Pay it forward
2 November 2021
You started your career as a lawyer and entrepreneur. Tell us more about your fascinating journey.
Upon graduating from Yale Law School, I decided to have a “quarter-life crisis”. I thought it was better to allow myself the freedom to figure out who I was when I was relatively young and with minimal commitments, rather than go through it in my 40s. Growing up as an immigrant kid from the Bronx who eventually graduated at the top of my class from Yale College and Yale Law School was hyper-competitive and exhausting, and didn’t allow much time for introspection. Likewise, it was borderline illegal to be gay in the US in the 1990s, so Europe looked like an especially attractive option for a mental break that would allow for self-discovery. Being a US lawyer was a passport to London and eventually to Barcelona, which was so gay-friendly my friends called it “Gaycelona”. That being said, my competitive American side eventually woke up, and I realised that, as an American, my opportunities for professional growth were severely limited in Barcelona. I found a Catalan business partner, and we launched a Prop-Tech start-up that would allow us to live in Barcelona, be our own bosses and earn US-style money. We raised $4 million for the business and sold it 10 years later. And since I was part of the vanguard of Spanish tech entrepreneurs who’d founded companies in the early 2000s, I was invited to teach entrepreneurship at IE Business School and then to help Telefonica launch Wayra and run it in Spain and then the UK. I’m now the CEO of FounderTribes and a visiting lecturer of entrepreneurship at Yale Law School.
You were previously the CEO of ‘Wayra’, where you invested in 185 start-ups and raised $265m. What were some of your success stories?
By the time I left Wayra UK in 2019, we’d invested in 185 companies that are now worth more than $1.5bn. Somewhat surprisingly, though it really shouldn’t be a surprise, many of our most successful companies could be labelled as social impact or mission-driven start-ups. One of my favourite success cases is Quit Genius, which just closed a $64m from Atomico and Octopus Ventures. We discovered them as part of our Health-Tech partnership with Merck/MSD called Velocity. At the time, the team consisted of four Indian and Muslim founders who were medical school students that felt they could save more lives by launching a start-up than by being doctors. While they were still students, they created Quit Genius, the world’s first digital clinic to deliver medication-assisted treatment (MAT) for a variety of addictions. Another example is WeFarm, which was part of our Wayra UnLtd programme, a partnership with Cabinet Office and UnLtd. We invested when the start-up was still an intrapreneurial pilot project within Producers Direct, a charity owned and led by smallholder farmers. WeFarm is now an independent scale-up that has connected 2.4 million farmers and has raised $32m in funding from True Ventures, LocalGlobe and Octopus Ventures, among others.
Where did the idea of ‘FounderTribes’ come from?
When I was at Telefonica, we launched Wayra hubs in 12 countries across the world and then entered into local partnerships to democratise entrepreneurship beyond capital cities. In the UK, we opened spaces in Haringey, Cheltenham, Oldham, etc., and we partnered with Cabinet Office, GHCQ, DCMS, Merck, etc. All of that work was awesome, but I saw that although there is a clear global need to inspire and support founders, most of the solutions use no real tech, and the few founders that get support tend not to be diverse in terms of race, gender or socio-economic status. Spending millions to rent real estate and to hire experienced personnel to support 10-20 founders per year is not scalable, particularly if the majority of those founders are unable to generate the ROI required to cover those expenses anytime soon. Indeed, although there are 580 million entrepreneurs globally, fewer than 40,000 per year get funding from investors. 90% of founders fail within 5 years, probably without ever really understanding why or getting any real support. And it’s even tougher if you are from a minority background. Black founders in the UK, for example, get less than 0.24% of VC funding according to a report from Extend Ventures. Even the British Business Bank has noted that race and gender play statistically significant roles in explaining why diverse founders fail.
The solution starts with examining what makes Silicon Valley or Israel great tech ecosystems, and I’d say it’s because they have amazing concentrations of domain expertise and a willingness to pay it forward. FounderTribes aims to replicate and scale this by using machine learning to help founders understand what they might be doing wrong and then connecting them to the mentors with the domain expertise to mitigate those risks and with relevant funding sources when they are investment-worthy. And we do all of this in a way that celebrates investors and mentors that themselves come from diverse backgrounds and/or have a track record of supporting diverse founders.
Our vision is to use technology to facilitate a world in which both talent and opportunity are equally distributed.
You have advised the government on how to increase access to investment and entrepreneurship for black people. Tell us what you have and hope to achieve?
Black people are 3% of the UK population but only receive 0.24% of VC funding. In the US, the figures are 14% of the population and less than 1% of the funding. Women represent about 51% of the US and UK populations, but women-led start-ups receive less than 3% of VC funding. If we are honest with ourselves, there are only two possible explanations: either we believe that women and minorities are uniquely un-investable or incapable of running businesses, or we must acknowledge that there are systemic barriers and biases that explain the wide disparities. I firmly believe it is the latter, and as such, I think that the solution is that large corporates and governments that serve as the limited partners for venture capital funds must hold the fund managers accountable and prioritise investments in funds with diverse decision-makers that invest in diverse founders. I’ve had well-intentioned but clueless fund managers tell me openly that they want to mentor black founders, but that they have less interest in hiring or investing in black people. They see supporting black founders or hiring black people as charity. That’s unacceptable. Make the hire. Send the wire. Or be prepared to be held accountable.
