Aaron Sandford AVG Blog August 2, 2019

Vested Interest

AVG and Ellevest bring fresh ideas to a new school of investors

Vested Interest

August 2, 2019 | Aaron Sandford

It’s true what they say: Change is good. But change that empowers? The best.

For two finance entrepreneurs—Alumni Ventures Group’s CEO Mike Collins and Ellevest’s CEO Sallie Krawcheck—riding the wave of empowering change has made a huge impact. Both companies are breaking ground in important segments of the investment market—and rewriting old-school ideology in the process.

A Club of Her Own

Change arrives on its own schedule. Often times it’s evolutionary, as was the case for Krawcheck’s perspective. As a 20-year veteran of the Wall Street boys’ club, Krawcheck spent decades in C-level roles at some of the largest names in wealth management: Smith Barney, Citi, and Merrill Lynch. Over the course of her career, it became more apparent to her that the rules—and the investment algorithms—were not only written by men, but for them. She began to scrutinize the ways that supposedly gender-blind investment advice was holding women back from their goals, reducing their access to wealth through their careers, and negatively impacting their financial security as they headed into retirement.

Krawcheck realized that she wasn’t just seeing a market gap; she was surveying a chasm. After experiencing the boys’ club, she decided to form a club of her own. She decided to launch in 2014, with the aim of creating an investment solution with women’s specific needs in mind.

New Rules Mean New Wealth

It turned out to be an auspicious time for change. Farther afield of Wall Street, Mike Collins was about to shake up the investment world in his own way. Venture capital had forever been a rich investor’s game, largely accessible only to institutional capital like large pension funds and university endowments capable of writing a $10M+ check.

For Collins—a serial entrepreneur and investor with deep roots in the world of accelerators, incubators, and traditional venture—the concept of opening up the venture asset class and making it accessible to individuals was a lightbulb moment.

He envisioned a private, for-profit, alumni-centered affinity fund that used a grassroots community approach to both source investor capital and investment opportunities. So in 2014, Collins launched Green D Ventures, a fund dedicated to serving his alma mater, Dartmouth.

Said Collins of initial reactions to this new take on funding, “The excitement was immediate. I’d talk about launching Green D 1, and people would say, ‘Why hasn’t anyone done this before?’ ”

Good Luck Telling Her She Can’t

Blazing a trail across the hallowed ground of traditional finance naturally attracts attention—and critics. In Ellevest’s case, the primary challenge was wading into a crowded field, competing against well-established brokerage firms and private banks. Not only did detractors fail to see the upside of a woman-centric investment strategy, they doubted its viability. It had been attempted before, though more in the manner of pink-washing so common to gender-specific marketing. Even some of Ellevest’s target audience was initially skeptical. What difference would there be this time around?

As it turns out, the difference was Sallie Krawcheck.

Ellevest’s power comes not just from its method, but its message. Ellevest has gone beyond personalized, goal-based investing to become a prominent voice in women’s issues, doling out straightforward advice that speaks to women and money: employment bias, the burden on mothers, the lack of funding for female entrepreneurs. And Krawcheck pulls no punches in calling out the faulty narratives society has offered women about money, right down to their morning coffee habits. When it comes to financial feminism, she tells it like it is.

If there’s a shock factor to Ellevest’s messages at times, the bigger shock for the boys’ club might be the company’s success. As of this writing, Ellevest has more than $280MM, setting records among their more established competition in achieving the asset growth milestones. That’s just the beginning. Ellevest has its eye on the prize—namely, helping women to harness the potential of the $11T in assets they control in the US.

Traditional VC Gets Schooled

While less fraught than tackling the massive issue of the financial gender gaps, Collins’s mission to open VC investment to retail investors also had to prove its viability. Could school-focused funds running outside the school-ordained ecosystem of venture funds and accelerators succeed? Would AVG’s promise of “Smart, Simple” venture investing resonate? VC for the individual investor hadn’t exactly been a mainstream idea. The relationships with schools took time as well, and careful communication.

As money began to flow from alumni investors to alumni entrepreneurs, however, the model proved itself. Managing Partners across the family of alumni funds have been able to foster relationships and participate more fully in their schools’ entrepreneurship efforts—delivering talks and workshops, participating in pitch events, and offering assistance to budding entrepreneurs and alumni companies in growth mode.

Five years on, Collins’s vision is now a reality. AVG has now made over 340 investments—funding some household names and bringing venture access to many accredited investors for the first time. AVG has established itself among more traditional peers—garnering attention from major news outlets like TechCrunch and the Boston Globe in the process, and supporting the success of groundbreaking companies, including Ellevest.

Collins notes, “In five years, AVG has grown to raising and investing nearly $200M a year. The AVG family has expanded as well, going from 3 employees in 2014 to 90 today, spread over five offices. Most importantly, we’ve opened this important asset class to a community of over 400,000 supporters. We’ve been able to scale so quickly because what we’re offering resonates.”

Partners in Progress

Breaking new ground rarely means going it alone. Ellevest’s mission to empower women has attracted the funding and support of some of VC’s most prominent women-focused investors and mentors, including Melinda Gates, Penny Pritzker, Valerie Jarrett Jenny Abramson, and Venus Williams. AVG is among that roster of supporters.

AVG was first introduced to Sallie Krawcheck and her mission through Waterman Ventures, its alumni-focused fund serving Brown University investors. Waterman had brought Ellevest President Charlie Kroll on as an investment committee member early in the fund’s development. Waterman Ventures’ Managing Partner, Ludwig Pierre Schulz, recalled his initial excitement at the chance to support Ellevest. “I just kept bugging Charlie about his next financing round at Ellevest. We were overjoyed to be able to participate.”

The decision to support Ellevest was a natural one for AVG. Their mission of creating new avenues to wealth for an underserved community spoke straight to AVG’s own business principles. An opportunity to partner with them was also of great benefit to the respective companies and investors—a win-win-win.

Said Schulze of the investment, “It’s wonderful to see our investors’ enthusiasm for Ellevest. We’re all excited about what Sallie and Charlie are building and the enormous market interest they have already achieved.”

Change can definitely be good, as AVG and Ellevest have demonstrated. AVG is excited to be a part of the momentum through its investment in Ellevest and other important, women-led companies through its Women’s Fund, as well as its own mission to open venture capital to a new segment of investors.

For more about Ellevest’s mission to get more money to more women, check out Ellevest.com.

Ellevest Disclosures:

As of August 8, 2019, AVG is an Investor in Ellevest, not a client of Ellevest.

All opinions and views expressed by Ellevest are current as of the date of this writing, for informational purposes only, and do not constitute or imply an endorsement of any third-party’s products or services.

The information provided should not be relied upon as investment advice or recommendations, does not constitute a solicitation to buy or sell securities and should not be considered specific legal, investment or tax advice.

Information was obtained from third-party sources which we believe to be reliable but are not guaranteed for accuracy or completeness.

Investing entails risk, including the possible loss of principal, and there is no assurance that the investment will provide positive performance over any period of time.

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