Investing in Inclusion

by Becca Leonard

Though women and minorities are traditionally underrepresented in the venture capital industry, SixThirty is taking great strides to transform this reality. In fact, 50% of SixThirty’s 2.0 portfolio companies are led by these underrepresented groups, which is a significant achievement when considering only 4% of all US venture-backed founders are women or minorities.

A diverse founder base means a portfolio with a sustainable advantage. It means portfolio companies building solutions and platforms that consider the needs, speak to, and capture the buying power of a larger, more diverse addressable market.

To celebrate this milestone, SixThirty hosted a live panel webinar with four inspiring leaders who have not only disrupted this norm, but have also successfully woven diversity and inclusion into the foundations of their own companies.

Hosted on November 13, “Diversity in FinTech — A Founder’s Perspective,” was presented in partnership with JobsOhio.

Panelists included: Laurel Taylor, CEO of FutureFuel; Mike Duncan, CEO of Bankjoy; Catherine Berman, CEO of CNote; Sindhu Joseph, CEO of Cognicor. The panel was led by Atul Kamra, SixThirty Managing Partner and Kristi Taylor, JobsOhio Sr. Managing Director, Economic Development Inclusion.

Below is a summary of the discussion led by Atul and Kristi, with key video times and highlights from the video:

Q: (Atul — SixThirty) 04:33

As a strategic partner of SixThirty’s, JobsOhio shares a common goal to make a more inclusive world... Kristi, please touch on your journey: growing up in Ohio, your work driving inclusion in the heartland, and SixThirty’s relationship with JobsOhio.

A: (Kristi — JobsOhio)

Growing up in Portsmouth, an epicenter for the opioid epidemic, I watched many of my friends and their families fall victim to addiction. I started my economic development journey in that region, moved to the state level, and have been with JobsOhio since we started in 2011.

Our mission is to drive job creation and capital investment across Ohio. We have an intentional focus on economic development inclusion; it’s critical for the economic well-being and growth of our state, and a primary part of our go forward strategy.

SixThirty’s global reach and go-to-market expertise affords JobsOhio the opportunity to interact with your amazing portfolio companies. In return, we share with SixThirty all of the resources Ohio has to offer to your portfolio companies: potential partners, customers, and one of the largest talent pools in the country. All of these things help create a soft landing for fast growing FinTech companies.

Q: (Atul — SixThirty) 12:20

Let’s start with introductions. Each of you has an important story to share about how you got into and found success in the world of FinTech. Cat, let’s start with you:

A: (Cat — CNote) 12:38

When my mom and grandparents moved here, the only way they made it was through entrepreneurship — it was through the power of fair lending that our family got a foothold in this country, and so the power of economic opportunity was not lost on me from a very early age.

I was sitting in my cushy office as managing director for Charles Schwab, seeing the rise of socially responsible investing, and right outside my window in San Francisco was this tremendous and ever-increasing wealth gap and inequality. I thought — you cannot see the rise in inequality, the rise in the wealth gap, be sitting at the table creating the future of finance, and not address this — and that was the start of the journey of CNote.

A: (Michael — Bankjoy) 15:08

I realized that I wanted to start this company as soon as I entered the credit union industry. The software options available to us were managed by a handful of big vendors who were dominating the market after being in the space for a number of decades. The quality of the product was low, but more than that, they weren’t doing anything to help people develop better personal financial wellness.

As a software engineer, I realized we could actually build something that was outcome driven, to help people understand their money better and live better lives through technology. So, we set out to do that, and now we’re a multimillion-dollar company.

A: (Sindhu — Cognicor) 18:01

I grew up in a small village in India speaking only the local language. As a child, I was very interested in human intelligence. At the age of 15, my father asked me what I wanted to do — get married, go to a higher studies school in India, or move somewhere new. I chose to go to a new unknown place and learn a new language.

When I finished my PhD in artificial intelligence from Barcelona, Spain, I decided to jump on this journey of starting a new business which was again completely unknown to me. In both cases, I choose the option that was the most challenging, but offered the most possibility for outcomes.

A: (Laurel — FutureFuel) 23:39

I grew up in a small town in Texas and moved to San Francisco after I graduated from Texas State. I had about $50,000 of student debt and a blow-up bed. I went to a very economical state school, but my dream was to go to school at MIT.

