What a $150M Investor Wants You to Build Now

0:00We are looking to invest in companies where the funding will accelerate the trajectory of the company. We're typically investing$500K to$1.5 million, hoping that we can turn that into a hundred times. Our money, brands we've invested in include Starface, Top Skip Drive, Chief, Bring Health. When you look at the founders that you've backed that have done very well, is there like a personality trait? Successful founders will run through walls. Are they a visionary storyteller? Do I believe that they can execute? And they're a little like, annoying. We like to back people who have world-changing ambition with a dose of humility.

0:40How does someone convince you that they've got all of those things? I start with the story. Why now? Why me? How big is this market? What have you done so far? I've seen a lot of influences in this space. Young women wanting to get into angel investing and writing angel checks. Has been glamorised by Shark Tank and on social media. I'm an asset manager. I'm not out here to just write checks for cool people. I am investing on behalf of the retirement savings of teachers in some cases. So there's a real responsibility. AI is going to completely change the workforce. My best advice, I think you need to understand how these tools work.

1:16The percentage of users, 80 % are men. We are already behind. The guys are leveraging their day in a way you couldn't even imagine. We are sitting here going, I don't know if I trust AI. Hey business besties, welcome back to Female Founder World. I'm Jasmine, I'm the host of the show and the person behind all things Female Founder World. Today I'm chatting with Nisha Dewar. She's the managing partner and co-founder at BBB Ventures. Nisha, welcome to the show. Hey Chaz, nice to see you again. Okay, you were on the show ages, ages ago, before we did video, I think. I think before we did video, I mean like right when you were getting started.

1:50Yeah, bless you, a year ago. No, I mean I feel honoured to have been asked and to be back again. I mean the people you've had on the show recently, they're like the real deal, mate. Yeah, so are you. Aw. Well, let's have a good conversation today and we'll see. Tell me, for people that don't know BBG Ventures or what a VC is, what do you do? Yeah. So I run a venture capital firm called BBG Ventures and we invest in female or diverse-led companies building for what we call the polycultural future. So we get really excited by founders who don't just have professional experiences that qualify them to win, but have personal experiences.

2:28So that's why we started with women back in 2014, because women building for women, they understand their target user. And today we've expanded that to a broader set of founders, but really thinking about where is the country going and what are the biggest solutions that need to be solved. And so we invest in both consumer businesses and enterprise or SaaS businesses. We have a mixed portfolio, but what does that really mean? So in VC, we are looking and a lot of your listeners might know this but some of them might not we are looking to invest in most often technology companies not always but companies where the funding will accelerate the trajectory of the of the company and who who want to have a fast growth business and that's a really important thing about VC so we're typically investing you know, 500K to$1.5 million in a very early stage of a company pre-seed or seed and hoping that we can turn that into 20 times our money, but really not just 20 times, actually like a hundred times because we'll make 25, 30 investments out of a fund, like a 50 or$60 million fund.

3:39And it's such a tough game that we need one, two or three of those investments to triple the total amount of money that we invested. So I need to have one or two or three investments that make me like 150 or 180 million dollars. And that is the very tricky game of venture capital. Okay. Tell me some of the companies that you've invested in that people might know. Yeah. So some of the consumer brands we've invested in include Starface. You and I were talking about pimple patches earlier and they have an extraordinary thesis around I think the rejection of perfection in beauty today for Gen Z. We have invested in Hopskip Drive which is a mobility company for kids.

4:24They get kids to and from school in cities all across America. We invested in Chief, the Women's YPO Network. Probably our biggest winner which not a lot of your listeners might know because it's a B2B company. It's a company called Spring Health, April Co. youngest unicorn CEO. Spring Health delivers mental health care benefits via companies as an employee benefit. They raised their last round was$100 million Series E at the beginning of 2024 and they were valued at over$3 billion. And I love talking about that company because we talk about consumer needs and there are a lot of important nice to have consumer needs, but there are a lot of must solve consumer needs and mental health is one of the biggest challenges in the country right now.

5:10So we love everything from CPG to technology to healthcare. Okay. You've been in this space for a while now. You said that the firm's been around since 2014, more than 10 years. When you look at the founders that you've backed or the types of companies that you've backed that have done really well, is there a through line? Is there like a personality trait? Is there a kind of experience? Like what makes these people so good or these ideas so good? Yeah. Yeah. So if you go and read about VC and what makes a great founder online, you'll find like a list of like 10 attributes. But I think the thing they all have in common is that successful founders will run through walls.

