//, Venture Fund/Michigan alum raises $137 million for startups 

Michigan alum raises $137 million for startups 

Base10 Partners, a venture capital firm co-founded by Thomas James Nahigian, a University of Michigan Ross School of Business alum, and Adeyemi Ajao, has recently raised $137 million for investment in the name of “automation for the real economy.” This marks what is believed to be the largest debut for a venture capital firm led by a Black man. The firm focuses on investing in early-stage startups utilizing artificial intelligence, automation and data to empower low-wage workers in large industries like waste management and mobility.

Base10 looks to startups using automation to make workers’ jobs easier instead of eliminating these jobs entirely. Nahigian, who graduated from Ross in 2009, said he and Ajao founded Base10 after noticing a lack of investment from Silicon Valley in companies using automation to help large industries like construction, waste management and real estate.

“We saw this large opportunity, thinking that data and automation is probably the most important technological trend over the next 20 years,” Nahigian said. “And we saw this large gap in that most venture dollars were going towards more A.I.-focused opportunities, meaning really hard-core technology and science problems, that are not widely used or adopted. We saw that a lot of value creation is happening and will continue to happen, as the biggest opportunities, in these large old-school segments of the economy like construction or real estate.”

Both Nahigian and Ajao have experience starting their own companies and investing in others. Nahigian previously worked at Accel Partners and Summit Partners and was an investor at Coatue Management. Ajao co-founded social media company Tuenti, which was bought by Telefonica, and Cabify, a competitor with Uber in Latin America that is now worth $1.4 billion. Most recently, Ajao was at Workday after the company acquired his startup Identified, where he launched Workday Ventures, a fund focused on artificial intelligence. During this time, Ajao invested in several companies, including Nahigian’s startup Jobr, a job-seeking and hiring app.

After working together on Jobr, Ajao and Nahigian decided to team up and found a venture capital fund focused on companies solving problems affecting the 99 percent — a term contrasted with the top 1 percent of the wealthiest members of society who hold and control a large majority of resources in the U.S.

“This was four years ago, now almost four and a half years ago, and TJ and I got to know each other pretty well through my investment in Jobr,” Ajao said. “At the time I was already thinking of starting a new venture firm because at this time I had quite a lot of experience investing. I thought that there was too much A.I. talent in Silicon Valley that was being directed towards the same problems. And there was a need for a new venture firm to focus on solving problems that were most important to the real economy, and what we call problems for the 99 percent.”

Base10 has already invested in several startups, including Yellow, a Brazilian mobility company bringing bicycle- and scooter-sharing services to Latin America to improve urban sustainability. Other companies Base10 has supported include The Pill Club, which integrates telemedicine and pharmaceuticals to deliver birth control to subscribers, and RoadSync, which eases the payment platform for the logistics industry.

The news came unexpectedly to Ajao, who is half Nigerian and was raised in both Nigeria and Spain.

“It was a surprise at first,” he said. “Just because I never really stopped to think about it, and assumed that with how many years venture capital has been around, there must have been someone before me that had crossed the $100 million dollar mark. Once I looked at the data, the surprise went away, because as you very well know, minorities are widely underrepresented in Silicon Valley — which is probably why there is an inherent bias towards focusing on problems for the 1 percent versus problems for the 99 percent.”

Nahigian emphasized the need for more diversity in the venture capital space, saying for Base10 in particular, leadership needed to reflect the people they were investing to empower. Improving diversity and inclusion would be a significant part of Base10’s investment in the real economy.

“We were setting out just to build and scale what we thought could be one of the leading preeminent venture capital funds focused on this theme,” Nahigian said. “Importantly, the theme that we’re focused on really focuses on diversity and inclusion. We’re investing in businesses that are going after real economy problems, (that) have a meaningful impact on the 99 percent. And it’s almost a shame that that diversity is not really reflected in who are leading and allocating capital within this industry.”

Business junior Devesh Modi is a member of the Zell Early Stage Fund, a venture capital and pre-venture capital fund at the Business School under the Zell Lurie Institute. For students interested in the venture capital space, ZESF provides an opportunity to gain experience investing in real early-stage companies. The fund is run by undergraduate business students and supervised by a faculty managing director.

“ZESF is primarily focused on giving undergraduates an immersive experience in the venture capital due diligence process,” Modi said. “While I just joined this semester, the class is organized into two main functions: education and deal experience. The education side is mixed between student and professor-run discussions on the fundamentals of due diligence and early-stage analysis … On the deal side, our professor, Erik Gordon, helps us run a full due diligence process on the company in question. I have not participated in this process yet, but from what I understand, this involves a significant amount of detailed research, expert interviews and class-based discussions regarding the legitimacy of the company. Once the process is completed, the students are able to decide whether to invest capital. Investments typically range between $20,000 and $200,000, depending on the size and potential of the company.”

Modi said ZESF is also working to improve their outreach efforts to improve diversity within the group.

“As an undergraduate, I haven’t had much experience with the professional venture capital world,” Modi said. “However, based on my experience thus far in ZESF, I’ve noticed that there’s a disproportionately high ratio of male to female students. The reasons for this vary, but a large reason for this has to do with the marketing of the club. We are currently making amends to the process by hosted diversity events and women-specific info-sessions, and are continuing to develop our strategies to equalize the diversity of the class.”

Modi offered some advice on entering the startup space with a new idea.

“Think it through,” he said. “A lot of people come into the scene imagining how great their ideas will be, but fail to fully formulate a concrete plan of execution on the business. There are a lot of moving components when crafting a new company, and if done with the partial effort it just won’t work.”

On venture capital, Modi pointed out the difficulty of entering the space as a new graduate.

“Venture capital, on the other hand, is a difficult field to enter right after college,” Modi said. “Instead, I’d recommend getting involved with something such as ZESF to refine their interests and understand the field. After a few years working in an industry, if they’re still interested, that would be the time to look at options in venture capital.”

Ajao also had advice for students: to focus on real world problems and to apply technology to solve problems that affect the people they know.

“What I would recommend is to not get distracted by very shiny words like A.I. or blockchain — which are fantastic technologies,” Ajao said. “Focus on how that can be applied to a problem that you face day-to-day, and a problem that is extremely authentic to you or to your family, because that is where the secret sauce is going to come. Because at the end of the day, founders that are successful are solving problems that they know better than anyone else.”

 

Source: Michigan alum raises $137 million for startups aimed at empowering low-wage workers | The Michigan Daily

By | 2018-10-17T08:33:28+00:00 October 17th, 2018|Michigan, Venture Fund|0 Comments

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