SVB and the Impact of Future VC Funding for Women, People of Color, and LGBTQ+ Founders (Podcast)
““Do whatever you can. Do whatever your expertise lends itself to. If you think, “Oh, because I don’t know X about venture.” Or whatever. It’s like, I talk to founders who are like, “I know nothing about the venture world.” And my response is, “That’s fine. Come talk to me. I’ll teach you about the venture world.””
Show Summary
In this episode of Stories from the Field, we sit down with Isaiah Deporto-Plick, a seasoned angel investor and entrepreneur who shares his insights on investment capital, funding for underrepresented groups in tech, and his experience as a co-founder for Fuerza Ventures. We also hear his breakdown of the recent SVB failure and the implications it has for the startup ecosystem. Throughout the episode he dives into the importance of providing funding opportunities for people of color and other marginalized communities in the tech industry and highlights some of the challenges they face in securing funding. Isahiah also shares his own journey as an angel investor and provides advice for founders looking to learn and grow in this industry.
LEARNING HIGHLIGHTS FROM THIS EPISODE:
His breakdown on SVB and what it means for the future
Advice for leaders looking to get funding for their businesses
Different ways to navigate the investment space for BIPOC, women, and LGTBQ+ founders
Hear the Full Episode On:
About Isaiah Deporto-Plick
Isaiah is currently Director of Business Development at Dori. Before Dori, Isaiah worked in business development at Carta, Microsoft and Silicon Valley Bank. Isaiah was also an operator at AngelList and helped build out Rolling Funds. Isaiah began his career as startup attorney at Fenwick & West LLP in Seattle and a corporate attorney at O’Melveny & Myers LLP in Newport Beach, California. Isaiah earned his J.D. from Stanford Law School, holds a B.A. in Political Science and International Relations from USC and is currently finishing up an MBA program at the University of Washington’s Michael G. Foster School of Business.
Isaiah grew up in Moreno Valley, California and was raised solely by his mother for most of his life. Isaiah is multi-racial (black, latino, native american and white). He is also disabled and was diagnosed with mild cerebral palsy as a child.
Isaiah is passionate about mentoring and hopes that this blog will serve as a resource for underrepresented founders/operators/investors/talent in the startup and VC communities that do not have access to the same resources as their white counterparts.
Resources & Links
LinkedIn: https://www.linkedin.com/in/isaiah-deporto/
Website: https://www.fuerzaventures.com/
Mentioned: https://www.kiddiekredit.com/
Full Transcript
Oana Amaria: Isaiah, thank you so much for joining us. I was looking at your bio on LinkedIn, and I love the way you separate the way that you talk about yourself. Right? You have who you are and then what you do, which I think is really interesting because we are a lot of people that do a lot of different things and then how we apply those gifts and those talents.
So, I'd love for you to share a little bit about your background. I'll talk about why we brought you on this episode, but I love that you use your legal background to really develop strategic partnerships. I love what you've focused with Fuerza, and we can talk a little bit more about our partnership there. And then we'll get kicked off to our topic today. So, go ahead and jump in.
Isaiah Deporto-Plick: Yeah. Yeah. Happy to. And I'm glad you brought me on to talk about this stuff. I think first and foremost, my identity is who I am. I'm a multiracial, disabled, individual man, that grew up in a largely low income socioeconomic city. And on the professional side, I'm a venture attorney turned operator. I'm also an angel investor. I am a micro VC, mostly play in the pre-seed and seed space, and I've been doing that for my entire post-law school career and live, eat and breathe venture capital.
Oana Amaria: Yeah. And actually, that is a great segue to how we had the idea to start this episode. So, as we were all watching SVB crash and burn, I was on vacation, so I was somewhere warm. You were having the longest weekend of your life in a while, I would assume, and trying to figure out how you helped these startups at the time that didn't know if they were going to be able to get payroll done on that Monday.
