Q&A: Founder of Chingona Ventures on current prejudice and bias in the VC space
This article is part of Rebel One’s “Investor & Founder Series”, a series of recorded interviews with CEOs and investors recently launched by RBL1, a leading venture capital firm and investor network based in New York City. You can view RBL1’s investor training programs and new content here. Written by Brian Ou.
Samara Hernandez, Founding Partner of Chingona Ventures, shares with the Rebel One network on how she got into VC and how she found her inspiration to start her own fund after working at Goldman Sachs and MATH Ventures.
Sergio Marrero, Founding Partner of Rebel One, dives into the topic of systemic racism within VC and the two founders talk about the different roles VC firms, limited partners, and founders must play in creating change in the venture space.
Here is a short summary of the 43-minute interview:
Sergio: Can you share a little bit on what kind of founders you invest in?
A: I invest in Pre-seed to seed stage founders, or when a company has raised less than $1M in outside funding. My check sizes are $100–150k, and I try to stay under a $10M pre-money valuation.
I really like industries in Fintech, Future of Work, FemTech, food, wellness and health, and EdTech.
I don’t only invest in women and minorities, but I do work very hard to make sure my deal flow has at least 50% underrepresented groups.
S: How did you get to start your own fund?
A: It’s definitely been a nontraditional VC journey. I was born in Mexico and came to the U.S. when I was young. My parents worked really hard for us to get an education. I didn’t know English very well until 5th grade, but I excelled in math. So that led me to pursue an engineering degree at University of Michigan which then led to me Goldman Sachs back in ’04 and ’05. After a decade with Goldman in primarily engineering and sales roles, I went to Kellogg for my MBA and then did an internship in early-stage investing and fell in love with it.
I graduated without a job so I had to hustle my way through. I tell this to a lot of the MBA interns I work with: you have to network and do the job before you actually do it. I did anything I could: working with startups, building financial models, putting presentations together, and doing customer reference calls. I was then connected with MATH Venture Partners and they gave me my first job in venture.
I worked there for 5–6 years and they were great to work with, but I saw a big need in the space, and that’s when I launched my own fund.
S: What is the strategy at MATH Ventures and how is it different from your fund?
A: I saw many funds in Chicago like MATH Ventures were focused on later stages like Series A. But in markets that were less mature, there was less early-stage money going in. Many founders with pre-product and pre-revenue startups found it very hard to navigate the VC community. There’s only so much advice you can give founders, they really need capital to grow their business, so that’s why I launched the fund.
S: Can you talk about why you founded Chingona Ventures as a sole partner?
A: For me it made sense to be the sole GP right now to make quicker decisions given the early stages and types of founders I invest in. Ultimately, I would like to create an enterprise and grow into multiple funds. With that, I know I need partners. But right now, I have a great community of investor friends that I co-invest and share deals with, and an unofficial group of advisors that I talk to all the time.
S: How did the process of becoming a parent affect your journey?
A: I raised my fund while I was pregnant. While it was a beautiful surprise, I was worried because I’ve heard all these horror stories of people not funding you because they think you will be a stay-at-home mom or you’re not dedicated. I was able to negotiate the equivalent to a term sheet with my LP and even started our own maternity policy at MATH Ventures.
Now when I meet new moms, I let them know where the lactation room is for nursing or offer to go to them if they’re pregnant to make sure the process is as comfortable for them as possible. If you want founders to have a different experience and attract a certain type of founder, you need to open to what they’re going through. For me, to meet at their office rather than my office wasn’t a big deal.
S: I wanted to talk a little about the racism, inequality, and bias in venture itself. Can you share more about the diversity of your portfolio and how you see and manage that?
Q: Let’s start with the facts. Less than 3% of all venture money goes to women and minorities. Minorities receive less than 1% and women of color receive less than .1%. It’s been that way for many, many years.
I don’t believe that people are intentionally not investing in women or minority founders, but there’s something missing because venture funding has not gone to these groups. What I’ve noticed is that if VC firms commit to increasing diversity in their portfolio, they become exposed to more deals and more types of deals. As a matter of fact, some of the best deals that I’ve gotten have been from women of color.
You need to be very intentional about it. Until VC firms make an action towards increasing diversity in their portfolio or team to really bring in different voices and networks to the table, they won’t be able to see more deals and make better investments.
The reality is, only a few venture funds really drive the returns for the industry. How I thought about it is, if I have a different approach and take a look at founders that others say are “too early” or “I don’t get the market”, I will be able to find opportunities early on that other investors won’t find. I can then help de-risk that investment by giving them capital and network for the next round of funding.
Ultimately, it’s up to the limited partners (LPs) that invest in these funds. If your investors are just giving you money and don’t necessarily care where the returns come from, your investments will most likely come from your network and if you and your team have similar backgrounds, you’re going to invest in the same types of people.
I think it’s one, being intentional from the fund level, and the LP side is thinking about your fund dollars in a different way and being very proactive about reaching out to these diverse fund managers. Because I can tell you, there are a ton of minority and women-led funds that are coming out to market with very different theses and the more dollars that they get, the more dollars that will ultimately go to these founders.
S: Can you share about your other initiative, Chicago: Blend?
A: So I’m on the board of Chicago Blend, which is an initiative to increase diversity in the VC space in Chicago. We realized that we could start referring more women and minorities into VC companies. We could get a group together and mentor these investors to progress and get promoted in their VC firms to start writing checks. We realized that within our portfolio companies, many on the boards were not women or minorities.
We created a database to start collecting names of women and diverse candidates to start putting them in board positions. That’s very important because at the board level, you’re essentially guiding the company, and I personally experienced a board role where I helped hire the first woman of the company.
S: What actions do you think we can take to better address the injustice that’s ingrained in the venture system?
A: I’m speaking about this from a Latina’s perspective, so it’s just one perspective. At Chingona Ventures, 50% of our portfolio is women CEOs and 50% is men, 25% are white, 25% are black, 50% are LatinX, 10% are Asian, and 5% are LGBTQ that I know of, 40% are immigrants, and 15% are moms.
I think taking a look at your portfolio to see what you’re doing and not doing is the first step as a successful investor.
If you find that you’re not getting deals through the investment committee, then it probably means there’s something going on in the investment committee if you all look the same or have the same backgrounds. There’s just natural bias, or they don’t believe in the founder’s ability to execute. Well, where does that come from?
Firms have to put underrepresented individuals in high-impact roles where they can succeed and bring in their network, and the firms can then hopefully invest in those founders.
S: What more do you believe we can do for the black community in venture at this time?
A: It’s no longer a pipeline problem or that there’s not enough Black founders. I believe as VCs do their natural deal source, they should review a list of diverse founders they’ve passed on or founders they really liked before and reach out to have a conversation.
I think this is going to be a long process, so looking at your deal flow process and saying how many Black founders are coming through the door and if it’s less than 5 or 10%, thinking about who can you talk to and what organizations have committed to investing in these founders.
It shouldn’t just be a thing now, it should be integrated into your entire process. And even if you don’t invest in them but they had a good experience with you, they will recommend other Black founders to your network.
Even within your portfolio companies, you can be committed to helping them hire their first black employee or work with recruiters and through tools like LinkedIn. I think it’s just being very intentional about it and integrating diversity as part of your investment process, culture, and hiring plan.
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If you’re interested in learning more about Hernandez’s experiences, you can watch the full interview here. If you are a motivated investor or young professional like me, I would highly recommend checking out RBL1’s Youtube channel for more videos on how entrepreneurs and investors are changing the world.
Thank you for reading and stay safe!
