Venture capital investment in FinTech

EMS:
Absolutely. So to start the conversation, tell us a little about your company, yourself and how you got to where you are today.
RTB:Secure. So I’m Rachel ten Brink. I am the general partner of Red Bike Capital. To give you a little background on my career, I started my career in the consumer industry. I spent 15 years building brands worth billions. I was Estée Lauder, L’Oréal, Elizabeth Arden, and then in 2014 I started a company called Scentbird. We were backed by Y Combinator, raised 29 million in venture capital, which actually makes me one of 90 Latinos to ever raise over a million dollars. Scaled that business and then started spending a lot of time advising companies. I was on several advisory boards, started investing heavily in angels, was quite successful, and that led to the start of Red Bike Capital.
EMS:Very interesting and unique background, Rachel. So to join the conversation, given your focus on investing in the sectors I mentioned, FinTech, e-commerce infrastructure, wellness and more, I wanted you to share your overall outlook for these areas.
RTB:So we roughly define our thesis as driving the economy and improving people’s lives. We see digital transformation as a rapid progression with many legacy, businesses just beginning to be transformed by technology’s capabilities. There are companies being built today that solve real problems and are just starting to scale. And despite all the financial headwinds and the fact that things seem pretty bleak out there, there are always opportunities for those ready to seize those with the right focus, talent and execution. So we actually think it’s a great time to invest in building an early stage portfolio, especially within the sectors we invest in FinTech. We are particularly interested in how technology has enabled alternative insurance models for credit and risk that include underserved creditworthy sectors of the population that are often excluded in traditional risk models and business practices.

These underserved segments of the population are disproportionately diverse and affect their access to credit and financial services and therefore limit their economic mobility for minorities. The other segment we are very excited about is within SaaS. We like technologies that specifically optimize specific verticals like online and retail acquisitions, improve efficiency and increase sustainability and reduce waste in e-commerce. We are also thinking about how AI can provide better decision-making across all areas of commerce.

And finally, health and wellness obviously affects us all. There is great knowledge to directly improve access, care and outcomes. We look for startups that have the potential to significantly improve people’s lives and care in particular about women and minorities. We’re excited about the next generation of telehealth and home testing companies going above and beyond. It connects these points between healthcare and the consumer and to create better results.
EMS:Very interesting. Rachel, on the other hand, I wanted you to address some of the biggest challenges you face as you look ahead and why.
RTB:So I think that beyond sort of macroeconomic conditions, and I think it’s impossible to ignore the challenges, but as I said, we also see it as great opportunities for early investment. I personally think for me it is time management. Venture capital is a kind of seven or eight jobs rolled into one. And so number one, primarily for us, and for me personally, is how can I add value to my companies? We are very much, I would say, the prototypical operator-led fund. My areas of expertise are revenue and growth. And so for example, on Monday I spent an hour and a half with one of our portfolio companies and really studied their acquisition strategy and how they think about their customers. So that’s first and foremost.

I think the second part has to do with my LPs. How can I help them? How can I help their goals, their priorities beyond just financial performance, which is obviously number one, but how else can I be truly valuable to my LPs? So it’s only two jobs, right? Then comes the other part of it, which is looking at new companies, meeting with new entrepreneurs, identifying opportunities, understanding the marketplace. So it takes a lot of time in how you care. And finally, I would say that there is a whole lot about branding for the company where big opportunities like this are very useful.
EMS:Rachel, as a female money manager. You are clearly an inspiration to so many others in the industry. So I would like to hear your experience as a woman and what you are doing to inspire other younger generations to follow in your footsteps.
RTB:I think it’s something that the more I’ve done this, the more aware and more thoughtful I become about it. I think most of my career was just putting my head down and working. I built brands, I built companies, and I really focused on delivering results and building businesses. But the reality is that I am one of 90 Latinos to ever raise over a million dollars as a general partner. I am literally 0.1% despite Latinos representing 20% ​​of the US population. One in four babies born in the United States today is Latino. So I represent a huge community, a huge economic force that has so much potential, and yet I know how tough and lonely it is to be the only one in the room. And that is why I am very keen to develop diversity. I think that reality is good for the tech ecosystem, and it’s very good for returns.

So I think that next to my day job as a venture capitalist, I think it’s very important to give back to society and to be a visible role model. I joke that my ambition in life is to be a professional door opener. And so first of all, I’m proud to be a mentor in several accelerators and also take every opportunity to talk about how diversity can really add value to business.
EMS:Absolutely, Rachel, and that segues nicely into the next question I have for you about how your firm addresses or integrates DEI, both at the overall firm level and also at the investment level.
RTB:So the way we think about THEM is, we don’t really think about THEM as such. I think of it as growth and opportunity. I think it’s very much in our DNA, we’re two Latino general partners, which is obviously a rarity, and we know that diverse teams are proven to perform better. So for us, when we look at companies that we invest in, when we look at investors that we want to partner with, we know that different teams, and that can be defined very broadly. It’s not just gender or age. It can also be experience, it can also be life perspective. We think that’s really important as a woman in a Latino-led fund, I really see that as a superpower. I get to sit in rooms that others don’t. I get to see opportunities that others underestimate. So there’s always some kind of unique power.

And what I also find is that the smartest founders know that there is power in that. And so we’re seeing really smart founders actively seek out different investors because they know they’re going to get that value addition, that they’re going to get that perspective as a woman, as a Latino, as an operator, as a CMO, as a CRO, who can really helping them scale their business. When I think about building Red Bike, it’s not just about the fund, it’s really about building a company and becoming a permanent voice in the VC ecosystem. I believe to truly bring diversity to the tech ecosystem, we need to be best in class and not just raise funds, but a company that transcends. We invest in the best entrepreneurs and are proud of our track record in diversity. 80% of our pre-launch fund angels had a female or diverse founder, and so far four out of four investments we’ve made in fund one have had a female or diverse founder.
EMS:Rachel, we’ve covered a lot today and I wanted to see if you have any final thoughts to share with us.
RTB:Secure. Our goal is to provide risk-adjusted returns to our investors. We expect to achieve this goal with a two-pronged strategy, so we invest diligently in promising startups at attractive valuations. We expect to leverage our networks to find some of the best companies and entrepreneurs who will translate integrated success stories. But I think the other part of this is improving our investment odds and results by proactively investing our time, our network, our Rolodex, to mentor and help our portfolio entrepreneurs succeed. Really leverage our operational expertise in large networks. Ultimately, our vision is to build an enduring firm that delivers real change in the VC ecosystem.
EMS:Rachel, I wanted to thank you so much for sharing your perspective with us today, and thank you for listening to the EisnerAmper Podcast series. Visit eisneramper.com for more information on this in a variety of other topics, and join us on our next EisnerAmper podcast as we get started.

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