What Venture Capitalists Look For

The video portion of this interview ran on Entrepreneur.com on Wednesday, Sept. 13, 2017: How the Daughter of a Maid and a Bus Boy Learned to Navigate the Investment World

Samara Meija Hernandez is an investor with Math Venture Partners. 

How did you become an investor? What was your career trajectory?

SMH: I started off at University of Michigan as an engineer. I graduated and realized I didn't want to be an engineer. I found Goldman Sachs at an engineering conference in '05 and '06. I didn't know what Goldman Sachs was. When I asked they said "we're a bank." My business school told me "they're the Gucci of investment banking." It was such a great place to be at the that time. I did two internships and ended up spending eight years at Goldman Sachs. I went to Kellogg at Northwestern, and took a class in venture capital. I loved everything about it. I loved early-stage investing, looking at new companies, looking at really cool deals, but, more importantly, helping entrepreneurs grow. That was really exciting, and that's how I got into venture capital.

How did you learn to navigate this unknown territory?

SMH: My family came here as immigrants to the United States. My grandpa was a migrant farm worker. My mom was a maid and my dad was a busboy. I didn't have that traditional background where [the parents went] to college and they knew a bunch of Wall Street people and made those introductions. I had no idea what Goldman Sachs was. I actually was planning to be a hairstylist when I graduated high school. I wasn't even thinking about going to college.

I went to the University of Michigan for engineering because I was good at math. The reason I was good at math was because I came to the U.S. not knowing English and math was a universal language. I excelled in math and not so much in English at the beginning. I did really well at math and then I got into Michigan and engineering.

It was difficult for me to navigate everything: applying to universities, looking for jobs, even paying and getting through financial aid. Sometimes I didn't have money. I would eat Ramen Noodles and wait until my next financial aid check came through. That was where I started. Navigating the space was a challenge. Even just how do you talk to people, how do you reach out to your manager, how do you ask for help? How do you navigate the whole Wall Street world. It was interesting to me.

I had a lot of great mentors at Goldman who I proactively reached out to and they helped me through the whole process. They were men, women, know black, white, Hispanic. I had a Puerto Rican advisor, who was amazing. We'd give each other hugs, we'd connect on a different level with culture. I also had a white man who gave me really good feedback. It was a combination of the culture, Goldman is really good at and me reaching out and saying "help." T

there's people that just take you under their wing, and I don't know why or how, but I will forever thank them for the rest of my life and I hope they know that. They're the ones that helped me, guided me and saw something in me. I'm grateful for that.

Is there a particular person at Goldman that sticks out? 

MH: There's so many. My first manager, pushed me a lot in good ways. I was in a team meeting and I said to her, "You talked about the bank meetings, what are you talking about? What things happen at the bank meetings? What do the clients ask about?" And she said, "Why don't you just come?" As an intern ,I came to these meetings. I didn't speak at the meeting and afterwards I had a lot of questions. I asked her the questions in private and she encouraged me to speak up during the meetings. She’s the one that pushed me to actually go out and find these answers on my own and speak up, regardless of my title or my experience.

She also encouraged me to network and grab coffee with a new person each week. That helped me discover, the power of networking and learning different areas of the firm. Eventually, networking helped me get to my next job at Goldman and then the next role, and the next. In venture capital there's so much networking that happens and there's no guidebook, there's no mentors, there's no nothing. You just go and run with it. Networking is a skill I learned at Goldman which allowed me to reach the top five in sales. It’s what helped me get into venture capital and really build my network.

On your viral op-ed titled "Why your boss is still a white guy"

SMH: 

Diversity has always been an interest and passion of mine. First Round Capital came out with a survey that asked entrepreneurs a couple different questions. One of the questions was, "Why do you think there's lack of women in tech?"

Men responded with saying that it's because of a pipeline issue, meaning that not enough women want to go into the industry. Women and other minorities responded very differently.

They said it's because there's lack of mentors and unconscious bias. There was a huge difference in these results and I wanted to explain why. So I talked about the facts on why people don't go or stay in tech.

The belief that there's a pipeline issue is a real problem. If, as a CEO of a startup, I think that not enough women or minorities are going into tech because of lack of interest, then I’m ok hiring from a homogenized pool. As opposed to saying “You know what? There's a lot of people that want to get into tech but there's lack of mentors and they don’t see themselves represented in this industry. How do we fix it?"

I wanted to attack the problem of unconscious bias head-on so I wrote about. I gave really simple quick thoughts of what you should do, and it went viral. I posted it on a Monday morning and within 24 hours it had over 15,000 views, 200 shares, 400 comments and that was just on LinkedIn.

Chicago Tribune and Chicago Inno picked up the op-ed and it kept reaching more people. The more negative comments I got, the more people reached out to say, "Thank you for writing this."

This happened, last winter and I'm still getting people reaching out to say, "I want to talk about this. This is important."

