David Hall is a venture capitalist and partner at Rise of the Rest, a firm that offers seed funding under the Revolution umbrella originated by Steve Case, founder of AOL. Hall is responsible for investment sourcing, execution, and oversight for Revolution portfolio companies. Black Enterprise caught up with the fund partner to discuss how he broke into Venture Capital, the hotbeds for black entrepreneurs, and tips for founders on how to raise capital.
Black Enteprise: How did you get into venture capital and what tips do you have for others looking to break into the industry?
David Hall: After I graduated from Morehouse College in 1997, I moved to New York City to work in investment banking as an M&A specialist for Morgan Stanley and then I moved to Akamai Technologies, where I worked in finance and M&A while getting a crash course in Internet technology. After Akamai Technologies, I pursued an MBA from Harvard Business School and then in 2003, I joined the Washington Post Company to work on deals at the intersection of media and technology. When I was at the Washington Post I read an article about what Revolution and Steve Case were building in D.C. and I found a classmate who worked at Revolution Health, one of Revolution’s earliest investments, and was able to get connected to the firm. The rest is history.
I think there are two main routes in venture capital or private equity, but I want to emphasize that these aren’t the only paths. The first is similar to mine—starting your career as a financial analyst or other entry-level position in finance to gain an understanding of the markets, business economics, M&A, etc. The other path I see frequently, and I think is becoming more common for venture capitalists interested in investing in particular industries (e.g., cybersecurity, healthcare, etc.), is being a founder/CEO. Revolution prides itself on having several former founders (including our CEO, Steve Case, who was the co-founder of AOL) who have business or entrepreneurial experiences and understand how to scale a business from the ground up. As an investor, this skillset can be incredibly valuable to companies at the early and growth stages of their life cycle.
Which cities are the hotbeds of black startup founders and where can these founders look for funding (including Revolution)?
We just returned from our seventh Rise of the Rest road trip a few weeks ago and got to meet with several black founders and ecosystem leaders in these cities, which included Dallas, Memphis, Birmingham, Chattanooga, and Louisville. I’ve also spent a lot of time in places like Atlanta and New Orleans, which have incredible entrepreneurs and organizations that support founders of color, like Atlanta’s Digital Undivided. What I’m excited about is the attention being paid to the lack of diversity in venture-backed companies and the firms and investors who are stepping forward to fund and support black founders.
What are three tips for successfully pitching your company for VC dollars?
• Stand out. When you have the opportunity to pitch an investor, you must find a way to stand out and I don’t mean to suggest that you should be overly creative. Use the first 10 minutes of your presentation to make your point and give the investor something that piques their interest.
• Your advocate. Find someone of importance who knows you, understands your company, and can vouch for you. This person should not be a part of your company so their perspective is authentic and not self-serving. Ideally, the best person for this job is smart, credentialed in your specific industry, and successful. If you can find someone with all three of these attributes, you’ve hit the jackpot, but having someone with one or two of these works, too. It’s best to take the college application approach, in that it’s better to have someone who knows you best and is willing to positively support you, then just a big name.
• Do your homework. There are great free and valuable resources available to entrepreneurs to help you understand the venture world. I recommend The Entrepreneurial Venture (by Howard Stevenson, Michael Roberts, Amar Bhide, and William Sahlman), The Entrepreneurs Guide to Business Law (by Constance Bagley and Craig Dauchy), NVCA.org, and Cooleygo.com. I believe these to be just a few great resources for entrepreneurs. Venture capitalists want the entrepreneurs we work with to understand the business so it can be a productive relationship.
Why is investing in startups with diverse founders a good business?
Numerous studies have confirmed that more diversity results in greater returns. We’ve found through our seven Rise of the Rest road trips over the last four years that diverse founders in diverse areas of the country are coming up with different solutions to a different set of problems.