5:54Like you cannot hold them back. And so when you're thinking about backing a founder, you're looking for all of the traditional things like, are they a visionary storyteller, right? Are they, the question we ask is like, is this person charting a new path in their world? So whatever industry they're building in, are they telling a story about how they're going to shift their paradigm? And then you're looking at, do I believe that they can execute across this? Cause like storytelling is one thing, but like being able to bring that to life and do the work is a whole other issue. So storytelling and execution, those are the key foundations.

6:33And then you're looking at tactical things like, do I think they can hire a great team? Can they convince people to come along for the ride? Can they convince employees? Can they convince customers? Can they convince investors? Like all of these things are at play. And then you're looking for qualities like resilience, adaptability, are they flexible? Can they take feedback? But when you put all of those people side by side, it's the people who are like, I am not going to stop until I win at this. And they are so high conviction and they're a little like annoying. You wouldn't necessarily be best mates with them?

7:12Not always. No, because they are, they have such a high degree of belief in themselves and the vision to the point that it's like a little bit delusional and rightly so, because you have to be a little bit delusional to build a startup and try and build a billion dollar business or any business today. So it's, you know, there's a reason that like a ton of really successful founders and CEOs are actually narcissists. We try not to back the narcissist. We, I would say actually our, everyone's got like a brand of founder that we like to back. And I think we like to back people who have world changing ambition with a dose of humility.

7:54I love that. Yeah. If I'm sitting here and I'm trying to convince you to invest in my company or someone's listening and they want to convince you, how does someone convince you that they've got all of those things? Yeah. I start with the story and there are three key parts of a story when you're trying to raise money. Why now? Why this product? And why this team? Or why me? And so the why now is about how big is the size of the opportunity? How big is this market? And what part of that market could I take hold of? But more than that, it's what is happening in the market today? What are the dynamics that mean this is the right time now?

8:36Are there some like old legacy issues in this industry? Is there something new about technology that is changing? Is there a cultural movement? And then why this product is, okay, why is my product going to win? What is so different about it that is going to deliver a 10x better experience or it's going to stand out from the crowd of other me too's in this industry and then why me is what is it about me and my team that makes us so qualified to win here so we're really looking for that level of ingredients and then we're we're digging into these other things so on storytelling is there a big vision a clear narrative arc on how my company is going to change my part of the world, right?

9:22And then on execution, like we want to see some examples. So what have you done so far? It's okay if you haven't raised money yet. You might not have had a ton of money to have so-called traction or numbers on the board, but you know, what have you done with what you've got? Like I love the story about Katrina Lake at Stitch Fix, right? She went around when she was coming, like validating the idea with an Excel spreadsheet, like with orders from her friends to show like there is interest here. There is appetite. When we met Sarah Pagey at Blueland, she had partnered up with her co-founder, one of the co-founders who had been a scientist at Method, right?

10:01And she already had the formulation for her cleaning products. She already had the margin structure. She knew where she was going to manufacture. So what are all the things that show me this person is a doer, not just a storyteller. And then we're going to push and prod. Like we're going to try and figure out like, what have you thought of? What haven't you thought of? We're going to ask a lot of questions and we're going to disagree with you on some things, right? Like how do you respond to that? Have you thought ahead about this? Can you take feedback? Is this going to be a fun partnership along the way where we feel like we could work with you for the next 10 years?

10:38Can you give me some examples? So you said like, why now? So are there any, are there any companies that you've backed where you can think about the the why now and why that made sense in that context? Yeah so well I think Starface is a really good one actually because you know we have a thesis like I think many of your listeners who work in CPG and building consumer businesses have which is every generation wants different brands from their big brothers and sisters and their parents right there is always going to be a redo and a re-opportunity and what you had with this company was a moment in time where I mean you and I have talked about sort of the differences between Gen Z and how they like to show up and what these founders have tapped into is because they have a number of companies like what are the categories of shame that have held us back and where is an opportunity to flip that on its head and beauty is one of those categories where we have been made to feel like we must pursue perfection at all costs.

11:46And what they saw with this product was both a product that would work, right, and would have sort of, you know, would be efficacious, which is so important in skincare, but an opportunity to speak to this customer who doesn't want to be perfect, wants to reject that, and in fact, wants to shine a light and celebrate their imperfections. And so this idea of the star came at the perfect time, but also, so think about this other market force, a time when people were willing to be messier on social media, right? And show like Instagram started as only your perfect photos. And then they added stories because they were trying to compete with TikTok.

