Launching a venture capital fund is daunting. Launching one as a woman? Even tougher. According to All Raise data, only 9% — about 170 — VCs in the U.S. are women, with a check-writing fund of about $25 million. Nearly a quarter (74%) of U.S. venture capital firms, meanwhile, don’t have any partners that are women. This leads to a dearth in funding going to women founders: Only 15% of U.S. funding currently goes to companies with at least one woman founder.
Two MBAs from MIT’s Sloan School of Management are trying to change all that. Jaida Yang and Preeti Sampat stepped on campus in Boston in the fall of 2016. And when they graduate this week, they’ll be setting off on the continued launch and growth of their venture capital fund, Infinite Road.
The plan isn’t as simple as launching a typical venture capital fund. Yang, 27, and Sampat, 30, want to launch a fund that knows no boundaries based on geography, industry, or even educational level. They’re searching for the best teams of co-founders, with an emphasis on diversity and the MIT campus, where they have spent the past two years working with early-stage student ventures.
Another potential roadblock? The typical VC attempting to raise a fund from partners has at least worked at a VC firm for a few years. They’ve also typically raised at least an angel fund before and have a track record of making savvy investment decisions. Yet neither Sampat nor Yang have extensive knowledge or background in VC. Sampat is a computer scientist by trade, and while Yang has worked in finance since earning her degree from Cornell in 2013, she only has fragmented experience in the venture capital world.
MEETING IN MIT SLOAN’S PACIFIC COHORT
After three years at JPMorgan in the derivatives department, Yang began her first stint in VC, taking a position at Marathon Venture Partners in Beijing, where she focused on early-stage healthcare and fintech companies. She enjoyed the work so much, she decided to get her MBA from Sloan and transition into the VC world. During the summer between her first and second year, Yang worked at Solvay Ventures in Boston and IDG Capital in Beijing.
Unlike Yang, Sampat started in consulting after earning her computer science degree in India. Sampat spent about a year at KPMG and Ernst & Young, before taking a position at Flipkart, India’s largest e-commerce marketplace. Wanting to gain more of a business background, Sampat decided to earn her MBA from Sloan. Her first brush with the venture capital world happened as an intern at Bessemer Venture Partners, also between her first and second years at MIT.
The duo met quickly after arriving at MIT as they were both in the Pacific Cohort at Sloan. But it wasn’t until last November, when the idea of Infinite Road popped up. The two were catching up over dinner, reflecting on their recent summers in venture capital and their overall experience at MIT. “We quickly focused on looking for something in the world we can add value to,” Sampat says on a phone call.
‘WHY DON’T WE JUST CREATE AN INSTITUTIONAL FUND’
Both Yang and Sampat were also involved in the fintech club on campus and advising MIT startups.
“We both have been working with many startups over the past two years and have been tracking the startups process from the beginning to today,” Yang says. That’s given the two some boosted exposure to early-stage startups and knowledge of those fledgling ventures. “We understand who those founders are, why they are working on the startup, how are they are working together, and what they are thinking about in terms of further expanding,” Yang says. “So we thought, why don’t we just create an institutional fund to help those companies grow further.”
Specifically, Sampat and Yang say they are looking for companies looking to expand internationally — a very logical and smart strategy considering the combined experience in the Chinese and Indian markets. Specifically, they say, Infinite Road will be looking at making investments in companies with products and services that are “not too broad, but not too niche,” and that have a “very clear go-to market strategy” and some early proven traction.
But more importantly?
“We have put a lot of emphasis on founders and the team composition,” Sampat says.
Specifically, not having any prior geographic, demographic, or educational expectations of the founders — an ethos that’s reflected in the name, Infinite Road. The “Infinite” comes from the Infinite Corridor at MIT and the “Road” stemming from the Silk Road, the early trade routes which connected different parts of the world.
THE ‘CHICKEN-AND-EGG’ CONUNDRUM
As Yang and Sampat prepare to graduate this week, the two have already made two investments in a couple undisclosed startups based in New York, proving they are already working through what Sampat calls the “chicken-and-egg” problem of launching a venture capital fund. “A first-time fund manager is going to have questions around how well are you going to be able to evaluate,” Sampat explains. But without the money, there is no way of proving they actually can make investments, she continues, noting partners at established VC firms or successful founders don’t usually have those questions surrounding them.
Nevertheless, the two plan to make 20 to 25 investments at a rate of less than a million in mainly e-commerce and fintech startups at the pre-seed and seed-stage levels. Another differentiator of their fund, Yang says, is instead of focusing on building a product or service like the typical startup, they’re building something more. “One thing that is very unique about the fund is we’re not trying to build a product or service, we’re building a community,” she says.
Moving forward, the two are quick to thank the MIT community they are leaving. “Our professors have been very kind to make intros and offer feedback,” Sampat says.
“It is really incredible how willing people are to helping us,” Yang agrees.
“This happened by a chance and since that day, we haven’t looked back,” Sampat says. “Every day is a surprise for us.”
“Very good surprises,” she says.