And so, I'd love for you just because one, you have this background, but you also used to work at SVB, right? And so, you have emotional connection, you have intellectual understanding and context and nuance. So, if you could give us a quick recap on what happened with Silicon Valley Bank, why it was such a big deal? I think a lot of people are still like, "I don't get it. These tech bros or these tech dudes." Or, whatever, the judgment statement insert there. Because we don't live and breathe it the way that you do. So, give us the big picture view, like 30,000 foot view of the situation.
Isaiah Deporto-Plick: Yeah. So, I'll start by saying, I used to work at the Silicon Valley Bank in their Access to Innovation program, which was an initiative that the bank started to invest in Latinx, Black, and women founders, investors, operators and talent. And I really focused on the investor piece. And so, it was standing up relationships with both for-profit and not-for-profit organizations that were doing this great work like Latinx VC, Black VC, the Black Venture Capital Consortium, Graham & Walker in Seattle, just to name a few.
And what people don't understand is, is SVB was the bedrock of tech. For 40 years SVB had been the cornerstone of tech. And so what happened is, well, I think it was Wednesday, SVB had came out to the market after the market is closed, maybe it was Thursday, and said they were raising additional capital. You know what? Funny enough, I was waking up from a nap and I get a ton of text messages and I look at my phone and people are like, "What's happening at SVB? What's happening at SVB?" I'm like, "What are you talking about?"
And I look at the news ... And banks or anybody raising additional capital, isn't an issue, right? It happens in the public markets all of the time. Well, what happened is ... And SVB was doing something very, very conservative in that they were investing in long-term bonds, which is super-conservative, but they had, I don't know, I think it was 75% of their investments in that. But as short-term interest rates rise, when you have to sell those long-term bonds, investors in those bonds looking to buy, want to buy them at a discount. And so, you're forced to sell those at a loss. And so, they had a $1.8 billion loss.
Well, again, not a big problem. You go raise additional funds in the market, but investors got spooked. But what really happened was VCs went and called fire in a room where there was no fire, and went on Twitter and told their portfolio companies to pull money out of SVB and that they were pulling money out of SVB. And when you use your platform to do that, what happens is you spark a classic bank run and banks, for anyone that doesn't know, they don't keep all of your deposits on hand. They have to earn interest on your deposits. But when you go through a bank run, and this is any bank, too much money is being withdrawed for you to cover, and so you end up having a bank run, and no bank is going to survive that.
It's not a tech bro thing. When you have one regional, small bank, regardless of the size, that goes under and has this type of run, every bank is at risk because people lose ... We're fickle, right? Human beings are fickle. We lose confidence in the banking system. And that's exactly what happened. Not to mention the fact that there was 8,500 people that were employed by SVB, who lost their jobs and their livelihood in an instant.
Jason Rebello: And then, I think the way you're able to articulate and paint the picture in ways I think most people can understand, I think is really, really helpful. It's so interesting, we have so many people struggle to accept this idea that we're all interconnected in a greater way, until you see examples like this of just how interconnected we are, by people that can be operating in their own self-interest and to use your own words, yelling out "fire" in a crowded room, creating panic.
But one of the things I remember reading in the Seattle Times article that had a quote from you there, I think you were talking about the overall environment that even led to some of the challenges even before the need for more capital from the bank. And I think you're quoted in there as saying, "For years, venture capital firms have been telling their portfolio companies, 'Grow, grow, grow. Spend the money as fast as you can and grow at all costs.' And then when they moved the goal posts, everything started to really fall apart." And since then, obviously they shifted from a, "Grow, grow, grow." To, in many cases a, "Cut at all costs." And oftentimes, that's human capital, to your point earlier.
And I guess my question is, beyond whatever short-term fixes that might come out of this initial crisis, it really feels like there's a need for a more foundational shift in the mindsets and even the business models of founders, business leaders, and even those looking to invest in innovation. And given how close you are to this space and the kind of work that you do supporting BIPOC and women founders, what do you feel like that foundational shift is? Where would you point to or what is the direction that you feel like we need to start advocating for, to solve the real problem at the root of what we're seeing?
