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MFV PARTNERS Interviews - TXV Partners

Kristine Harjes interviews Marcus Stroud, Founding Partner of TXV Partners.

We invite you to watch the video or read the lightly edited transcript below.

Kristine Harjes:

Hello everyone, and welcome to the Motley Fool Venture Partner Fund Interview Series, Investment Officer Kristine Harjes here. Motley Fool Ventures has been making limited partner investments and other venture funds, and we’re really excited to highlight some of these rising star VCs and their investing strategies. I’m here today with Marcus Stroud. He’s the managing partner at TXV Ventures. Marcus, thanks for joining me today.

Marcus Stroud:

Thanks for having me.

Kristine Harjes:

To get us started and introduce yourself and what you’re working on, tell us a little bit about you and your background.

Marcus Stroud:

Yeah, I’m the Founder and Managing Partner at TXV Partners alongside my Co-founder Brandon Allen. We’re based here in Austin, Texas with a presence in San Francisco. We focus on human performance and software. We started the fund about a year and a half ago, a little under two years ago. We’ve been extremely fortunate to back some incredible entrepreneurs and I’ve met some incredible LPs in the process, as well, and that’s our story in a nutshell.

Kristine Harjes:

Great. What were you doing before this? Tell me how you wound up in venture capital

Marcus Stroud:

For sure. Yeah. I would say, I trained and played football in college at Princeton. And while I was at Princeton, I had met several awesome venture capitalists, several awesome private equity individuals, and I always knew that, at some point in my life, I wanted to get into the VC space. And I also knew I wanted to be in Texas, which at the time, was not really a hotspot, I would say, for VC. I began my career in New York and then after working in New York, I began working for a fund here in Austin and then working for a fund in Dallas. And from there, got the opportunity to take over TXV.

I was investing on behalf of athletes and celebrities through a vehicle called the Clubhouse Investment Club, had a chance to co-invest alongside some of the premier funds in our country, as well as, certainly the LP and some of those funds, through that vehicle. And that led to us eventually having the opportunity to kind of create our own fund. We decided to spin out, we wanted to have more of a niche focus on human performance and software, and that’s how we got to where we are today.

Kristine Harjes:

You’ve mentioned human performance and software, those are two very different categories. How are you defining each?

Marcus Stroud:

Yeah, that’s a great question. I think what we believe and what we’ve seen, especially in the last seven, eight months, every aspect of our lives is going to be impacted in some way by technology within both of these spaces. Within human performance, we’re looking at alternative medicine, such as meditation, yoga, rehabilitation. We’re looking at general wearables, we’re looking at fitness tech. We’re looking at how sports are using technology to advance, some of their technologies. That’s how we’re looking at human performance. Then software, we’re looking at systems that have failed to integrate more some of the advanced technologies. We think of things such as airlines, we think of things such as education, and we think of things such as infrastructure, you know? Those are kind of the spaces that we feel very confident in, that we’ll be in the frontier of the future, if you will.

Kristine Harjes:

Awesome. Have you made any investments so far?

Marcus Stroud:

Yes, we have. Within the fund that’s publicly-announced, we have three investments. We have a couple of investments that are publicly-announced, that will be announced in 2021. But within the fund, we invested in a company called Future. Future is focused on human performance through one-on-one training. They use AI to pair you with a trainer and provide that layer of accountability. Within the software space, we invested in two companies, one called NameCoach and the other one called Cambre. Cambre is essentially your online learning management software. This is what kind of led to our deep interest in the airline space, there’s just so much outdated technology. So it’s linked to technology in that space, and Cambre is using revenue pricing mechanisms to create better systems that are structured for Legacy Airlines, and then NameCoach is an API that allows folks to pronounce uniques names more correctly, essentially.

Kristine Harjes:

Very cool. One of the purposes of this program for Motley Fool Ventures is to make sure that we’re providing capital and support to create a more diverse ecosystem within venture capital. What role do diversity and inclusion play for your fund?

Marcus Stroud:

Yeah, that’s a great question. I think it’s certainly easy for people to look at our fund and see two black GPs, and assume that we are a fund that is entirely dedicated to African-American or minority entrepreneurs. But I think for us, the mission is much deeper than that. I think for us, we serve… We saw an opportunity to create opportunity, it’s the purpose of TXV. We wanted to create more black GPs, more women GPs, more minority GPs in general, and we wanted to be able to invest in them as well. So our fund is not dedicated exclusively to investing in minorities or women. However, as a team that’s uniquely diverse, that’s both young, old, white, black, whatever, we see D&I just being a part of our moral fabric itself. And ultimately, if we can look back 10 to 15 years from now, and TXV has the most diverse GP staff of any fund in the country, we think we will have been successful, because we believe a way to change our industry is by getting more investors to the table. So how are we doing that ourselves?

Kristine Harjes:

Yeah, that’s awesome. We also really appreciate the geographic diversity that you’re adding to this cohort. Tell me a little bit about the ecosystem in Texas. What are the startups like? What are the investors like? Are there any particular sectors that you see a lot of activity?

Marcus Stroud:

Yeah, I think right now, the buzz is Austin and Miami. I think everybody’s starting to realize that this is just such an incredible place to build a company, it’s such an incredible place to be an entrepreneur. It’s such an incredible place to be that, this ecosystem has long had incredible funds that built Texas, more or less, from an early-stage perspective. And now it’s cool to see so many funds from outside of Texas, come here, leading funds such as APC, leading funds such as Margaret Capital, couple of vehicles [inaudible 00:07:49]. They are now starting to come here to Austin. I think with this kind of massive migration from around the country to a place like Austin and Dallas, you’re starting to see so many unique entrepreneurs coming here, you’re starting to see much more institutional capital folks in here. And I think with that, you’re going to see a new, I would say, alternative system of, or center of, tech innovation. I don’t think anything will ever match Silicon Valley, however, I think Austin is going to be an incredible alternative for people looking to do something different.

Kristine Harjes:

Very cool. Is there anything that we haven’t touched on so far that makes TXV unique?

Marcus Stroud:

Yeah, I think what makes TXV unique are the type of LPs that back us. I think so many funds when they launch, especially emerging managers, they go out and they try so hard to get whatever capital can come through the door, because you’re so desperate to raise money. You’re generally going to family offices, you’re going to endowments, you’re going to pensions, whatever. And I think for us, we want to be very strategic in how we circulate our LPs. Because we want to be able to weaponize our LPs towards finding better entrepreneurs and just having better support over the long-term. We’re just so fired up to have people like Motley Fool Ventures involved, so fired to have other Tier 1 funds, LPs to our fund, so fired up to have sports teams, and sports owners, and athletes, et cetera, because all these people essentially contribute to our thesis, which is human performance and software, and making a more inclusive ecosystem, if you will. I think TXV has just been extremely, extremely fortunate to have such incredible people backing us.

Kristine Harjes:

Yeah, and we’re really excited to be a part of such a great group.

Marcus Stroud:

Thank you.

Kristine Harjes:

Thanks. Thanks Marcus, for coming on and introducing yourself and the fund.

Marcus Stroud:

For sure.

Kristine Harjes:

For more information about Marcus and what him and his team are up to, you can search for TXV Partners on Instagram and Twitter. Marcus is also @MarcusStroud on Twitter. For more information on Motley Fool Ventures, including more interviews like these, you can check out foolventures.com. Thanks so much for listening and fool on.

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