Sourcing funding for diverse emerging managers of venture funds is a struggle. As a result, you have to think outside the box, as Lisa Morales-Hellebo and Brian Laung Aoaeh, general partners and cofounders at REFASHIOND Ventures, have. Their fund invests in early-stage innovations that refashion global supply chains.
The pair are using AngelList's Rolling Funds, which is designed to solve several friction points that diverse emerging managers face when raising funds. A rolling fund enables fund managers to accept new capital by auto-renewing quarterly commitments, rather than having to raise a significant portion of their fund before investing can begin. Rolling funds allow fund managers to quickly and continually raise capital as they build a track record, enabling them to increase the fund size overtime. For a deeper analysis, read Laung Aoaeh's article.
To attract investors (limited partners), diverse emerging fund managers can set minimum investment levels aimed at making it easy for accredited investors—high-net-worth individuals (HNWI)—to say "yes" to investing in a fund.
Why Diverse Emerging Managers Raise Rolling Funds
The deck is stacked against diverse emerging managers of VC funds, especially first-time fund managers. While women and BIPOC have the skills and connections within industries, they don't have the relationships with institutional investors. The bulk of funding for VC funds comes from institutional investors, such as:
- Pension funds
- University endowments
- Private foundations
- Financial firms, such as insurance companies and banks
- Corporations
- Family offices
When institutional investors invest in emerging manager funds, they typically have rules about the fund size and the fund managers' background. Funds need to be at least $100 million and managers need to have a track record in venture capital of working together in the sector in which the fund will be investing. With so few women and BIPOC investment decision-makers, this is a Catch-22.
As a result, high-net-worth investors (HNWI) play an outsized role in funding first-time funds managed by women and BIPOC. Once there is investor traction among HNWI, other investors may invest in a diverse-led emerging manager fund.
A Passion For Supply Chains Leads Two Innovators To Work Together
Morales-Hellebo and Laung Aoaeh were introduced in 2016 by a founder who knew them and thought that, since both were obsessed with supply chains, they should meet each other. In 2017, they launched The New York Supply Chain Meetup, which became the founding chapter of The Worldwide Supply Chain Federation. In 2018, they teamed to build REFASHIOND; a venture fund focused on game-changing supply chain software and cyber physical systems.
Morales-Hellebo is a seasoned entrepreneur, product strategist, and creative director whose career spans 24+ years of working with technology startups and Fortune 500 companies. In 2014, she founded and launched the New York Fashion Tech Lab with Springboard Enterprises and the Partnership Fund for NYC. It’s an accelerator program for women-led, B2B fashion and retail focused technology companies. An alumna of TechStars who was named as one of the Top 10 Women in DC Tech, she is active in the startup community, on the board of an accelerator, mentor for two others, and is on several startup advisory boards.
Laung Aoaeh launched and grew KEC Ventures—a single-family office—an early-stage technology venture capital firm with $98 million of assets under management across two funds and 51 investments. Prior experience includes Lehman Brothers and UBS. He is also an adjunct professor of supply chain and operations management at the Tandon School of Engineering at New York University.
Innovation doesn't just happen. It results from unexpected insights based on business and personal life experiences. Morales-Hellebo and Laung Aoaeh's experiences shape their views on the importance of supply chains, not just in developed countries but in developing ones. Both their parent’s families grew up in poverty. They see the importance of supply chains for both types of countries, especially as it relates to climate change.
Morales' parents moved from Puerto Rico to the Bronx and later to Westchester to give their children a better life. The side of the family she was close to were pig farmers and seamstresses.
Laung Aoaeh was born in Ghana and raised in rural Ghana. On a daily basis, he would have to find medication for his grandfather's rheumatoid arthritis. Because the supply chains are broken in developing countries, Laung Aoaeh estimates the mark-up on the drugs he purchased were anywhere between 40% to 700%.
Traction for REFASHIOND's Rolling Fund Is Building
The fund sources deals from The Worldwide Supply Chain Federation's global membership and the general partners' vast network of professional relationships in technology, supply chain, operations, venture capital, media, professional services, academia, and the public sector. They leverage their operational experience and strong connections with corporations worldwide as both potential investors and market-validating customers for REFASHIOND Ventures' portfolio companies.
REFASHIOND limited partners include Dave Anderson, managing general partner, Supply Chain Ventures; Kathryn Finney, managing general partner, Genius Guild; Benjamin Gordon, managing partner and CEO, Cambridge Capital; Matt Ocko, cofounder and co-managing partner at DCVC; Daniel Stanton, better known as Mr. Supply Chain; and Albert Wenger, managing partner at Union Square Ventures, among many others.
Unfortunately, bias is alive and well in the venture community. Comments to both have been condescending and insulting. Morales-Hellebo provides a couple:
- "Sweetheart, you're so pretty. Why don't you just marry better?"
- "They'll [receptionists] turn to Brian and ask him where he's delivering or picking up a package from."
To date, REFASHIOND has made 17 small investments—$25,000—in preseed, seed, Series A, or Series B startups that are building the future of global supply chains. Startups that could have investors making much more significant investments want Morales and Laung Aoaeh on the cap table for their insights into the market, connections, and help building the infrastructure that supply chain startups need to scale. Morales is CEO & Founder of REFASHIOND OS (rOS), which curates innovators’ technologies (BUILDERS) to be matched with enterprise opportunities (BUYERS), as well as specialized subject matter experts and key contributors. Laung Aoaeh is also involved in the company.
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