👋🏾 Hi friends!

With only one day left of my summer in Italy, I will soon revert from complaining about the heat, to… complaining about the grey skies and rain in London.

Maybe I’m just a bit of a goldilocks?! 😂

In this weeks Off Balance, I’ll be chatting about skin in the game and some of the numbers behind the barriers to entry for people of colour when trying to build a startup (or any business). I’ll also speak about why mentoring matters and we’ll deep dive into valuations.

All of that will be followed by a look at what else has been happening in the world of tech and venture in this week’s Lowdown.

Also, don’t forget to check out this week’s guest on the Nothing Ventured pod, Matt Jonns. He’s founder of Founder and Lighting, a somewhat non traditional dev agency that invests in and builds tech businesses with non technical founders.

You can listen to the Primer episode here with the main episode out on Friday 1st September.

Also if you have any feedback or if there’s something you’re desperate to see me include, just reply to this mail or ping me online - I’m very open to conversations.

Give me a follow on LinkedIn, Twitter (do I really have to start calling it ‘X’ soon?), Instagram and now even Threads and drop me a note :)

Don’t forget to like, rate and subscribe to Nothing Ventured on Apple, Spotify or YouTube, it really helps more people see what we’re doing!

Now let’s get into it.

Skin in the Game

I would normally reference an article that had been doing the rounds on social media in this section, but instead, I wanted to draw attention to a recurring theme that I, and my guests, talk about on the pod - often unintentionally.

And that’s representation.

Or the lack there of.

I started thinking about this concept of skin in the game, and it resulted in writing the following post:

You can't be very serious, you don't have any skin in the game...

This 'established wisdom' within the early stage ecosystem has got me thinking.

A lot of investors, and hence founders, have a belief that if you haven't put your money where your mouth is, then you haven't shown the sort of grit / determination / hustle that you should demonstrate as a startup founder.

But here are some facts:

💸 Per Crunchbase, funding to Black and Latinx founders in the US peaked at $4bn in 2018, out of a total of $141bn invested in the US that year - that's 2.8% of total funding at peak.

🛒 Per Pew Research Center, median household income for Black US households in 2021 was $46,400, a full 40% lower than non Hispanic white households.

💰 And as for generational wealth? This quote from Synchrony says it all:

"In the Black community, building generational wealth hasn't been easy to either attain or maintain, for multiple factors. Comparatively, Black families achieve considerably less wealth than white families, with a median net worth of $24,100 compared to $188,200."

So let's think about this… in the US (which accounted for just under 50% of total VC investment in 2021 - $330bn out of $671bn), minority founders are:

- Less likely to receive funding

- More likely to have a lower income

- Less likely to be from families / communities with generational wealth

But yet, we still talk about needing skin in the game.

And this is just one example.

I haven't mentioned female founders with young children or people from developing nations that are systemically excluded from certain services.

The same could be said for emerging fund managers who are required to fund their so called 'GP commit' as part of the total fund.

I am a very lucky individual.

I bootstrapped one of my businesses and, when I ran out of cash in the other, was able to take out debt to leave the business clean. I knew if things fell apart, I'd be able to take myself to my parents place and get back on my feet.

But so many people simply don't have that option.

So many people can't raise money from friends, family and 'fools,' because their friends and family don't have money and didn't go to the 'right' schools.

They can't risk going all in because if they do, they don't have a parent's house they can fall back on.

And yet, even though they already come from communities that receive the least amount of funding, they may be further penalised for not having 'skin in the game.'

This has to change.

Entrepreneurs should not be brought to the brink of bankruptcy, mental breakdown or familial collapse to build a better future.

So how do we encourage more people to take that plunge?

How do we level that playing field and give everyone at least the opportunity to take a risk?

What are your thoughts on this? 

Hit me up in the comments here, or join in on the discussion on LinkedIn - I’d love to get your views 💪🏾

How can did I add value?

I’ve mentioned my friend Rahim before, in fact in one of my first newsletters. And I’m only bringing him up again because, over the years he has been what I can only describe as an informal mentor to me. When I first came back to the UK, he set me on the path I’m now on.

Rahim recently wrote about his relationship with his own mentor who sadly passed a year ago and how, he had found that mentoring - which he does openly and enthusiastically - is one of the core pillars of how he thinks people should build and grow their careers.

OK, so that’s how he was helpful, but what about me?!

Well since that informal mentoring with Rahim, I have acted both formally and informally as a mentor to a number of people myself.

It’s fulfilling being able to help people who are at an earlier juncture in their career than I am. But I’ve also realised that mentoring can, weirdly, help you identify areas where you yourself can also seek more guidance.

One thing that’s worth noting is the difference between mentoring and coaching:
Mentoring - you’re typically giving someone the value of your experience
Coaching - you’re holding a mirror up to someone so they can find the answers they already have

Last week, I was asked to have a conversation with a CFO who had joined a later stage startup.

I won’t go into the details as the conversation was confidential, but here are some of the things we talked about:

• How to think about the right metrics for the business

• How to manage the stakeholders to get to the right objective

• What it means to raise in the current environment

• The difference between VC investors that are hands off versus PE investors that are hands on

It was obvious that this CFO was smart and had his head screwed on. But he was in an environment where he didn’t have someone he could easily ask questions of.

Being that person he felt comfortable enough to turn to filled me with so much joy and purpose.

That’s when I realised the best mentors I’ve ever had never feel like they’re actually mentoring me.

And I try to do the same.

Have a conversation, help where you can and show, never tell.

I’d love to hear about your experiences with mentors and if you’d like to have a call with me, just connect with me on LinkedIn and let me know that’s why :)