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This Women-Focused Investment Fund Looks Beyond Companies With Female Founders

Mary Mazzoni August 27, 2018

Nathalie Molina Niño marches to the beat of her own drum. A technologist and coder by training, Molina Niño launched her first tech startup at the tender age of 20. In 2013, she co-founded [email protected], a training program for women entrepreneurs at Columbia University’s Barnard College. Three years later, she headed up the launch of SelfMade, an entrepreneurship platform from media mogul and Telemundo alum Nely Galán.

With her latest venture, BRAVA Investments, Molina Niño is out to back startups that support women but, in keeping with her fierce independent streak, she’s doing it her own way. BRAVA focuses on long-view, later-stage investing in the style of Warren Buffet’s Berkshire Hathaway — which means, unlike other upstart funds, it’s not interested in the latest unicorn or the next headline-grabbing IPO. In another departure from what’s expected, BRAVA is a women-focused investment fund that looks beyond companies with female founders. “Our thesis is rooted in the idea of investing in women, but in a slightly different way than my colleagues in the industry,” Molina Niño tells Conscious Company.

“I do what I call ‘outcomes over optics’ investing, which is to say I’m not so concerned with the gender of the founder or with the things that make nice, fancy, pink headlines. I’m more concerned with making sure the business model is substantive in a meaningful, measurable way. I want our investments to benefit as many women as possible — not just one or two founders, but on a truly global scale.”

Molina Niño’s new book, “Leapfrog: The New Revolution for Women Entrepreneurs,” hits store shelves on August 28. We sat down with her to learn more about her unconventional approach to investing and her dream of lifting up the next generation of women with equity investing.

BRAVA invests with a focus on women, but you hesitate to describe yourselves as “impact investors.” Why?

Nathalie Molina Niño: A lot of people equate impact investing with concessionary returns. At BRAVA, we invest with a strong impact lens, but scale is the name of the game for me. We’re hoping to get the attention of pension plans, endowments, and the other big-capital forces in the world — which means we’re unapologetically for-profit. I do not accept concessionary returns.

We’re really cutthroat about our financials — not only because that’s our growth strategy, but also because I feel strongly that until we prove to people that investing in women is good business, it will never be mainstream. My goal is to make a gender-lens investing thesis so lucrative and so interesting — even for the non-impact sector — that it’s the sexy thing every all-business-all-the-time capital force wants to do.

What makes BRAVA different from other gender-focused investors?

NMN: When I got started, I watched experienced and deserving investment teams struggle to get capital, and many of them were my friends. They set out to raise $50 million to launch their platforms, but ended up settling for $10 million or $20 million at a time. One of the things I noticed, apart from their theses being different — and, in my opinion, my thesis is stronger — is that most of these were all-female teams. That is an amazing, extraordinary thing but, although it may sound cynical, I don’t think we’re there yet. If this year has taught us anything, it’s that we’re far from where we need to be, and I suspect that the trouble women-led businesses have getting funded translates right into all-women investment teams, too.

I decided to benefit from hindsight and try to solve for these barriers that prevented my colleagues from raising capital. When we first launched, we caught some heat. People wrote think-pieces to the effect of, “I just read about this new investment platform that purports to support women, yet it looks like most of the partners are white men.” I wish those journalists had called me to ask about the reasoning behind those choices, because it wasn’t an accident. It was by design.

White men have the power, the influence, and the capital. I decided that I’m not going to do this unless it involves them, and not just as allies — I don’t even use that word — but as a part of the process. We don’t need more cheerleaders. We need people to roll up their sleeves, get dirty, and come together to invest in women.

How do you make sure your focus on scale and profit isn’t detrimental to the companies you fund?

NMN: When I looked at women-focused funds and their portfolios, I found a lot of spray-and-pray, Peter Thiel-type thinking: You invest in 100 companies, knowing at least 90 of them will go bust, and hope one unicorn emerges. That feels extractive by design. How do we build societies by putting money, energy, and resources into a 90 percent failure rate?

From a structural standpoint, BRAVA invests in five or six later-stage, larger-ticket companies that I’m sure are here to stay. These are companies with the potential to last, and my job is to help them double, triple, or quadruple in size. My favorite businesses are those that operate through a gender lens accidentally. They don’t even realize it sometimes. Other women-focused investors won’t touch them, not because they’re not good investments, but because they don’t seem gender-focused enough.

Can you give us an example of a company that operates through a gender lens accidentally?

NMN: I recently spoke with a company that works in supply-chain efficiency at apparel factories. They purchase controlling shares in factories or buy them outright, and along the way they noticed a pattern: all of these factories have high levels of turnover and absenteeism, the root cause of which they traced to poor working conditions.

