Base10, a four-year-old venture capital firm, has completed its third fund with $460 million in commitments. The new fund brings Base10, which now has $1.3 billion in assets under management, the world’s largest Black-led venture capital firm, according to its co-founder Ade Ajao, who is partly Nigerian. While that is noteworthy, we are more interested in how Ajao and company co-founder TJ Nahigian are exploiting that distinction without making diversity an explicit part of their own investing objective.
Indeed, the business claims to be completely focused on investing in companies that assist automate “real economy” areas such as food, retail, transportation, and finance. Furthermore, it claims that by just focusing on good firms rather than approaching teams with a preconceived notion of the “perfect” founder profile, it automatically finds its way into strong startups with diverse teams. Perhaps. It looks that something about its strategy is working. Base10 has made a number of investments, including Nubank, a Brazilian fintech business that went public late last year. (Ajao gave it a personal check early on, but Base10 was founded too late to invest in it until it was already a growth-stage company, according to Ajao.)
Base10 also has 79 portfolio businesses, including Notion (now valued at $10 billion), Figma (now valued at $10 billion), FTX (now valued at $32 billion), and Handshake (now valued at $3.5 billion), to mention a few. Ajao, who helped co-found the Madrid-based ridesharing business Cabify before joining Workday Ventures in VC, spoke with us recently. We wanted to learn more about how he and Nahigian, who is both an investor and a previous entrepreneur, were able to achieve so much in such a short time, and how the current market crisis is affecting their view.
TC: You’ve said for a long time that you’re minority-led but not minority-focused. Is this still the case? AA: That is still true. One thing that is critical for us to demonstrate is that if you simply try to invest in the best businesses available and do so with an open mind — that is, if you try to remove biases about backgrounds, demographics, and geography — you will likely end up with better financial performance and a more diverse portfolio. Other minority-led funds using the same strategy are experiencing the same results. That, more than anything else, speaks to the industry’s blind spots in my opinion.
How varied are the founders in your portfolio, and what exactly do you mean when you say “diverse”? Geography? Gender? We’re talking about gender, ethnicity, and where you’re from when we say demographics and geography. More than half of the portfolio has a founder or co-founder who would be deemed “underrepresented” in venture capital. Outside of Silicon Valley and San Francisco, the majority of the portfolio is located.
What do you believe the relationship between these two pieces is? Geographically, you’re casting a wide net. Is it why you believe your founders are more diverse, or do you think it’s more deliberate? Africa, Latin America, and the Midwest are all places where we’re making investments. But the Bay Area, where we all live, is the single geography with the most investments, and even within the Bay Area, we have a higher percentage of companies founded by people with non-traditional backgrounds. I’m not sure why — I don’t have all the data — but when we had to replace in-person meetings with Zoom sessions, one thing we saw was that when we had a founder pitch the entire group, they frequently stated, “Oh, wow, you people look different.” I believe it has an effect.
In terms of Latin America, SoftBank has done a lot to help the area, including marking up some of its own assets in the region. Is there any danger that if SoftBank slows down, money may dry up a little, or have enough other investors descended that it won’t matter? Cabify began in Latin America in 2011. My next three investments were [the Brazilian] e-hailing app 99Taxis, [the Colombian on-demand delivery startup] Rappi, and Nubank, which I passed on to many Silicon Valley venture capitalists who refused to touch them. Partnerships did not want to invest in enterprises outside of the Bay Area at the time since it was considered a disadvantage.
‘If you agree to move to the Bay Area, we’ll draft a term sheet,’ it said. ‘Hey, we’re going to Mexico,’ ‘We’re going to Colombia — who should we see there?’ I’ve had emails and calls from a lot of those collaborations in the previous 18 months. I never had the impression that the tale was only about SoftBank. Marcelo [Claure], a former SoftBank executive, and his team performed a fantastic job, in my opinion. They really brought the environment into focus, as well as what other people were missing. However, I believe that enough individuals are beginning to see the light. [In the interim], what I enjoy is that there aren’t many general partners at venture capital companies in Silicon Valley who have expertise in Latin America, which provides us an advantage.
