MFV PARTNERS Interview Series: Zeal Capital Partners

Kristine Harjes:

Hi everyone and welcome to the Motley Fool Ventures partner fund interview series. Investment officer Kristine Harjes here. Motley Fool Ventures has been making a series of investments in other venture funds and we're really excited to highlight these rising star VCs and their investing strategies. I'm here today with Nasir Qadree, who is the founder and managing partner at Zeal Capital. Thanks for joining me today.

Nasir Qadree :

Kristine, thank you for having me.

Kristine Harjes:

So if you could start us off just by introducing yourself, tell us a little bit about you and your fund.

Nasir Qadree :

Yeah. So Zeal Capital Partners serves as a Washington DC base. So we're in your backyard. Inclusive investment vehicle, laser focus on partnering with exceptional diverse management teams that are rethinking the building blocks of wealth from education to employment to financial wellness. Now we believe turbo charge is economic mobility across the US. We make direct investments into founders across two verticals, FinTech and future of work. And we do this through our investment strategy that we've coined and our inclusive investing strategy that we actually trademark that essentially allows us to widen our lens to lead with inclusion, that allows us to source, invest, and help scale in high-growth early-stage companies that also best position those companies to outperform as well. And in turn, if we're investing in those companies, we ourselves are the fundable outperform as well. So it's a proactive investment discipline that allows us to rethink how we source, invest, and scale hydro companies everywhere, not just coming from very few places.

Kristine Harjes:

Very cool. Tell me a little bit more about inclusive investing. What does that look like in practice?

Nasir Qadree :

Yeah. So the data isn't new, right? We know where capital has gone from a geographic perspective and a gender ethnicity. Essentially it's combining these data points and making it into a strategy. And so for us, it's a five prong approach that begins with us as managers. So 70 trillion under management, 1.3% on average, looks like you and I and that is a travesty. And so for me, when building Zeal, it was important that I focus on our infrastructure, the diversity of thought, and skillset and investment acumen, operating experience, domain experience. And you see that through our investment team, our operating partners, our executives and residents that focus on our respective verticals, our advisory board, and even our LPs are diverse as well. And so when you proactively build the infrastructure, you organically, bucket number two, over index your allocation and underrepresented or underestimated entrepreneurs who are investible, but often have gotten left out like women and people of color.

So that's bucket number two. Bucket number three is being proactively lenient to overlook cities and ecosystems. So we know that 80% of capital over the past decade plus has gone into places like California, Massachusetts, and New York. Literally building on top of my investment thesis at my previous two funds. And so given our formal relationships with ESOs, entrepreneurial's organizations, 23 of which are all headquartered outside of Silicon Valley in New York and Boston. We were proactive that that will yield a more diverse and inclusive pipeline of companies that we will be interested in investing in.

The fourth bucket is your currency or your sector focus. In our case, it's FinTech, future of work. And then the fifth bucket is our impact lens. And so we built impact metrics in terms of questions we ask ourselves during our screening and diligence process, we've also built impact framework as a means to track social outcomes within our portfolio companies. Many of our LPs care deeply about impact as we do. And so essentially inclusive investing is really combining this impact investing sphere and ESG over here and the traditional financial services investment up here and combining it all in one saying, "Look. In an effort to achieve an alpha, we believe that this inclusive investing strategy is a more proactive, disciplined way of including all and beginning is starting at the top of being a team." And so that's inclusive investing in practice.

Kristine Harjes:

I love it. I love how strategic and detailed it is. I mean, you and I both know that we're not going to solve the problem of the face of entrepreneurship being a white male without being proactive and having a systematized way of going about doing this. Now, when you look at the other side of the table, there also aren't a whole ton of VCs that look like you or look like me. Tell me about your journey to becoming a venture capitalist.