12:31And so what a perfect sort of distribution opportunity for your marketing strategy. We've got this tiny compact of stars. We can send it to influencers and regular micro-influencers for free. They try it on. They love it. They showcase themselves. And so you start to see that it's never just one factor. It's a confluence of factors that starts to get you that sort of momentum of why now. I want to keep the conversation mostly around like what's helpful for business owners if they're raising money and all of that but I do have this very specific question that I think you're perfect to answer because I spend a lot I'm very online yeah a lot of time on TikTok all the gals want to be investors now it's very like there's a real shift to women wanting to get into investing and young women particularly and I think because we've seen a lot of influences in this space like talk about it we also see a lot of young women wanting to get into like angel investing and writing angel checks.

13:31My question is, first of all, talk me through what like the realities of day-to-day is like for someone who is like junior in a, in a firm like yours, like what are they doing and how does someone get a job like that? Like what kind of experience and skills do they need? Yeah, it's a great question. And I think it's important to demystify venture a little bit first because it has been glamorized in the press and it has been glamorized by Shark Tank and on social media. As you said, like a lot of influencers and you and I know some of them, they're starting their own firms. They've been angel investing.

14:07It is a really sexy job and a really unsexy job. It is the best job in the world because you are meeting really smart people all the time who want to change in the world. Like what could be better than that? It is an unsexy job because 99 % of what you look at, 99.98 % of what you look at, you will not invest in. right if we look at our deal flow funnel we're investing in like 0.2 percent so it's a I probably just did that math wrong but you know what I mean yeah but like we are looking at a lot of companies that are not appropriate for venture capital so we have to say no to a lot of people and it is a constant hustle to find new companies and it's not just like hey I like this person or hey I like this idea, they have to surpass the bar on every one of those metrics that I listed.

15:01But what's really important is I'm a money manager. I'm an asset manager. I'm not like out here to just like have fun for kicks and like write checks for cool people. I do that, but I am responsible for a lot of money that is other people's money. Can you explain that for a second? Where do VCs get the money that they're spending? Because this is important to say. Yeah. So I have to raise money from institutional investors who are called my limited partners or LPs. That can come from a variety of sources. So when you're a smaller fund, you might raise money from high net worth individuals or angels, people who've made some money by selling their own business or been really successful operators.

15:45But as you go up the stack, and so we would be called an institutional firm, we've got$150 million under management across, you know, three or four vehicles. Our last one was$60 million. You start moving into this more institutional space. So that might mean family offices or people with foundations. It might mean endowments of universities. It might mean pensions. So I am investing on behalf of the retirement savings of teachers or firemen in some cases. So there's a real responsibility, right? Like we have to deliver a return on that money. So the second part of the job is really understanding like how do I take this 50 or 60 million dollars and triple it?

16:34And what is the appropriate mix of companies? and I have to make initial investments in those companies. When they come back to me for more money, I can't just give them more money because I like them. They have to, again, surpass the bar, surpass their milestones. I have reserves maybe for that. So it's a complicated like portfolio analysis approach as well. So when I say no to a company, it's not always because I'm saying no just to that person. I'm saying no because of what else have I invested in? What else do I need to invest in? Like what should the appropriate mix in my portfolio be? And then as a manager, I have to deal with like tax and audit.

17:18Like I'm a startup founder really, right? So I am managing a team. I'm managing accounting, finance, audit, legal. It's a heavy sort of administrative job on that side too. But if you're a junior investor or an associate at a firm, it depends on the size of the firm. So at a larger firm, you might just be meeting founders all day and sourcing companies and then doing a lot of diligence. So really understanding what a market looks like. And you need a really healthy mix of quantitative and qualitative skills. So can I develop a hypothesis or an opinion on this arena? Where do I think it's going?

18:02Who's playing in it? What are those market forces that mean this is ripe for opportunity? But I need to understand the math behind it too. Like how big could this market be? How big a share could this founder take? And then what does it take for them to become a hundred million dollar business? That's sort of like a, you know, the low bar adventure capital. But at a smaller firm, you might be helping with more of the analysis that the partners are working on. You might be helping host events. So you meet more founders. You might be helping write updates for the investors in the fund. And it's really like, so if you work at our fund, it's like a full stack VC job.