Isaiah Deporto-Plick: So, I think after the Great Recession of '08, '09, we saw great companies be built, right? Uber, obviously there's a lot of Uber connections here. You have DoorDash. You have Lyft. Those are the three I want to focus on for a specific reason. They're still struggling with profitability, right? And they went public without having a business model that got them to profitability quickly. So, that fundamental shift that's happening is that's no longer a viable path for startups.
Startups can no longer assume that they're going to be able to go public without a path to profitability, a strong case for profitability. They're going to have to hit profitability sooner and they're going to have to show a path to profitability sooner. And that's going to be the key. It's not about growth anymore. Growth is still important. You got to show that you can grow into a 10 billion, $100 billion dollar company, but you also got to show that you can get profitable super quick, which is going to make it even harder for people of color and women founders, and just diverse founders in general, that already struggle to raise. I see stuff like, they're not raising any money because the statistics are so bad ... The dollar amount's just, it's embarrassing.
Oana Amaria: Something, if I could jump in, that I loved is one of ... So, in our partnership with Fuerza, we have invested with you all, but we also did sponsorship of services. Right? And one of your companies that we supported at this podcast that talked about how Black and brown founders have to go to their community for seed money in a different way, and you got to teach people how to use transfers and 401(k)s or Roth, all these innovative ways to get people to invest in a ... It's just a whole different hustle, right?
Isaiah Deporto-Plick: Yep.
Oana Amaria: And so, what I'm hearing you say is, not only is that always been the case, and obviously I think we're all familiar with that on this call, but now it's back to the changing goal posts, right? Again, if I believe in you, all the data shows that me championing your cause is going to get you to that profitability, right?
Isaiah Deporto-Plick: Yep.
Oana Amaria: Which is what happens in a lot of these rooms with VC funding, right? And so, it just makes me think that it's such a greater barrier now than ever before.
Isaiah Deporto-Plick: It is, it's a even greater barrier. And then you couple that with you took out one of the biggest service providers in the ecosystem that was actually funding these communities and that money is gone, whether through venture debt and people are ... All of this stuff about venture debt is coming out now. It's problematic and yeah, sure, okay, it worked for the bank, but you take away the funding that SVB was doing both from unaffordable housing but also funding these communities and funding these startups and funding organizations to provide resources for these startups. And you're just compounding the issue even more.
Oana Amaria: Yeah. So, we talked about how there's the debates of, this is not about the deregulation in 2018, it's about the toxic culture in Silicon Valley. And of course, it's probably both. It's probably and some, all of the above. My question is, how will these bankers learn from their mistakes if there isn't really accountability? Right?
We've seen a lot of bailouts in many industries, not just banking, airline, and I just saw this whole article now about how this is the best year they've had in 40 years or whatever. Right? So, how do we get accountability to build that trust again, to build better systems, to build better apps, to get to our communities?
Isaiah Deporto-Plick: Yeah. I mean, accountability is hard, because I think if you look back to the Great Recession, after '08, '09, we went on a path, Dodd-Frank, all of these things to get more accountability. But then as time goes on and the economy gets better, people have short-term memories, we always remember '08, '09, Gen Z really doesn't, because they were kids. And lobbying and advocating, that changes things over time and that's always the problem in any economy, at any point in time, is memories are short.
And so, it's always unfortunately going to be a cycle. I don't see that changing. We have to keep advocating, the people that care about these issues, like us, have to keep advocating, have to keep fighting. Diversity's not popular right now. Diversity is canceled. I wrote a blog post on this because wokeness is being attacked, whether it's by DeSantis or opinion pieces in the Wall Street Journal, it's being attacked. And we have to keep speaking up. We have to keep advocating, whether it's popular or not, because if we go into the shadows and we hide in the times when it's not popular, there goes any chance of any change. But change takes hundreds and hundreds of years. It's not going to happen overnight. And there's going to be positive cycles and negative cycles, but we got to keep fighting.