Nasir Qadree :

Yeah. So I grew up in Atlanta, Georgia. I am the first in my family to graduate from college. I went to a historically black college university. I say this for context because you and I both know that the traditional backgrounds of most VCs are, to your point, they're white men, come from on average the same universities. And the difference in this new crop of GPs that are coming into the market, I think it's very powerful because of our unique lens, our unique personal backgrounds, our social networks and you couple that with our skillset, our investment acumen. And so for me, I started my career in the public markets at two bullish bracket banks in New York City. But actually I got my foray into venture capital after co-owning a coffee shop in New York City. It was essentially a coffee shop, wine bar that meets an incubator in New York city.

And we attracted a great deal of entrepreneurs and we often also attracted investors. Me being nosy and inquisitive and wanting me to gain a sense of what's happened here in the coffee shop I befriended a couple of investors and so they took me underneath their wing and introduced me to the private markets. And more specifically, venture capital, but I also had an interest, even going back into my time on Wall Street, doing how do I combine my love, my interest in deal-making, in investing, in economics with more mission-driven work? And so obviously impact investing became more of a theme, but more simply I cared a lot about education and the role that innovation, technology, and entrepreneurs being a newer seat at the table, were building viable businesses that were poised to increase at an outcome, an employment outcomes as well.

And so really began to lean in to the education entrepreneur ecosystem and then proactively started meeting other investors in this space and led me to begin work at village capital and then AT&T and that's when I really started to recognize the relationships I've been able to build from entrepreneurs to my peers as investors and other important ecosystem builders like think tanks and mayors and academic professors as well that all, I believe, play a critical role in amplifying entrepreneurial ecosystems around the country.

Kristine Harjes:

Given that you're able to build such an expansive network, did that make raising the fund any easier?

Nasir Qadree :

It didn't. Once you go into market, you have your pipeline, your go to LPs that you feel you're the perfect fit given their interest, their mission, their mandate, but it oftentimes doesn't play out that way. And so it was important that I remain laser focused on our strategy and the differentiation of our strategy compared to other venture firms in the marketplace. And so I knew that the partnerships that I've been able to build with ESOs all across the country was very different compared to your traditional VC who, in many cases, would not fly more than 20 miles outside of Menlo Park, Cambridge, and Manhattan. I thought that was a huge competitive advantage. And then when I thought about building my team, it was important that I was building a team that their backgrounds were also first generation college graduates.

They came from a blue collar family, they graduated from ivy league schools, they graduated from HBCUs as well, they had diverse experience from policy to investing to building companies. And then of course they're thought leaders, like our advisory board across four buckets, be it financial services, future of work, racial equity, and impact investing. And so it was important that I had conviction around the strategy, really believe in the talent that I pulled together in terms of creating that value proposition to entrepreneurs, and also thought thoughtfully about our post-investment value creation was very critical in terms of how we thought about that.

And so that collective thinking really best positioned us and allow me to remain confident that while raising capital one can assume and assume right, it's difficult. I really felt strongly that the foundation and the infrastructure we were building was quite was, how can I put this? It was a strong infrastructure. It allowed us to-

Kristine Harjes:

You found it compelling?

Nasir Qadree :

They found it compelling so far. Exactly. But in many cases, Kristine as you can imagine, we're flying this thing as we built it. There's been a lot of lessons learned through raising a fund that I feel responsibility to share with my peers. And that's one of the things I'm excited about with this new cohort that you guys have pulled together with Motley Fools investing in diverse fund managers because the truth is if we're really going to see impact, we can't work in a linear fashion and believe that we're going to just learn on the fly and learn by ourselves. We learn by doing, but we also learn by exchanging notes and sharing lessons learned and having, what I like to call hashtag real talks. So I'm just super excited to know that I'm not on this journey by myself, that I have people like yourself and Brendan and Ollen alongside of us here in this journey early. So thank you for you guys' leadership.

Kristine Harjes:

Absolutely. Yeah. We're so happy to have you as part of the program and looking forward to everything that we're going to accomplish together. So you're pretty early on in the fund, but have you been able to make any investments yet?

