Use Your Knowledge for Good: Tessa Flippin '05 on Venture Capitalism as Social Justice

Use Your Knowledge for Good: Tessa Flippin '05 on Venture Capitalism as Social Justice
Amy Barnard

*Photo courtesy Chuck Olu-Alabi.

Founder and Managing Partner
Capitalize VC

What
A venture capital firm investing in Black- and Latino-founded tech companies.

What Sparked the Idea
I founded a fintech company in 2016 that served portions of Latin America. While trying to raise capital and scale the company I didn't see people sitting across the table who looked like me or who understood the problem from my unique perspective. I decided I wanted to step over to the other side of the table and solve that problem. 

Why She Does It
If tech platforms want to solve issues facing a diverse population, they need the perspectives of diverse people. For that to happen, we need to get funding to diverse founders and teams so their platforms can launch and grow. My hope is that five to ten years from now the tech platforms Capitalize VC helps to launch will be household names.

Web
capitalizevc.com

We are creating the opportunity for the world to look different in ten, fifteen, twenty years from now.

Quick Definition:

If you haven’t seen the term VC before, it can be helpful to know that it stands for Venture Capital. A venture capital firm raises money from limited partners to invest in startups. If the startup succeeds, the VC receives a portion of the returns. Capital isn’t the only thing a VC might offer a startup: technological expertise, managerial experience, visibility, and mentoring, among other things.

 

Q&A

Q. You started your journey as a founder in your 20s launching a financial services company in Latin America. Why fintech? Why South America?

I wanted to figure out ways that I could make an impact within diverse and underserved communities from a technology perspective. Basically, I wanted to find a way to make the world a better place by starting a tech company.

 

Q. How was your fintech company poised to do that?

I ran a company that could send international money transfers in a more convenient, less expensive way than, for example, Western Union. One group this would help is immigrant and migrant workers, who needed to send money back and forth to family members. 

 

Q. How did that experience lead to your current work as a VC?

While trying to raise capital and scale my company, I experienced many of the issues that come with being a diverse founder who is trying to tackle these really large scale problems. One big thing I encountered was that I didn’t really see people sitting across the table who looked like me or who understood the problem quite like I understood it. I realized that the very lack of diversity among VCs and investors can create barriers to getting the best outcome for a company. I decided to utilize that experience that I had as a founder as motivation to solve the problem of access to capital for early stage Black and Latino founders.

 

Q. So did you jump right from founding your first company into founding your VC?

No. I realized that I needed to better understand the venture capital space and gain some experience in the industry. I decided to learn about VC from the other side of the table at that point and joined an investment firm based in Chicago where I worked as a venture capital investor. It was a chance for me to learn the landscape of the industry.

 

Q. What did you see when you made this transition into VC?

I realized that what I suspected was true: there are very few people of color on the check writing side of the entrepreneurial industry, and even fewer Black individuals, and even fewer Black women. So I realized that I had a perspective that wasn't adequately represented, and I could use that perspective and my experiences as an investor and as a founder to really tackle some of the issues I faced during my journey as a founder.

 

Q. Why is it so important to have tech companies with Black and Latino founders? What difference does this make?

It's important for up and coming tech platforms to have the perspectives of diverse people throughout product development and go to market. If they want to solve issues that face diverse communities, they need diverse voices speaking into their process all along the way. If we're not getting capital to diverse founders at the earliest stage, we're cutting them off at the knees: they never get a chance to get their ideas off the ground, and those voices are lost. 

 

Q. What do you hope will happen through Capitalize VC?

At Capitalize VC we invest early on in teams that have at least one founder that identifies as being Black or Latino. The companies that VCs invest in today are the ones that five to ten years from now will be household names, so we need VCs focused on diverse founders. We want to create the opportunity for the world to effectively look different in 10, 15, 20 years, because of the technologies that we're investing in today.

 

Q. What challenges do you face in this new role?

A difficult part of the work is saying “no” to founders. We see hundreds of deals every week, and we can only invest in a few. There are so many founders that we want to support, that we think are doing a great job and developing really interesting technology, but we can’t support everyone. Sometimes we say no because it doesn't fit our thesis or maybe it's not at the right stage. Sometimes we have seen other things in the space as well and there's just too much competition in that space. And so it is really hard to say no to founders because you do feel so much passion for what they're building. Even when we have to say no, we still try to add value where we can to the companies that approach us, whether by feedback or connections, even if we can’t invest.

 

Q. What has been most rewarding about this process?

Watching the founders in our portfolio succeed. Seeing these founders put the capital to work, taking the advice we give, solving problems and overcoming challenges…just being on the frontlines with them.

 

Q. If you were speaking to MA students about this idea of using your skills, gifts, privilege—whatever you have—to do good for others, what would you say?

Doing good for others is something that’s always been important to me. So maybe you're in that bucket, where it comes naturally to you. But you could be in the other bucket where you're not naturally driven to a career in social impact. For those individuals, I would say this: doing good for others is good business and can lead you to greater success. 

Very few people succeed without the help of others. Think about building your network. Your success is probably going to be driven by the people around you helping you and vice versa.You never want to be that person who is just constantly taking from other people; you want to be the person who's also reciprocating. There is this aspect of “I will help you, and I hope that you help me as well.” Focusing on what you can do for others and how you can help others succeed instead of just thinking about yourself will ultimately make you more successful at whatever it is you set out to do. 

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