Groundwork is on a mission to help diversify the venture capital landscape. In Part 1, Towns shares details specifically highlighting the types of entrepreneurs he’s focused on investing in, and why he feels it’s so important to grant access to a diverse community.
Now, in Part 2, Towns shares his journey on how he became involved in the investment community, and what he’s doing to raise a $10 million venture capital fund.
BE: How did you get involved in investing?
Towns: Years ago, I launched a startup. In the process of launching, growing the business, trying to find investment capital, getting the investment capital, and then navigating to a decent exit, I recognized a number of things. One of the things that I recognized was that it was just way, way harder for me to navigate the investment piece of it, than it was for any of my more fair skin friends.
This was something that we talked about pretty often. I always felt like, if I got to a point in my career where I had the ability to turn around, clear this path, and make it a little less bumpy for the next generation of innovators, then I would. That’s what I wanted to do.
After that, throughout my career, I spent a lot of time advising startups, sitting on boards, and helping folks navigate the space. Over time, that naturally lead to angel investing and learning a little bit more about the venture space.
Fast forward to 2014—when Laura Powers tapped me about the possibility of leading their entrepreneurship program at Code2040. I moved out to the Bay Area, and built their Entrepreneur-In-Residence program, which was an amazing experience. We talked to hundreds of founders around the country to learn about what’s working, what wasn’t working, and where some of the pain points were. We recognized that there were a number of issues, but one of the main things was lack of access [to capital]. For me [personally], I wanted to take the skill set I had developed due to supporting companies and growing programs to really dial-in on one of the biggest pieces of the puzzle [that’s missing] and we need to solve, which is this access to capital piece.
So, we built a program that really aimed to solve that. We launched the pilot in three cities—Chicago, Austin, and Durham, NC. The program is doing really well now. It’s scaling to other cities. I’m just excited about everything that’s going on there. Groundwork is a culmination of everything that I’ve done over the course of my career, but with a really specific focus on deploying capital earlier, to founders from groups that sometimes get overlooked by the broader investment ecosystem.
BE: How did you start the process of raising your fund for Groundwork?
Towns: It was a lot of hard work, a lot of flights, a lot of phone calls, and through some strategic relationships. Last year, just before the end of the year and right before Super Bowl 50, which took place in the Bay Area, we started looking at how we could be very intentional about building some bridges and connections between the investment community, the athletes and their financial folks, and the entrepreneurial community. So, one of the things that you’ll find with Groundwork is that we spend a lot of time looking at intersections between tech and other fields or between entrepreneurship and other fields. Then, we figure out how to navigate those intersections and determine if there is value in building strength around those intersections.
At that point and time, the sports and Silicon Valley intersection was something that we really wanted to explore. We threw an event at this really amazing venue in San Francisco, and invited players and a number of investors from different funds. We had folks from Kapor Captial, Google Ventures, YC, and some others, just to get everybody into the same room for a good time, in addition to developing fellowship and networking. We wanted to start building some of those connections. We started generating some interest in the fund and in what we were building, because of some of those early connections. We’re going to be doing something similar this year, but bigger. (BE—you should join us!)
My ask is super simple: we’re building the fund and also the startup Accelerator program, so we have opportunities to support entrepreneurship broadly, through the fund, and hyper-locally, through supporting and growing entrepreneurship ecosystems via the Accelerator.
When I have conversations with people, usually they’re focused on one or the other. Either it’s something like, “I need something like Groundwork to really support building the local community of entrepreneurs in our city or in our state!” Those are people who would jump on board in a way that supports the Accelerator. Then, other folks may say, “Hey, I just want to get in on deals that, maybe, everybody else is missing out on. Perhaps they are just are ridiculously undervalued, because the industry hasn’t figured out a way to get to these folks early; they fail to recognize that type of talent or trajectory early enough, before those type of folks move into the fund as LPs.” Those are people who would, most likely, want to work in a way that supports the fund. With that clear delineation, usually in one or two conversations, we know which direction to head in with a potential investor.
The Accelerator side is mostly focused on VC, and we’re doing some stuff in Oakland, CA, currently. However, as we grow, we’ll be looking at other cities as well, such as Philadelphia or Baltimore. We also have some really interesting stuff we’re doing in Durban, South Africa—so we’re excited.
BE: How big is the fund currently?
Towns: We are still in the process of raising, but we aim to have a $10 million fund. The Accelerator falls outside of that. So, the capital that we raise for the Accelerator is not included in what we’re talking about when we’re mentioning the fund.
Our first investments will get a lot out of the fund in 2017, and the Accelerator launches in 2017, as well. So, that’s the official Groundwork kick-off, in terms of being out here deploying capital to founders that are in our network.
Sequoia Blodgett is the Associate Technology Editor for Black Enterprise, Silicon Valley. She is also the founder of 7AM, a lifestyle, media platform, focused on personal development, guided by informed, pop culture.