Nasir Qadree :

We have. We have. Our first initial investment was a company called Esusu. We've made another public investment. Our first actually company that we sourced. We took a board seat, we led the deal, took a board seat at a company called Kanarys. And so both companies aligned directly with our inclusive investing strategy. Esusu serves two exceptional diverse management teams that fits our credit access expansion was essentially it's focusing on helping under-banked consumers increase their credit scores through tracking rental payments through CRA's. And so we believe that Asus is the next generation. There's FICO score then there'll be the Esusu score in terms of how we rethink or finding alternative pathways to helping consumers increase their credit score. Then there's Kanarys. You and I both know the past 12 months, DNI.

In fact, we like to say lead with equity inclusion then diversity in that order because we believe that's actually a bit more proactive. But Kanarys is a Dallas based company led by two African-American Harvard law graduates that is built at people analytics platform that allows corporations to really think thoughtfully about how they think about equity, inclusion, and diversity across the corporation. So we believe it's going to be the go-to technology platform for all corporations as they think about identifying their blind spots, thinking about retention, thinking about the culture, thinking about the governance. And it's obviously the demand for resources to ensure that, because every corporations shareholders are actually asking the question, "What are you doing to incorporate DNI as a priority and what resources are you using capture?" And so we believe Kanarys will become the go-to technology company for all corporations to really attract their data. So we love the fact that this data centric. We're all data geeks at Zeal and so just excited about Mandy and Price. And then at, over at Esusu, Abby and Samir.

Kristine Harjes:

That's great. One of the most exciting things about investing in such an early stage is you really get to say, "You heard it here first." Yeah. These are the companies that if they do what we hope that they can do, then they're going to change the world.

Nasir Qadree :

That's true. That's true. You know Kristine, I truly believe that if entrepreneurs are going to be the change makers or the change agents of our country or our globe, then it has to include everybody, not just very few people coming from the same places. So that's why it's important that not only do we continue to highlight the data, but while there's no cookie cutter approach, sharing different strategies, in our case it's inclusive investing. We believe my North star when starting Zeal was that even for the Kleiner Perkins or the excels or other quote unquote blue chip venture firms, they can view this strategy as it needs. All right.

If we want to proactively change the look of our portfolio, then first we got to think about our team and our geographic relationships, and our LPs are beginning to really care about impact. And so how do we think about that? What are the framework and the questions that we should be asking ourselves during our diligence process? And so I'm excited as a new investment firm in the marketplace to not only invest in the next generation of FinTech and future report companies, but also bring to the forefront a new investment discipline that possibly could be a great example. Actually I'm bullish. That it will be a great exemplar for even existing and more seasoned venture firms.

Kristine Harjes:

Yeah. We're bullish as well and we're excited to see what your leadership is going to do. For folks that want to learn more about your work, what should they check out?

Nasir Qadree :

Sure. So we're available on all platforms. So Twitter, Instagram, and LinkedIn. Well Twitter and Instagram, I believe it's at zealvc, at zealvc and then on LinkedIn it's just Zeal Capital Partners. For myself on all platforms, just my first and last name, Nasir Qadree. And you can always reach me directly at nasir@zovc.co. I pride myself on being very responsive to every email. It's just a characteristic of mine that I feel that it's important to me to respond, even if it's a great chance that they're not a great fit for us and I think it's all part of building community and making sure everyone's voice is heard. And so that's why I love and shares being responsive.

Kristine Harjes:

That is incredible. I don't know how you're able to do it, but you have all my respect for it. Thank you so much for joining me today.

Nasir Qadree:

Kristine, my pleasure and I'm so thrilled, excited to work with you and the entire Motley Fools team. Thank you for having us.

Kristine Harjes:

We're really looking forward as well. And for everyone that's out there listening, there are more interviews like these with the leaders of our partner funds available at lp.foolventures.com. Thanks for listening and Fool On.