Xconomy Bookclub: Village Capital CEO Tackles Innovation’s “Blind Spot”

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there are viable businesses that capital markets wouldn’t traditionally fund, but that have enough potential so that an investment wouldn’t be pure philanthropy. And, a lot of the time, those companies are in areas that serve the greater good, such as fintech and health IT for underserved or normally overlooked populations.

While Fin Gourmet, mentioned above, focuses on rural workers without many employment prospects, another Village Capital company, fintech startup Lendstreet, helps people reconcile their debt. Following the financial crisis in 2008, Jerry Nemorin saw a need in helping families struggling with crushing debt.

But as a Haitian immigrant based in central Virginia, Baird writes, Nemorin did not have the sorts of relationships that resulted in early-stage investment. Baird quotes Nemorin as saying: “When it comes to pattern recognition, living far away from VC funds in central Virginia, as a black guy, solving a problem for poor people, I was 0 for 3.”

Nemorin eventually did make a few key connections and did move out to the Bay Area. But, for Baird, the question is, what about similarly talented founders who can’t pick up and move to one of the most expensive places in the country?

Baird says Village Capital’s strategy is deliberately looking where others don’t: in “flyover country,” among women and minority founders, who are working on “real-world problems.” He says 40 percent of Village Capital’s portfolio companies are led by women; 20 percent are people of color. Only 10 percent of the companies are from the top venture-getting states of New York, Massachusetts, and California.

That strategy works, he says. “Ninety percent of our companies are still surviving and growing seven years in.”

Silicon Valley is instead focused on “putting billions of dollars into how to make mobile advertising and clickbait news more effective, and nudging people to buy more stuff.”

Certainly, Baird isn’t the only investor evangelizing a bigger tent for innovation. AOL founder Case is currently touring the upper Midwest with his “Rise of the Rest” tour, which is designed to highlight opportunities in non-traditional innovation hubs. (Along for the ride is JD Vance, the ex-Silicon Valley investor and “Hillbilly Elegy” author, who has also joined Case’s firm, Revolution.)

In “Blind Spot,” Baird also points out other firms such as Backstage Capital in Los Angeles, Lotus founder Mitch Kapor, and IndVC, a Mumbai-based firm that concentrates on businesses that want to stay independent. “The good news here is that there are a lot of people thinking differently,” Baird told me. “They’re too small to matter in the eyes of Wall Street, but they’re gaining a lot of momentum.”

 

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