How Former Facebook Executives Are Taking A New Approach To Venture Investing

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According to a recent Prosper Insights & Analytics survey, nearly half of US adults feel confident about investing in the stock market.

New technologies have made this possible, as according to the same survey, 38% of US adults have used mobile apps to make investments. The very nature of investing is changing and for the first time has expanded to include more participants than ever before.

Yet this trend goes beyond the individual. Institutional investing is also evolving and welcoming a new wave of investors and firms that are approaching venture capital unlike their predecessors. Many newer shops offer differentiated value to the companies they invest in or focus on serving a new generation of diverse founders.

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f7 Ventures is a women-led firm at the center of this trend. I recently sat down with f7’s founders Kelly Graziadei and Joanna Lee Shevelenko to discuss their investment philosophies, what they aim to do differently, and the larger shifts they’re seeing within the industry. 

Gary Drenik: What is f7 and how is it different from other VC funds? What led you to start it?

Kelly Graziadei: f7 Ventures is a fund launched by operators that have scaled some of the largest technology companies in the world, and we happen to all be women. My co-founder Joanna and I both worked at Facebook for many years, where I led global sales, product marketing and media teams and she built multiple operations teams O-1 as well as worked on Facebook’s growth strategies and mobile products. During our time there, we helped launch over 20 products globally and helped the business grow from a team of 100 to 40,000+ and billions in revenue.

We both had 15-20 years of experience at technology companies before getting into VC. We have made pivotal business-defining decisions, learned hard lessons, and found scrappy solutions. F7 allows us to use that knowledge to support early-stage founders where they need the most help. Today it feels like anyone can start a company, but where most fail is in the execution. We partner closely with founders to see around corners and provide tactical help – whether it’s fine tuning a sales comp plan or a marketing strategy. We love to dig in.

We also benefit from our highly diverse network. Throughout our careers we constantly sought out different perspectives, ideas, and backgrounds so over time, our networks have become inherently diverse and differentiated from traditional venture networks.

Drenik: There’s been more interest than ever in the stock market, which has wide ranging consequences. As investors, what are your thoughts on this trend and how it will play out in the future?

Joanna Lee Shevelenko: The growing general interest in investing is a net-positive because it empowers more people to generate wealth. Instead of just being a Costco customer, you can be an owner of its shares, and there is something really powerful about that.

It’s been great to see the proliferation of new technologies and services that give individuals the confidence and tools they need to invest – whether it’s robo-advisors like Wealthfront and Betterment, or simplified stock trading like Robinhood. Of course, there’s also the risk that comes with investing so it’s important that we increase education and the resources available to everyday investors. TikTok shouldn’t be a primary source of investment advice.

It’s important that people understand the real risk involved, and make decisions accordingly. We think there’s a huge opportunity to build consumer tools that both educate people on this, and help people make smarter decisions based on that risk.

Drenik: What industries or sectors have you been most excited about? Where are the biggest untapped opportunities for early-stage startups?

Graziadei: We’re really excited about industries that have recently accelerated, due to the dramatic shifts in the world over the past two years, from the pandemic. With large behavioral shifts, come dramatic innovation. And the pandemic has driven dramatic shifts in how we work, live and connect.

As we’ve all seen, the pandemic accelerated changes in how and where we work. Remote work has become a key part of the lives for so many of us with desk jobs. Meanwhile it’s projected that 43% of the US workforce will choose to work as a freelancer by the end of this year. There’s a massive opportunity for businesses to build technologies that empower the new and evolving workforce. This is also a space that has been particularly interesting to us. It’s the reason behind our investments in Read.cv, which is rethinking the resume for how people want to showcase their skills, interests, and strengths and not rely on traditional labels, or WorkWhile, a labor marketplace & the AWS for hourly talent that sources talent, matches talent to shifts and supports workers with payment solutions and benefits they can’t get elsewhere.

There have also been groundbreaking advancements in and increasing adoption of Telehealth. We’ve made two investments in the space including Rocket Doctor which is moving Telehealth from an acute care solution to one that addresses chronic conditions and ongoing care. They’ve developed direct-to-patient diagnostic kits and are bringing the in-person doctor’s office experience to remote appointments with devices and specialists. We think the shift to remote care is a permanent one for many parts of the industry, so opportunities like this are exciting to us.

The change in work coupled with the ongoing pandemic has also led to a change in how we think about “community.” We have traditionally formed communities in our neighborhoods, places we work, churches and schools. The world today has led many people to search for connections in new places. We’re interested in technologies that can bring people together – both online and in-person – to make them feel supported and a part of something that’s bigger than themselves. We invested in Hamul for this reason, as the company makes gaming even more social for gamers and non-gamers alike with more ways to play, stream, chat, have fun and meet gamers from around the world.

Drenik: Where do you think venture investing is headed more generally? What trends do you see emerging?

Lee Shevelenko: Capital is a commodity. We think that at the end of the day, founders want more than just capital out of investors – especially at the early stage. Founders need investors that can provide tactical and practical support, not just irrelevant or grandiose suggestions based on a 30,000-foot view of the business. Early-stage companies have smaller teams and fewer resources, so an external support system can be critical. We believe that investors who can get their hands dirty and jump in when something goes wrong have a competitive advantage, which is what we aim to do. 

The people behind the capital should also matter. Founders also recognize that they may end up spending quite a lot of time with their investors and so they’re thinking about whether it’s someone they want to be spending that precious time with and that they can trust with the ups and downs of building a startup. They may want to understand what their investor is like to work with on a day-to-day basis, and after the check is signed.

Simply put, we think a lot of the founders we partner with choose to take capital from f7 because they believe in the help, we’re able to provide, and because they like and trust us as people.

Drenik: What do you think needs to happen to bring more women into investing? How can the industry change to support this?

Lee Shevelenko: So much of investing has to do with your “network.” It’s where you find founders, it’s where you find other investors, and it’s where you find amazing talent at companies that may want to get into the industry someday.  To bring more women and other underrepresented individuals into investing, we need the existing ecosystem to diversify their networks to not just include people who look and think like them, so that when someone is asked who they should bring in as the next Associate or Partner at a firm or where they should allocate their dollars, it isn’t just more of the same.

Second, we need to get more women to see themselves as potential investors and wealth creators, and realize they have the skills that it takes to invest. Investors come from such a wide range of backgrounds – they can be founders, executives, product builders and more. Women need to understand that they can play a role in distributing wealth creation, but they must first see themselves as part of the ecosystem. In order to do this, we can start by creating role models and raising visibility of other women investors so LPs and the industry move dollars to emerging managers that happen to be women.

Graziadei: Adding onto this, there’s also a need to continue to evolve the structures and policies that may unintentionally limit the ability for women and underrepresented individuals to break into the space. With a traditional VC fund that is over $10M, you are limited to 99 investors (LPs) which in turn drives up the minimum check size required to invest. This creates a big hurdle for first time and underrepresented investors. We’re seeing new fund structures such as rolling funds try to address this and we need more/faster change and innovation to create more access to the asset class.

Drenik: Thanks Kelly and Joanna for sharing more on your fund and where you think venture is headed. We’re looking forward to seeing more of your work supporting companies and founders.