You are passionate about the importance of ensuring VC investment is accessible to all from underrepresented backgrounds. What is the current situation and your hopes for the future?
Like much else in life, whom you know often matters more than what you know. In the US, a country of more than 331 million, 40% of all VCs went to two schools: Stanford and Harvard. There is a similar situation in the UK with Oxbridge and the top business schools. The zip code in which you grew up, what you look like, how you speak, who your parents are and other similarly outdated notions still matter way too much, especially in Europe, which has the largest percentage of billionaires that come from inherited wealth. My hope for the future is that the current burst of ESG investment, combined with mission-driven applications of new technologies, will allow us to break down many of these barriers.
You believe black founders can do more to empower themselves. How would you advise them to go about this?
On my first trip to Silicon Valley, I was at an event with Steve Blank, and I asked him what he thought of British entrepreneurs. He told me that he had no predetermined sense of British entrepreneurs, because there hadn’t really been any concerted branding exercise like there had been with the Israelis, the Swedish or Indian-Americans in the United States, who had spent 20 years organising conferences in Silicon Valley, creating networks to promote members of their community and now had Indian-Americans as CEOs of Google and Microsoft. None of this just happens, and none of it happens overnight. I think that the same is true for black founders. George Floyd has provided an opening, but it’s our job to now convert that foot in the door into a few permanent seats at the table. We need to create our own networks of founders, executives and investors; to support and promote one another; to assume that it should be completely normal that black people can create and lead the biggest and very best companies; and to take a long-term view with a long-term strategic plan. I’d also suggest that we need to better connect the various branches of the African diaspora. There is a lot of very vocal, active support – and billions of dollars – being allocated to black founders in the US, in a way that is not being replicated in the UK. Black founders across the globe need to build networks and support one another not just in their own countries but internationally as well.
You have stated that the use of terms such as ‘BAME’ and ‘ethnic minority’ do more harm than good. Can you explain more?
86% of the UK population is white, with 81% being white British. Racial minorities make up 14% of the UK population. BAME is just a convenient way for the white majority to refer to the 14% of the population that is non-white. I doubt most black people would self-identify as BAME, but that was never really the point. The term conflates the histories, identities, experiences, struggles and opportunities of varied groups, each with their own proud stories to tell. The only thing that unites the experiences of a Chinese person, an Arab person and a Black Caribbean person living in the UK is that none of us are white, but that does not make us a united group with a common identity and can obscure discrimination faced by certain groups and not others. For example, when asked about the number of black members of the cabinet, Matt Hancock responded: “There’s a whole series of people from a black and minority ethnic background. The chancellor of the exchequer, the home secretary to name but two.” A great advancement to be sure, but Hancock’s answer obscures that the real answer to the question is that, at the time, there were no black members of the cabinet, and the presence of two Asian cabinet ministers does not make that fact less problematic.
What has been the most challenging and enjoyable part of your career to date?
The first time I was a founder, I underestimated just how hard it was. In 2005, there wasn’t really much support or guidance. There weren’t many established networks of mentors with domain expertise. Accelerators weren’t yet a thing. There wasn’t a multitude of content on social media, because social media didn’t really exist. In Spain, there wasn’t even really a term for “entrepreneur”, and a lot of people thought that entrepreneurs were just unemployed, lazy losers who couldn’t or wouldn’t get “real” jobs. Many of my friends pitied me and questioned my sanity for giving up a “good” job to launch a tech start-up. The environment was particularly rough in Spain, where there was very limited access to capital and particularly harsh penalties for failed entrepreneurs. All of this was made even more challenging when the Great Recession hit in 2008, and Spain was labelled one of the PIIGs (i.e, Portugal, Ireland, Italy, Greece and Spain – countries that needed to be or were in danger of being bailed out). Almost overnight, the multi-million-dollar round that we thought we had closed disappeared, as did the lead investor that was supposed to fund it. Our existing lead investor told us to fire most of our employees, which at that point included very close friends who were also petrified and started to treat my co-founder and me like risk factors to be mitigated and controlled. It was definitely one of the most turbulent chapters of my life, but I learned that I was a lot tougher and more resilient than I had given myself credit for, and it made it all the sweeter when we sold our start-up. Likewise, all of the ups and downs of that experience paved the way for everything I did afterwards, from being a professor to becoming an investor to becoming a founder once again. All of the lessons learned from that period are priceless.
What is something you’ve learned that you lean on daily?
Recently, I discovered meditation, and before that, I’d relied upon ritual and routine to clear my head and not take myself too seriously. In the latter case, my ritual entailed listening to the same gospel songs each and every day and taking to heart the key message: Life can be tough, but you have to have faith, stay optimistic, appreciate both everything that you’ve achieved as well as all you’ve had to overcome to achieve it, always pay-it-forward and remember that, in the grand scheme of things, you are not the centre of the universe.