In my first post in the Genius Guild Series, I discussed how we use our “360 Value” approach to build and invest in companies led by Black founders and how we use this investment to apply a market-driven approach to ending racism.
At the center of “360 Value” is the belief that by investing time and money in companies that create value for EVERYBODY — for the founders’ communities, for us as investors/co-builders, and for founders themselves — not only will Genius Guild create a regenerative system of shared wealth in Black communities, but we will also generate significant returns for our investors.
Greenhouse Core Investing Areas
We invest in the following core investment areas:
Restructuring the Flow of Capital in Black Communities
Companies that use technology to restructure, rethink, and rebuild how capital flows and is accessed in US Black communities. Examples: Greenwood Bank, Invest Sou Sou
Companies that are using innovation to improve the health and well-being of Black communities, with the ability to scale to other communities. Examples: Goodr, Care Academy
Belonging & Connectivity
Companies building connectivity between individuals and communities in a very disconnected world. Examples: Quirktastic, Shade Room
Genius Guild Venture Investment Model (VIM)
In order to help Genius Guild invest with this lens, I developed an investing framework called the Genius Guild Venture Investment Model (VIM). GG VIM was developed to make sure that Genius Guild, through it’s Greenhouse Fund, doesn’t replicate the same outdated framework deployed in current reductionist forms of capitalism (I’m looking at you American Capitalism) whose sole purpose is to maximize value/returns for the “owner” class, or shareholders.
GG VIM is how we strategically think about investing in market-based innovations that end racism. Comprising four key sections — Vision, History, Market, and Proof — along with four simple but direct questions, GG VIM grounds our investment thinking and criterias.
How Greenhouse Uses Our VIM
GG VIM allows for the more thoughtful use of a traditional applied investment criteria. Both VIM and our investment criteria work together to inform our approach to investing in Black founders, and thus building market-based innovations to solve racism:
Greenhouse Investment Criteria
Target: Led by a US-based Black Founder(s) (>50%+ ownership). The company can have other founders/co-founders who are not Black.
Traction: Evidence of traction within markets that serve Black communities,with the ability to scale to other markets.
Technology: Technology is central to building and scaling the company. We are willing to help each of our companies think through its stack, especially those scaling from other platforms.
Takeoff: The business has a clear, scalable model and early signs of product-market fit.
The way to think about the difference between GG VIM and Greenhouse investment criteria is to think of one as being how we strategically think about investing (our model) and the other about how we tactically apply this thinking (our criteria).
GG VIM is integrated into all areas of Greenhouse, from our due diligence process to wiring the funds. For example in our online pitch form, we don’t ask any questions about education background, work history, etc. I saw during my 10+ years running one of the first incubator programs targeting Black and Latinx female founders that this information wasn’t really indicative of success for Black startup founders. In fact, those who came from more traditional environments (expensive education/tech bigwig) without a background in entrepreneurship sometimes had difficulties handling the uncertainty of building a business.
How Other Venture Funds Can Apply Genius Guild’s VIM
The goal of GG VIM isn’t to replace the basics of venture investing models, but to rethink and restructure the thinking that often leads to the manipulation of the VC model to exclude others, namely Black communities. GG VIM isn’t a replacement for your current investment criteria (see below for exception), but a way to approach and assess your current investment strategy.
In order to effectively implement GG VIM, you will need to do an assessment of your funds current strategy and infrastructure,from portfolio construction to staff to how investment decisions are made (and by whom). When buying a house, one of the first things that an inspector checks is the foundation. If the foundation is poor, it doesn’t matter if the kitchen has high-end stainless steel appliances; the house will still sink. It’s the same with your fund and applying an anti-racist lens. If your fund applies an investment lens that actively overlooks the ways in which capitalism and capitalist markets have been manipulated to limit, exclude, and defraud Black communities, then implementing VIM won’t work.
Once your fund has had a thorough assessment done (by an outside agency, not the only Black associate on your staff) and any deeply rooted issues are identified and addressed, then you can start to incorporate the framework. This should begin with the General Partners in your fund, and one General Partner should “own” the implementation of the framework.
My hope is that other investors use the GG VIM approach to strategically think about how to apply an anti-racist lens to their current investment frameworks. It’s important to note that this approach works best for those investing at the pre-seed/seed stage, where traction is still being established, although parts (especially Vision and History) can be used in all stages of investing.
Up Next: I share how Genius Guild’s core values provided the foundation for how we think, operate, and exist in the venture space.