18:41You get insight into all the different parts of all the work that I do and my partner does. So it can be a really fulfilling job but I think the job in and of itself is not just like I get to sit around and have opinions on people's businesses and make that decision there is a long path to making that decision and you asked about angel investing we can get into that if you want for your listeners but that is another kettle of fish because you're using your own money and you really have to think about like what is what is my own financial worth and do I have the capital to allocate money to a set of investments because you should really be thinking about what is an area I know am I looking at enough things to compare them and pick things that feel like they're outliers and even with an angel portfolio you should be thinking about it as a portfolio like I want to make five bets 10 bets 15 bets, you know, smaller amounts of money.

19:44So it's, it's a really interesting thing to add to your portfolio, but it should only be done in addition to like, I'm already in the stock market. I'm already in, you know, some conservative things. Like what is your diversified set of like your financial approach? That's really great advice. So you're obviously looking at a lot of different businesses all the time and also speaking with a lot of investors I'm guessing as well I'm curious about just like trends that you're seeing first of all businesses you're seeing coming through and startups you're seeing coming through if there's a certain thing that just feels like everyone's moving in this direction and then what you think is really interesting and what other VCs think are really interesting amongst those trends yeah so the thing about venture capital is it's primarily uh focused on technology and software so as you can imagine right now it is ai ai oh yeah i can imagine yeah and some of these valuations are blowing my mind they're wild so there's this huge bifurcation happening in the market which is ai deals are being priced at probably a 30 to 40 percent premium than non-ai deals so that's the first thing you've got happening.

21:00Just throw AI into your deck. Throw in AI into your deck. Any old way. Yeah. So probably about 80 % of the deals that are coming through our pipeline would say they're an AI company. Okay. I would say only about a third or half of those are AI native companies, by which I mean, and this is what VCs are really excited about, AI native companies. So could this company have existed before AI or is it an existing product that is being optimized or improved because of AI? And so ChatGPT is the obvious example. Companies like Character AI or my favorite tool to use, Granola. What's Granola? So Granola is probably the best note-taking tool for being in meetings.

21:47Like you might use Zoom or Otter as sort of your transcript notes, but granola is I have it on in all of my meetings. I never take pen and paper notes or typed notes anymore. I'm so much more present. So these are examples of companies that couldn't exist but for AI. And I think that's where the interest is. I would say consumer is having a moment. We actually just did a big deep dive into this at our firm. And, you know, if you think about the internet revolution and the mobile revolution. I mean, the mobile revolution was like 14 years ago. So that makes me feel old. Yeah, me too. So this is the first time that we have had a moment where every single consumer incumbent can be disrupted.

22:36And that is really exciting from every category to music, to storytelling, to video, to productivity, you name it. Like it is up for grabs and the incumbents like all these big companies they they're building I think incrementality into their platforms and counting on the fact that they have people sitting there already but there are going to be a ton of opportunities to to win in consumer so I think that is really exciting on the business to business side people are really excited by old stodgy unsexy unglamorous industries like I just got really excited about a company that is automating the customs processing broker brokerage industry what does that mean so like all of you like a lot of your CPG founders who manufacture overseas they have to go through a customs processing process every time they bring goods into the company.

23:41Everything about that is done like very manually. Faxes, like they barely email these people. It's super hard to get on the phone. They have like two systems of software that are super old. They don't even do API integrations, which is basically unheard of. And so I'm in a company that's amazing that is going to help automate this process to allow these customs brokers to process more forms and then look at them as the human in the loop and review it, right? Like not replacing the human. So it's a really interesting moment. There's like a ton of opportunity in these really old, like unglamorous, sexy industries, but also huge opportunity in like the shiny consumer things.

24:26So I think like that's why prices are so high like vcs are like falling over themselves because it's a new moment a paradigm shift yeah wow yeah as you're looking at all these businesses in the ai space and i'm sure you you and your team are just like deep diving on this in general about what the opportunities are i'm curious about what your thesis is on how the world's the workforce like what changes are coming because I am personally like quite terrified. So you and I saw the same quote from Robert F. Smith, the founder of Vista Equity. I actually saw him speak at a conference about a month ago and he said the same thing about how AI is going to completely change the workforce and the white collar workforce.

25:09And he said, he said in this, the quote, it was something like he's speaking to his team and he said half of you or 20 % of you or something will be looking for a job next year. it's pretty frightening next year yeah it is frightening and listen I'm seeing it happen yeah already the amount of work that you can automate is really staggering if you understand prompt engineering and if you spend time on it and so but that's going to get easier too right now you have to like spend time to understand it but in a couple of years you won't so I will be honest with you I think he's directionally correct I don't know if it's a year or if it's five years.