As they work to improve these factories, they bring in third parties to certify that there’s no child labor, no slave labor, that everything is up to environmental code, and that they’re paying people a living wage. Then, they go to the major Western retailers like Nike and GAP with a value proposition to the effect of, “The next scandal that will impact your bottom line is right around the corner. Here is a factory that’s ready to go and ready to handle more capacity.”

From their perspective, it’s about efficiency and revenue growth, but — this being the apparel space — over 90 percent of impacted factory workers are women. This company doesn’t parade its social enterprise ethos or gender focus to the world, yet it represents all of the things I look for at BRAVA. It doesn’t have a female founder, and that doesn’t matter. The people whose lives it impacts — in a real, measurable way that I can easily quantify — are predominantly women.

How does your fund feel about exits?

NMN: I want BRAVA to be in the business of long-view investing in the style of Berkshire Hathaway. One of my first investors was a group that includes Howard Buffet, grandson of Warren Buffett, and that was not a coincidence. It was an alignment of philosophy. As an investor, I want to build relationships like those Howard built with Coca-Cola or Geico. These are companies you would be stupid to sell. They’re doing well, they’re growing, and they’re practically printing money. You don’t need an exit. You’re happy to sit back and collect quarterly dividends.

But unlike Howard, I didn’t start with a nest egg of $300 million, so I had to think of alternative ways to get there. For me, in the near term, that means functioning in a fund structure but with a slightly longer horizon. I want to be the investor at the table who doesn’t push an entrepreneur into a decision because it’s the most profitable this year or next year. I want to be the investor who says, “No, you have mouths to feed and a business to grow, and I support you if you’re making decisions with a 10-, 15-, or 20-year horizon.” Most investors don’t do that.

How did you develop your investment philosophy?

NMN: It’s rooted in my personal experience as a woman of color, quite honestly. If I were to tell you the thing that bothers me most about short-term thinking or the focus on who is in the leadership role, it would fundamentally be the lack of urgency — and I think that comes with privilege.

When I ask gender-lens investors who exclusively fund female founders about their theory of change, I get what I call the virtuous cycle answer: If we successfully invest in a woman who becomes the next Sara Blakely, founder of Spanx, she becomes a billionaire philanthropist, and then she lifts up other women. I don’t deny the truth in that, but that scenario takes decades to play out.

I grew up in the sweatshops of Los Angeles, and I know there are millions of women who have zero interest in a theory of change that won’t make an impact for 30 years — if it ever does. If you’re selling me this idea that you create one woman billionaire and somehow the benefits trickle down to all of the other women in the world, you’re selling me trickle-down economics, and I don’t buy it. You can make it pink or dress it up as progressive, but it’s a flawed model. It’s not that I don’t think it’s important to invest in women founders, but I’m looking for scalable, long-view solutions that will impact women tomorrow. My philosophy is about systems-level change — and that goes beyond a founder, CEO, or board.

Can you give us an example of a systems-level investment with the potential to impact women on a broad scale?

NMN: Right now, we’re trying to take the birth control pill over the counter. If we’re successful, who cares who the founders are? Millions of women will suddenly have access to something they didn’t have for decades. If we can make it affordable, we have the potential to change global population numbers. And who’s going to argue with me about whether or not the founder is female? That’s ridiculous. Whoever the founder is, this is something that can affect change for women in the here and now.

Beyond the focus on founders, what do you feel is missing in the gender-lens investment space? How can the sector improve?

NMN: When I look at the portfolio companies supported by gender-lens investors over the past decade, it’s really disappointing. We’re doing the exact same thing the bros in Silicon Valley do: we’re pattern-matching. We are only investing in white women.

That’s another thing I try to solve for in my investment model. Again, I don’t care about the leadership as much as the outcome. When you enable systems-level change — whether it’s for those women in the factories or women buying affordable birth control — the results impact women of color and women who are typically locked out of this conversation.

What can gender-lens investors do to better support women of color?

NMN: Women of color, especially black and brown women, are the most entrepreneurial women in this country, but they’re stuck in survival mode. They don’t need our help to become entrepreneurs, because they’re already extremely entrepreneurial, but they’re so limited in their resources that they’re not able to take their companies above $1 million, which seems to be the glass ceiling in the space.

If we unlock that population from survival mode — to the point that they can invest in themselves, educate their kids, and build their businesses — you won’t see one Oprah Winfrey or one Sara Blakely. You’ll see armies of black and brown women with the potential to take over the economy. That’s essentially what I’m trying to do.

Do you run into resistance when promoting this model? How do you deal with it?

NMN: Resistance comes from all sides — often from progressive do-gooders who feel married to a model they’ve used for a long time. People tell me, “You think entrepreneurship can solve all problems.” Maybe I am a little myopic, but I know we haven’t maximized that tool yet. We haven’t used entrepreneurship enough.