A few years later I was accepted into MIT and was a leading a global business unit for Google. I was standing in the Google cafeteria admiring the benefits that Google provides and realized that just the day before I had received a 2.5% interest rate on a mortgage and a 9% interest rate on a student loan. I realized it was an epidemic that no one was talking about this problem of student debt and I didn’t understand how we could have a $1.7 trillion problem in our economy that had not been digitized. Standing in that a cafeteria, FinTech found me, and made me step into the unknown.

Q: (Kristi — JobsOhio) 28:30

We often focus on the plight of women and minority founders, when we really should be focusing more on the opportunity that comes with investing in women. We know that a very small percentage of US VC funding goes to teams with female founders and minority founders, but thinking about it from an economics standpoint, Cat — can you share your insight on why you think investing in women is a smart business choice?

A: (Cat — CNote)

We’re leaving money on the table when we don’t invest in women. When women do receive venture capital, women businesses show a return of 20% more revenue with 50% less to the investment. This research also shows that women led startups delivered twice as much of the dollar invested over a five-year period than their male counterparts. If we take it out of the venture realm and it just into women led businesses overall amongst small and medium enterprises, woman led enterprises are 80% more profitable than their male counterparts. Women do more with less.

Q: (Atul — SixThirty) 31:08

You’ve just had some tremendous momentum recently Michael, but it was not always the easiest path. Please share with us the roadblocks you’ve come across and who was there for you along the way.

A: (Michael — Bankjoy)

As a black entrepreneur, one of the biggest challenges that I’ve faced is in raising capital and fundraising. We receive about 1% of all VC funding — and that’s 1% for black men and women combined. I must have talked to about 90 investors after finishing Y Combinator and every single one of them said no.

I firmly believe that any great entrepreneur has achieved success through a combination of consistent hard work and just finding luck from time to time and so our luck came the form of an investor and entrepreneur out of LA who committed $1 million to our seed round. He saw we launched our company on TechCrunch, he read the article and reached out to me on LinkedIn. He became a close friend and advisor just as the SixThirty organization has. The big breaks have really come from folks like you.

Q: (Kristi — JobsOhio) 35:48

Laurel, who were the stakeholders who helped you along the way and what did they bring to the table to really help make a difference?

A: (Laurel — FutureFuel)

There are a million reasons why a startup can fail until you’re looking for the person who believes in you, your mission, and your business model. SixThirty has been a critical and core partner to us, as well as two funds that specifically invest in diverse founders: Salesforce Impact and Rethink Impact.

You have to find those partners that are going to be willing to offer connections and introductions, because that makes the world of difference between a yes or no.

Q: (Atul — SixThirty) 39:40

Sindhu — when you compare what you’re building with peers in the industry, how does your background as a woman minority founder influence the product that you’re building for the marketplace?

A: (Sindhu — Cognicor)

When I started Cognicor, our team of 15 members was comprised of 12 different nationalities, helping us all discover new aspects of each of our cultures. Likewise, building a platform that understands every user need is very important to me, which is what makes the Cognicor platform hugely different from other platforms.

For example, for a software job you have this persona of a 25 to 35-year-old male, white or Indian. If you feed a standard AI system with this kind of data, then a black minority woman is likely going to be rejected, so we have to be really careful in terms of how we design these systems and remove some of these inherent biases that have historically been in our society.

Q: (Kristi — JobsOhio) 45:53

Mike, as a black founder, how does your background influence the market you’re addressing, and how are you working to make sure that the team you’re building continues to embrace and promote that?

A: (Michael — Bankjoy)

I believe minorities have fewer opportunities and need to work harder to enjoy the same successes as other groups of people, so that’s really influenced Bankjoy and how we develop and think about the product.

We started with smaller credit unions, because we knew that they were suffering the most when it came to the kind of technology options they had in the marketplace. We believe that with digital banking there is an opportunity to actually do something really good in the world: the next time there’s a COVID-19 or a catastrophic event, maybe our software will put people in a position where they can weather the storm.

We have a diverse team, and we’re going to pick diverse people because that’s how we think. It’s part of our culture. The fact that we’re living in times where we’re all kind of forced to work remotely anyway has us looking for the very best candidates all across the country now, not just within our local communities.

Q: (Atul — SixThirty) 50:26

A question came in from Dennis Barnes, CEO of RGAx: Financial institutions were founded long before diversity and inclusion became a global priority. Can large public institutions ever get to where diversity is a way of life — where it’s not a project in response to public outcry?

A: (Cat — CNote)

We recently announced a major partnership with MasterCard exactly on this idea. The way most corporations have started to walk the walk with diversity is with recruitment. I think that’s a tremendous place to start, but it can’t be where we finish. Your investments as a corporation speak loudly about what you believe and who you believe in. Looking at things such as: Do you have diverse fund managers, where do you place your deposits, and where do you place your investments? Are they representative of your values as an institution? That’s what CNote does.

