ICYMI: The New Face of VC

0:00Bloomberg Business Week Daily is brought to you by HPE, bringing you the self-driving network, a network that's self-optimizing, self-healing, and self-protecting, and only continues to get smarter. Learn more at hpe.com slash networking. Some people treat ChatGPT like some kind of smart search engine, and some use it to get work done. ChatGPT Work is a new way of working in ChatGPT that can take action across your apps and files, stay with a project for hours if needed, and turn a goal into finished work. It's designed to help you move from a chaotic starting point to a reviewable first version.

0:36So all the source materials, briefs, and scattered information that you have to grind through to turn into something useful can just become something useful. Put ChatGPT to work on your most ambitious ideas and projects. Get started at ChatGPT.com by selecting Work Mode, available on Plus and Pro plans. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated.

1:13What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Bloomberg Audio Studios. Podcasts. Radio. News. This is Bloomberg Business Week Daily. Reporting from the magazine that helps global leaders stay ahead. With insight on the people, companies and trends shaping today's complex economy. Plus, global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast. With Carol Masser and Tim Stenevek. on Bloomberg Radio.

1:58In the month of May, Bloomberg News came out and said it's never been harder to make it in venture capital. This is hundreds of small VC firms struggling to raise money in the current market with emerging managers seeing their total funding in the U.S. declined to about$17 billion last year from$64 billion in 2021. I will say that's not the case for our next guest who recently did a fundraise. I'm very excited to hear from her. Well, let's get to it. Collab Capital is what we're talking about. Actually closing a second fund with$75 million in committed capital to invest in early stage startups, addressing foundational needs across work, healthcare, and community infrastructure.

2:35And so we want to talk about it and see what she's up to. Let's head to Atlanta, Georgia. She is the co-founder and managing partner of Collab Capital, Jewel Burke Solomon. She was head of Google for Startups U.S., where she created initiatives that deployed over$45 million in non-dilutive capital to Black and Latino-led businesses since 2020. Jewel, great to have you here. You know a lot about getting money into areas and startup entrepreneurs who maybe don't find it so easy to raise capital. First of all, the fundraise, let's go there because it has been hard to raise money in the VC world. How did you do it?

3:14Certainly. And thanks so much for having me. It was not easy. It was a little bit challenging, But I think it came all together because of relationships and spending a lot of time. We spent a lot of time on the road meeting with limited partners, getting them excited about our vision for shared prosperity and really telling a different story about how we're finding incredible entrepreneurs who are building a different type of future. And so I think that's what what got our limited partners excited. We had a number of LPs that were partnered with us in the first fund, which was a$50 million fund that we closed back in 2021.

3:54A number of our LPs came back to the second fund, and then we welcomed some new names as well. So we're really excited to now have fresh capital to continue on our journey. Because I'm here on the East Coast, Julem, I talk much more often with private equity people than with VC people. You're at a far earlier stage. It's more like one in a thousand, I know, with VC than it is with PE. But I'm always excited to hear from VC people about their success stories. So what are some of the companies that you've invested in that have really been winners for you? Yeah, so we're still early, so we can't call out the winners quite yet because we're still waiting on those exits to occur.

4:41But we do have some incredibly talented and great companies that are on the right trajectory. So some that I'll just call out because they're killing it right now. We have a company called Reverie, which is in the media space, a company called IntusCare, which is in the health care space. PACE in particular for elder care, technology for elder care facilities. We have a company, our only consumer product company, Hairbrella. They're having a breakout year. And all of these companies that I'm mentioning, they're beyond$10 million in recurring revenue. They're meeting their customers and really having a lot of success.

5:23Wait, Hairbrella? That's something I don't have, I think. Whenever it rains. It's for everybody. It's for everyone. Something interesting about that business is people, when they hear the name, they're like, oh, it must just be for women. But somewhere in the neighborhood of 30 % of her customers are men. There's a ton of different products and it's really reimagining headwear and rainwear and swim caps. And they have all types of products for just about anyone. Yeah. And even for kids when it comes to swim caps. I am curious how you pick and choose and what do you think in terms of the runway to ultimately some kind of liquidity event, whether it's an IPO or selling it off?

6:03Like, how long do you foresee that you need to be funding? because we do find, whether it's because of private credit, private equity, there's like a lot of money that's been sloshing around that enables companies to stay private longer. But having said that, it also means you've got to make sure that investors can be patient and ride it out. So I'm looking at, you know, what is your runway for a lot of these companies? Is it three to five years or how are you thinking about it? Yeah, when we meet companies and underwrite those investments, we're typically looking at a 10-year time horizon because we're investing at the seed stage primarily.

6:38And so we're going to be with these companies for a long time. We're ready for that long haul. But we are seeing companies that are really moving quickly towards revenues that we think will equip them to sell. So some of those companies I just mentioned, they're well on their way. And we expect exits within the next three to five years out of majority of the portfolio. What's the ideal exit look like to you? Because again, in private equity, it's a tough time for exits. Obviously, you have ample time to get there since you're looking out so far. But what do you want to be doing? Do you want to be selling something?

7:17Do you want to have an IPO? Has it changed? I think because the IPO markets have not been as open as we would like, we are really underwriting a number of different potentialities in terms of private equity purchasing, strategics purchasing. But for us, we're looking at every deal that we do, we want it to be capable of returning the fund. So our first fund was 50 million. So that means that, you know, we're investing in companies with the hopes that they will return at least 50 million back to the fund. Second fund is 75 million. So that means the bar is raised a bit in terms of the deals that we will do in that fund.

7:59But across the board, we're very open to what makes sense for the business and really making those strategic partnerships so that we can introduce our portfolio companies to the right buyer at the right time. You've emphasized that experience on the ground leads to the most powerful innovations. And I'm just wondering if you could share an example from your portfolio or from your experience where you've seen a market kind of unlocked or opened up. Absolutely. One of my favorite examples from the portfolio, another star in the portfolio is a company called Qena Health. It's founded by a woman who is a registered dietitian, Vanessa Rosetto.

8:41And she was so close to this problem of the fact that, you know, your everyday person hasn't historically had access to a registered dietitian or nutrition help to help them along on their health care journey. And so having her experience working with patients, she's been able to build an incredible company in Kulina Health where they are really focused on patient outcomes and delivering incredible care to folks along their nutrition journey. Yeah, an interesting portfolio of companies. Jewel, we've got to run, but hopefully we can check in with you soon in the future again. Jewel Burke-Solomon, she's co-founder and managing partner of Collab Capital joining us.

9:19I love the VC world. I love the idea in terms of you get kind of clues of what's to come, maybe. Me too. I think it's fascinating. And also your bets that are winners pay off big. Yeah, right. But you got to make a lot of bets. This is the Bloomberg Business Week Daily Podcast. Available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from 2 to 5 p.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

10:03At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones, member SIPC. Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing.

10:41They're using data and technology to integrate patient care, pharmacy, and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person. How you need it. Optum is helping make healthcare work as one for everyone. Learn more at business.optum.com. Before you sign off, you tuned in for ways to help teams move faster, make sharper decisions, and turn scattered context into work they can use. ChatGPT for Business can help. ChatGPT for Business gives teams a shared workspace with admin controls, permissions, and access to work and codecs in ChatGPT.

11:21This means your business can move from question to answer and code to rollout quicker. Join over 10 million business and enterprise users worldwide already using ChatGPT for Work. Download the ChatGPT desktop app or contact sales to learn more.