25:49My best advice is I think you really need to focus on building as an individual. So I think you need to understand how these tools work. I think you need to be using these tools and I think you need to be experimenting with building things with these tools. You know, today they're calling it vibe coding, right? But I think the people who have a building mindset and mentality and a creative approach and then who also have really great soft skills are going to be the people who continue to thrive and create new opportunities for themselves in organizations. So while I think it feels really scary, if you think about actually this generation and their desire to be their own bosses and their own business owners, in some ways it's actually a really unique opportunity for the upcoming generation.

26:41And so my counsel actually to people in our generation or even older folks is like, be using these tools in your daily workflow today. Understand how they use, use them to give yourself leverage. There is a staggering stat about the percentage of users. I saw you share this, 80%. Yeah, 80 % are men. That is crazy. Like we are already behind. The guys are leveraging their day in a way you couldn't even imagine. They're getting so much more out of their day, getting so much more output. And we are sitting here going, I don't know if I trust AI. Like, okay, but then don't give it your private health information.

27:23That's okay. But make the time. I would encourage everyone take three days and muck around with how you can automate anything everything in your life because there is a way to do it start with chat GPT use notion LLM play around with Claude add granola like there are so many great tools out there and by the way there's a dozen guys who created dumb lists on how to do all of this and they've already done the work for you. So good luck to them for having been ahead. Now go and use all that information to your advantage. Amazing. If you were like a young entrepreneurial person, you wanted to start a business and you're kind of like looking for the idea.

28:07When you see people come to you with these incredible businesses and big opportunities, is there any kind of like through line that you see and how they came to noticing those gaps? I think it's most often about a personal pain point or a professional pain point right that you observed it surely that customs situation is someone who is like worked in that space right no I think that's exactly right like our founder of one of our other companies Isabella Rafferty's Avella she started Canela Media it's like the fastest growing streaming platform for the Hispanic population she built two ad tech businesses before this and she grew up watching telenovelas right and she knew this community wanted their kids to grow up speaking Spanish right so that is like the perfect example of professional meets personal insight so I really see like people who have experienced this pain point as that's the unlock because that's when you have passion as well about this to stick with this business idea like Sarah Paigey when she launched Blueland like she had had a baby and she started learning about all the microplastics like this was in 2017 2018 now we hear about microplastics every second day on Instagram but she was just really uncovering like what am I putting into my child and so she was like I am on a mission to remove single-use plastic from this world and so if you want to talk about big vision inspired by personal pain point that is a really great narrative arc so I what I would really say is like I don't think there's any TAM or total addressable market that you can find on a spreadsheet that there's like a formula to find out to start a business I think you should think about in the pain point that I've experienced are millions of other people experiencing the same issue?

30:09And is there truly no good solution out there? And is there a moment in time that says like something is happening that means this could be, this could be the moment? I mean, there are businesses too that like were too early. So I really think like if you're going to stick with something, you know, you've, you've been at this for a long time. I've been at this for a long time like you really have to love it and feel so passionate about that i want to switch gears and talk about there have been a lot of headlines lately about some pretty big acquisitions in the consumer space we've seen road touchland poppy who else there's been a few yeah and for those of us who are building businesses and nowhere near an acquisition when a brand at that stage is looking to sell and looking to exit what are some of those milestones that they need to be hitting or like where do you need to get a company to so that that is a realistic option for you?

31:09I'm so curious about this and I feel like it's a very hard thing to Google. Yeah. Yeah, it's a great question. Well, firstly, I'll say I think it's a really exciting time because we've basically been in like an M &A desert for the last, you know, four years and we've been in an IPO desert too and the tariff situation has not helped anyone. No. But I think what's exciting about this moment is there are strategic acquirers out there and they're looking and they're on the hunt for businesses with good fundamentals. So I think what is really true in all of these businesses that have been acquired is that they are pretty clear market leaders.

31:49In some cases or many cases, they have very clear distribution advantage and they have really strong business fundamentals. So profitability, inbuilt distribution. So when we think about how should you think about the path to exit for CPG, we are really encouraging founders to get those fundamentals in place early. So we actually won't even invest in a company that has to spend so much on customer acquisition that they're not profitable on first purchase. And we want to see a very clear distribution advantage. So often today that does look like being in retail nationwide, but there can be some other advantage.