step up to increase the number of Black and Hispanic people in their networks, from scout programs to events networks. That’s a fine step to widen the funnel, but the real and meaningful metric is where their capital goes. A quote I love is, “For where your treasure is, there will your heart be also.” Will VCs put their treasure — their hiring and investing — where they’ve said their hearts are? Without that, the small moves towards seeming more diverse don’t add up to much.
Aleeza: How should firms approach recruiting underrepresented people of color?
Sarah: The great news is that there is a massive backlog of amazing Black and Hispanic talent in our industry who are beyond highly qualified, networked, and trained. Make the hiring pipeline more diverse and those people will shoot to the top of your short lists. This isn’t the time for a lazy attempt at diversifying your pool with one “Rooney Rule’d” candidate. We know that if there are not multiple underrepresented candidates, there’s almost no chance you’ll end up choosing someone who isn’t the status quo at your fund. If your recruiters and hiring managers feel comfortable presenting a slate of candidates for your next open role that doesn’t include multiple Black and Hispanic people, they are not doing their jobs and you are not doing yours if you allow it. Create a culture that values the things that drive outcomes. We know diversity drives returns, we know it’s our job as VCs to drive returns. Do your job.
A quote I love is, “‘For where your treasure is, there will your heart be also.” Will VCs put their treasure — their hiring and investing — where they’ve said their hearts are? Without that, the small moves towards seeming more diverse don’t add up to much.
Aleeza: Do you see parallels between the #BlackLivesMatter and the #MeToo movements?
Sarah: There are many parallels between the long-overdue reckonings around sexism and now racism. These issues are incredibly intersectional and the solutions need to be as well. If you are a female-led fund with no Black or Hispanic women who you’ve hired or funded, you’re doing it wrong. If you are a Black male-led fund with no Black or Hispanic women who you’ve hired or funded, you’re doing it wrong. These movements are fundamentally about justice and equality. They are about humanity. Poet Maya Angelou said “The truth is, no one of us can be free until everybody is free.” Until we understand that these struggles are the same struggles and the only way to change the world is by changing it for all of us, we will keep having to go back every few years and get those we’ve overlooked. The goal is to have an industry that looks like our world — people of all genders, races, abilities, orientations. Until we get there, we haven’t come nearly far enough.
Aleeza: What are the three resources that you believe that every founder should have (books, podcasts, people)?
Sarah: Read Attached to better understand what drives people (including yourself!), Dare to Lead to learn to embrace vulnerability at work, and the Calm app to mediate when it all feels like too much (it’s 2020, I’d suggest using it daily!).
Aleeza: What do you wish every female founder knew before starting their company?
Sarah: I don’t actually think this advice changes based on gender. You need to be incredibly smart about the space you’re building in, consistently work incredibly hard for years, pitch more people than you’ve ever imagined to get hires, users, investors, press, etc. It’s a ton of work so the best advice is to be very sure you love what you’re building and that the world needs what you’re building. If you’re the nth mattress company, no matter how much you love to sleep it may be hard to find success. I see so many founders with the passion and drive building the wrong thing. Your first idea likely won’t be the final one you build so test and iterate until you find something that sticks.
Until we understand that these struggles are the same struggles and the only way to change the world is by changing it for all of us, we will keep having to go back every few years and get those we’ve overlooked. The goal is to have an industry that looks like our world — — people of all genders, races, abilities, orientations. Until we get there, we haven’t come nearly far enough.
Aleeza: Do you have advice for young women who are looking to break into VC?
Sarah: Be helpful! Ideally to both founders and VCs. Anyone reading this can connect with investors on Twitter or via newsletters and social media posts. It’s easy to find startups on places like AngelList or Product Hunt. Whatever your current day job, there’s a startup working to disrupt that and an investor looking to fund ideas in that space. Find them and ask how you can help. Don’t ask to pick their brains, most founders and VCs have shared hours of their best thoughts in podcasts, on social media, and in interviews like this. Go read that, find pain points or areas of interest that align with your skill sets and then reach out with ideas or ways to help.
VC is a service business, so when people reach out to me asking for help instead of offering it, I wonder how successful they’ll be as investors. I spend my day helping founders and other investors. Eventually you’ll be a brilliant investor and Midas List staple, but until then, you likely won’t even be able to write checks when you start out at a fund. What you will be able to do is help founders. That is how you build a reputation that wins deals and promotions.
The other thing to do is to start saving now to angel invest. Even small checks, like $1K into syndicates small — show that you are passionate and want to help fund the future. No one’s traveling right now, we all have reclaimed our Uber and brunch budgets, so put that money aside and start tracking areas you care about now. A year from now you could be an angel investor and it’s far easier to break into VC if you can point to founders you’ve helped and investments you’ve made. Can everyone afford to angel invest? No. But most people reading this are in tech at jobs that pay six figures a year. Setting aside even $100 every week means you can join several syndicates on AngelList that start to build your investing track record. It’s certainly cheaper than an MBA!
Aleeza Hashmi is a Contributing Writer at All Raise. She is pursuing her MBA at Wharton and is a Venture Fellow with Rough Draft Ventures (powered by General Catalyst). She is an avid skier, a so-so baker, and slowly mastering her mom’s recipes! Find her on Twitter and Medium.
