Base10, a venture company founded just four years ago, has just closed its third fund with $460 million in committed capital. With co-founder Ade Ajao – originally from Spain – being half Nigerian, the new fund makes Base10 – which now has $1.3 billion in assets under management – the world’s largest black-led venture capital fund, they say.
While that’s noteworthy, what’s far more interesting to us is how Ajao and company co-founder TJ Nahigian use this distinction to their advantage without making diversity an explicit part of their own investment mission. In fact, the company says it’s solely dedicated – and always has been – to supporting startups that help automate sectors of the “real economy” like food, retail, logistics, and fintech. Even more: By focusing on good companies and not on teams with an “ideal” founder profile in mind, it naturally finds its way into strong startups with very diverse teams.
Maybe like this. Something about his approach certainly seems to be working. Some of the bets Base10 has taken include Brazilian fintech Nubank, which went public late last year. (Ajao wrote him an early personal check, but says Base10 was founded too late to invest in the outfit until it was already a growth-stage company.) Base10 is also an investor in such buoyant startups as Notion ( now valued at $10 billion), Figma (worth $10 billion), FTX (worth $32 billion), and Handshake (worth $3.5 billion), to name just a few to name a handful of the 79 portfolio companies so far.
We spoke to Ajao yesterday, who co-founded Madrid-based ridesharing company Cabify before jumping to VC via Workday Ventures. We wanted to better understand how he and Nahigian — also an investor and former entrepreneur — have built what they have in such a short amount of time, and how the current market turmoil is affecting their prospects.
TC: You have long emphasized that while you are minority-led, you are not minority-focused. Does that stay true?
AA: That remains true. One thing that’s very important to us is to show that if you’re just trying to invest in the best companies out there, and you’re trying to do so with an open mind – which means you’re trying to be biased about Eliminate backgrounds, demographics, and geography — you’ll end up with better financial performance and a portfolio that’s likely to be more diverse. Other minority-run funds with the same approach see it the same way. To me, that says more than anything else about the industry’s blind spots.
How diverse are the founders in your portfolio, and when you use “diverse,” what do you describe? Geography? Gender?
We mean demographics and geography, and that’s gender, ethnicity, and where you’re from. At a higher level, more than half of the portfolio has a founder or co-founder who would be considered “underrepresented” in the venture. Most of the portfolio is outside of Silicon Valley or San Francisco.
How do you think these two pieces are related? They cast a wide net geographically. Is that why you think your founding mix is more diverse, or is there more intent behind it?
We invest in Africa, we invest in Latin America, we invest in the Midwest. But the single region with the most investment is the Bay Area, where we all live, and even within the Bay Area we have a higher percentage of companies being started by people from non-traditional backgrounds. I don’t know why – I don’t have all the data – but one thing struck us more when we had to replace face-to-face meetings [with Zoom calls] it was when we had a founding pitch with the whole group, they would often say, “Oh wow, you guys look different.” I think it’s having an impact.
As for Latin America, SoftBank has done so much to support the region, including in some cases flagging its own investments in companies there. Are there concerns that the money will dry up a bit if SoftBank slows its roll, or have enough other investors pulled out that it shouldn’t make a difference?
I founded Cabify in Latin America in 2011. And then my next three investments were [the Brazilian e-hailing app 99Taxis, [the Colombia-based on-demand delivery company] Rappi, Nubank and I passed those deals on to several Silicon Valley VCs who didn’t want to touch them. Back then, partnerships didn’t want to invest in companies outside of the Bay Area — that was seen as a disadvantage. It read, ‘We’ll write a term sheet if you agree to move to the Bay Area.’ Now, over the last 18 months, I’ve had emails and phone calls from a number of these partnerships saying, ‘Hey, we’re going to Mexico’, ‘We’re going to Colombia – who are we supposed to meet there? ‘
I don’t think so and I never thought that the story was all about SoftBank. i think what [former SoftBank exec] marcelo [Claure] and his team was very commendable. They really put the spotlight on the ecosystem and pointed out what other people were missing. But I think enough people are seeing the light. [In the meantime] What I like is that with venture capital firms in the Valley you don’t see many general partners who have experience in Latin America and the reason I like that is because it gives us an advantage. [Laughs.]
Sequoia’s Doug Leone recently suggested that startups should be prepared that some of the money floating around will dry up as the market turmoil shakes investor confidence. Meanwhile, we’re already seeing layoffs, rounds of failures, implosions. How do you feel about this moment in time?
If you look at the amount of money that’s been raised by venture capital over the past eight quarters — I think it’s been record numbers every quarter — that money has to be going somewhere. The other thing I want to say is that over the past two years, basically every LP has seen record amounts of cash returns from venture capital funds.
I am not a macroeconomist. I don’t know if we’re close to a recession. I just think back 10 or 11 years when I was fundraising [for Cabify] on Sand Hill Road, and it’s day and night [compared with today]. I mean like 10 years ago if you started a company in Spain or a company in Colombia good luck. And Nigeria? I mean that was crazy talk. Now I think the cat is out of the bag.