We make this very easy through technology for those corporations to move their dollars into communities of color, women led enterprises, and low-income communities. We’re not talking about a grant or a press release. We’re talking about long term commitments that allow corporations to walk the walk alongside competitive returns, because we know the same businesses also have a fiduciary responsibility to deliver returns and preserve their capital. Looking at where corporations are housing their dollars, whether it’s cash or whether it’s long term investments is a really exciting place to continue and more importantly institutionalize the power of diversity.

A: (Sindhu — Cognicor)

Looking at some of the largest organizations within the financial industry — what we see is their inflexibility to move in one direction or the other. One way they could catalyze this diversity movement is by working with smaller companies to learn how to build this kind of culture. Choosing to collaborate with these teams becomes a cultural extension for the larger corporate teams.

Q: (Kristi — JobsOhio) 56:17

Mike, you mentioned the impacts of COVID-19 and how your product might help people prepare for events like this. Can you expand on some of the positive impacts of COVID-19 on your business?

A: (Michael — Bankjoy)

Digital Banking has become more important to banks and credit unions as a result of COVID, so there’s more spending in that area. Our client base has grown at about 50% since the pandemic started, and we’re getting ready to grow 3X right now. With all of our installations being done remotely, we’re hiring all over the nation and it’s really opened up a diverse pool of candidates that we can go after, so our team is getting stronger as a result.

Q: (Kristi — JobsOhio) 58:25

Laurel, has the pandemic helped to accelerate financial awareness around student debt?

A: (Laurel — FutureFuel)

With executive orders enabling all federal borrowers to suspend their payments through the end of the year, we’ve seen a massive increase in engagement, and we as a business have grown 1,000% since COVID hit. We currently have 45 million Americans who are facing 17 to 20 years to pay down their loans, and that means 86% of them are not participating in their 401k or at the level they could be because they’re paying down student debt. Student debt in the workplace is going to become a new normal. We’re right at that inflection point and COVID has exacerbated the need for solutions.

Q: (Atul — SixThirty ) 1:02:35

What’s a call to action for us after this discussion? What can we all be doing to address the issue of diversity and inclusion in our own workplaces or at home?

A: (Cat — CNote)

What we advocate at CNote is to make sure that you are expressing yourself not through not just through your social media posts and your conversations but through the power of your dollars. I think a lot of us right now feel very bullish about this exciting narrative across the country in terms of racial and economic justice- but then the question becomes how do we turn that narrative into long term action and change?

This is something very simple that every single person listening can do: We have a product called the Flagship Fund at CNote. The minimum is $1, and every dollar put into that account strives greater economic mobility for communities of color and underserved communities. So that first time black entrepreneur, that first time women entrepreneur, or that family looking for affordable housing is where your dollars go when you invest in the Flagship Fund.

We also encourage folks to think about putting money into a minority deposit institution. Whether it’s a local credit union in your backyard or through the power of our technology, the Promise Account. Use the power of your investments or your savings to do some really important work. That’s my call to action.

A: (Laurel — Future Fuel) 1:07:19

I would like to share the counter of the do’s and the don’ts. Don’t confuse activity with progress. Taking a meeting with a woman or a minority is not progress. I think it’s really important to continue to hold yourself accountable to continuing to have this conversation on diversity and inclusion until you actually start to see the change happening.

A: (Sindhu — Cognicor) 1:07:15

I think from that regard COVID has been a great equalizer… in a different perspective, this has been really exciting for women diverse minority founders and not just for funding, but hiring, working with [diverse] businesses; and I encourage everyone to make those decisions in a way that supports these communities.

Bankjoy delivers award-winning banking technology, including mobile banking, online banking, e-statements, online account opening, online loan origination, and conversational AI to banks and credit unions — big and small.

CNote makes it easy for individuals and institutions to invest in a more inclusive economy.

Cognicor is the conversational AI platform that lets businesses drive efficiencies in sales and service.

FutureFuel exists to help you crush student debt and fuel your future.

JobsOhio serves as a catalyst to accelerate growth by investing in communities, helping Ohio’s businesses expand and attracting new companies to the state

SixThirty Ventures invests in early-stage enterprise technology companies from around the world building FinTech, InsurTech, and Cybersecurity solutions, and connects them with corporate incumbents through its Go-To-Market Program.



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