Philanthropists say philanthropy is a better tool or try to convince me to accept concessionary returns because someone is doing such good work. I disagree. By keeping my bar on returns the same as everyone else’s, I hope to convince the market that funds like mine are a good investment. Yes, there’s a place for philanthropy. But if you really want to impart social change, that means channeling sovereign -wealth-size buckets of money into things that support women.

On the other side, the typical financial person is skeptical of anything related to a gender lens. They see a firm like BRAVA, with our focus on women, and assume it must be a charity. But when they see how cutthroat I am about returns, as well as about impact, they start to see things differently. I don’t care if you put a beautiful statue on Wall Street and call it the “Fearless Girl” if the only requirement for your gender-lens portfolio is having a certain number of women on the board. They can keep their statues and their headlines. I know my stance is controversial, but my hope is that naysayers won’t have much to say once the numbers start to come in.

How do you choose companies that will impart that kind of systems-level change? 

NMN: Companies pitch me with their amazing parental leave policies or their 1 Percent for the Planet contributions, for example. In my opinion, everybody should be doing that anyway, but that’s the sort of thing a lot of people consider impact.

To me, that’s not good enough. A company’s impact should be core to its business model. If it’s not, then it’s expendable, and that is problematic to me. What if they exit? What if they’re acquired? If there’s no commitment to continue making the sort of impact I’m tracking as an investor, I see no reason to invest. I want to invest in companies with impact at their core — which means the business can’t exist without it.

Let’s unpack that a bit: Say a company is rooted in impact — it couldn’t exist without creating impact around a certain issue — but its leadership is self-serving and treats employees badly. Despite its impact-driven model, those other factors are out of alignment. How would you respond to that sort of scenario?

NMN: Like any investor, I use multiple metrics to assess a company, and the nature and expertise of the leadership team is a key data point. There’s no question in my mind that great leadership makes for successful companies. A company that is notorious for treating its people terribly is a company that, at some point, will have its comeuppance. Sooner or later, the way they treat people will affect the bottom line.

That said, if I’m talking to my investors, I’ll never lean on, “This is the right thing to do, and that’s all.” Thankfully, in this case, it just so happens that treating your employees with respect prevents the sort of disasters we continue to see in the news — from United Airlines, to the Weinstein Company, to so many others. There are measurable, bottom-line impacts to treating your employees disrespectfully, and as a long-view investor, I’m not meeting my fiduciary responsibility if I don’t keep that in mind. It’s a personal preference, and it also makes financial sense.

What are your top three pieces of advice for entrepreneurs or CEOs that want to change the world?

NMN: Don’t take capital from investors unless you have no other choice and unless you are fully comfortable being fired from your own company. It may sound contrarian, because I’m in the business of investing in entrepreneurs, but there’s always risk in giving someone else control of your company. It’s a big step that people tend to take too lightly.

Second, don’t be afraid of debt. I worry that a lot of entrepreneurs — particularly women and people of color — are getting VC funding pushed down their throats, and nobody tells them about this less sexy option, which is debt. We may end up with a generation of entrepreneurs who took on too much venture capital and not enough debt. That’s an unbalanced capital stack, and that’s a recipe for failure. And when that happens, and women and people of color have a higher failure rate, nobody will blame unbalanced capital stacks. They’ll blame skin color or gender. That worries me, and entrepreneurs need to be wary of that trap.

Lastly, think about alternative exits. One of my investors is co-founder of Hanky Panky. They’ve been around for 40 years, and last November they did an employee stock ownership plan (ESOP). The founders are planning to retire, and they just handed the company to their employees, which was extraordinary. That sort of alternative exit story is is really interesting to me. There’s more to the world than IPOs and acquisitions. I wish more entrepreneurs would think in those terms, because we’ve made quick exits a badge of honor, but there are a lot of different ways to succeed.

What gives you hope?

NMN: Donald Trump gives me hope. Liberals getting caught sexually harassing women gives me hope, because it forces us to have conversations. Even the powerful, the wealthy, the liberal, the educated, and the people who saw themselves above the fray are starting to have difficult conversations.

They’re starting to see things they never wanted to believe were true: we have a country rooted in a cultural phenomenon of deep-seated racism, and we have as much misogyny on the left as we do on the right. If you asked people — even my own friends and my own community — about these things five years ago, you’d get a much different answer from what we’re seeing now.

The situation we’re in as a country, as difficult as it is, forces us to have difficult realizations. It makes white liberal America finally have meaningful conversations with people of color and, for once, there’s hope of seeing eye-to-eye. If you can’t acknowledge a problem, you certainly can’t get into the business of fixing it. It will take a while, but I think we’ve taken the first step.



Equity and Inclusion / Impact Investing / Stakeholder Capitalism
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