How do you cope with the attention of something like this?: 

SMH: It's rewarding for me to have somebody come up to me and say, "I want to talk to you. I want help with this." If I'm the only person that they feel comfortable with talking about it, great. If I'm not and I can find somebody else, great. You know it's hard, I don't know what the right answer. I'm very uncomfortable with being in the public eye. However, if this is creating a platform for change, then I'm willing to put myself in an uncomfortable situation.

We need to have open conversations on difficult topics. It's not about bashing a certain race or culture or whatever, it's about discussing problems with diverse groups of people and coming up with solutions on how to fix the disparities.

What advice do you give to someone with a similar background to yours?

I wanted to be a hairstylist, and I went into engineering instead because my sister suggested it. She recognized I was good at math and said I should try engineering. You're never too young to bring somebody up and just encourage them.

I struggled through the undergraduate process but I had somebody pushing and encouraging me. My older sister would say, "Hey, you can just stay one more semester. One more semester." I wanted to have a stable income and decided to pursue [a lower risk industry] because I knew I had to pay my way. My parents weren't going to cover expenses for me. I always thought I had to take care of somebody else. The reality is I, there's some truth to that, but I didn't necessarily need to [play it safe], especially when I was younger.

When you're younger you can take on more risks. You don’t necessarily have family to take care of or a lot of debt. Try it. I think a lot of times in [Mexican] culture, and especially as women, we're taught to be perfect and we can't make mistakes. We just need to go out there and be like, "Just try it". If you fail you're young enough to do something else, right? Just try. Explore, if you're really interested in something. Just don't do it because you want to be a woman in tech. Pursue things that you’re genuinely interested in it.

Sometimes that means taking a few steps back, in your career and in life, in order to move 10 steps forward. I've just known that, "Okay, I just have to work 10 times as hard. I need to be 10 times more prepared in the room than anybody else." You know, because sometimes you're the only woman, you're the youngest. You're the only minority and so people are looking at you differently, right? That's just been a mentality that I've always had, like I just don't want to give anybody an excuse to question why I'm there. It starts with you not questioning why you're there. The second is to give people a run for their money. Be better prepared. And third, find mentors and role models.

Be very proactive in reaching out to say, "I need help". Not just from women. Some of my best mentors have been white men and reaching out to different people in different industries with different backgrounds and experiences.

What's the most important skill for someone in your field?

SMH: The most important skill is not necessarily how smart you are, it's having a unique perspective on something and having empathy towards it.

Ultimately [an investment] comes down to can the CEO execute? Can they do what they say they're going to do? It's really about your perception of the CEO, how [an investor can] help and how you analyze teams.

A lot of the issues we find are not necessarily with the product, or they're running out of cash, or something wrong with a model. All of those things are real issues, but a lot of problems are people-centric. Are they [the start-up] hiring the right people? Are they creating a culture where everybody knows what they're doing? What they're focused on and then executing on it? There's a lot of co-founder issues. Understanding people is the most important skillset.

What predictions do you have for the future of this industry? 

SMH: I definitely want to touch on what's happening in Silicon Valley right now and the conversations around sexual harassment. There's been a lot more news about women speaking up about sexual harassment and speaking up against investors. There's this power dynamic with investors and founders. Women are having the courage to speak up and say, "this is what happened." Then funds are actually doing something about it. There's action being taken to fix this issue. [So far] it's short term, and I hope that it continues. Sexual harassment is the most overt display of discrimination against women, but there's a lot of things that are not so obvious.

The more we can tackle this up front, the more we can create an environment where underrepresented groups feel comfortable being in tech, raising money and being in venture capital and investors. In turn, that can lead to different types of teams that we invest in, and how companies are built. Ultimately, that could have better returns for us as an economy, and for investors as well. You can avoid situations that happen with the CEO of Uber. I think that dynamic is changing and hopefully we can be at the forefront of that change.

What sells? What advice can you give to someone looking for VC funding?

SMH: Build relationships up front. We don’t invest in one data point. Typically, it takes a few meetings and time to build a relationship to understand someone as a person. Even if you're not fundraising, start the fundraising process now. Meaning, build relationships, get to know people and ask for advice. It's always better to ask for advice than to ask for money. There's a lot of people that I've mentored, as well as our fund, who have gone on and become projects we’ve invested in after we’ve seen how they've grown. They said they were going to do something and actually did it.

Another factor I look for is seeing how someone reacts to their customers, to the market environment and how they pivot over time. The reality is that a lot of companies will change the direction of their business multiple times.

When you get a no, take it a step further and say, "No to what?" Find the answer. Is it a no to this revenue? No to this product? No to me? No to my team? No to what?

Pick the right partner and investor for you. Not every investor's the right partner for you. Take the time to build relationships and send them updates. Learn from them and grow., Pick someone that understands your business, who will fight for you and tell you when you're doing something wrong. It's almost like a mentor. Trust this person to help you grow your business and see your passion.