Jason Rebello: Continuing with that, we got to keep fighting, again, bringing it back to BIPOC and women-founded companies, that are in my mind, given the fact that diversity is a key proponent of innovation and being able to see all the sides of a problem, so that you can avoid catastrophic missteps.
The importance now more than ever, to make sure that we fund companies founded by these diverse founders that are approaching problems from a completely different perspective, that are bringing novel solutions to the table. What's the rallying cry or how can we really show up in allyship for those startups that are founded and led by underestimated global majority. That are bringing real solutions to real problems, that are struggling to get real funding?
Isaiah Deporto-Plick: Yeah. I mean, I think you hit the nail on the head. It's a real problem and it's hard. I think one, keep mentoring these startups. I spend a lot of time mentoring these startups. I love the idea of this underestimated global majority, because we truly are the global majority. I mentor startups whenever I can start, startup founders. It's, use your time, whatever time you have, you don't have a lot of it, but use your time.
For me it's, look, eventually I want to do this full-time. The goal is to raise eventually 500 million, a billion dollars, whatever it is, to go out and fund these startups, because if we're not funding them, nobody will. Because diverse teams, the data shows they perform better. It doesn't need to be a diversity fund. This is money. These teams make money. This is a profit-making venture. I'm a venture capitalist. I'm doing it because they make money, because they do. They're really good founders and they're really good talent. They're really good investors. We're really great at what we do.
Do whatever you can. Do whatever your expertise lends itself to. If you think, "Oh, because I don't know X about venture." Or whatever. It's like, I talk to founders who are like, "I know nothing about the venture world." And my response is, "That's fine. Come talk to me. I'll teach you about the venture world. You're a domain expert in what you're trying to build and you can use that domain expertise to teach others. Also, you are going to become a expert or somewhat of an expert in venture as a founder, because you're going to go through this process and you're going to learn from your mistakes and you're going to learn from others."
And so, those founders need to pay it forward to the next generation wherever they can. And it's hard. It's hard to be us and look like us and keep fighting and having to pay it forward to others, but no one else is going to care like us. It's like with founders, they always say, "No one cares about a company as much as the founders." No one cares about DEI as much as us. Right? No one's going to push that forward. It lives and dies with us.
Jason Rebello: Oh, wow. That's real. Thank you so much for sharing that perspective.
Oana Amaria: I love it. Already, there's like a three point breakdown. I think it's so powerful. I always say in our sessions, "If the reason you're hiring me is because I'm a woman, that's the least of my qualifications." Right? Yeah. I mean, something you said earlier is that it sucks right now to be in DEI and you can't tell us that right now, because we're living it and breathing it. And our job is to have the hardest conversation that somebody has once in their lifetime. We are dealing with so much. If you think about what's happening in Florida and how it impacts our clients, for example, right?
But something we talk about is that allyship actually costs you something. Right? And for us, this is the time to take a stand. Even if you take some heat. Like the woman that wants to write a book on wokeness, that is taking some heat right now, I think that that's ironic, right? Because that is what is "dismantling our society" and whatnot. And so for us and the people that whether you're an enthusiast or an evangelist or a practitioner, or someone that deeply cares about this issue, we can't opt out. This is the fight that we're in right now.
And so, many times, clients, again, back to this idea of this is fluffy stuff, it's nice stuff, DEI is like, "Let's get together and team build." I'm like, "That's not what it is." Diverse teams are actually really hard and really complicated. But people ask us for practical examples. And one of the things that you have that I loved, because they say, "Well, tell me, what's the product version of that or how can I operationalize this?" Right? And one of the accomplishments that you share is building and validating a business model for FinTech, and we have a lot of FinTech friends and clients, to improve transparency of credit score models.
And I think that's really powerful because in our very first episode, for those of you that remember, we did AI for good and just accounting for credit with AI, and how you create the qualifying parameters for something like that. So, very high context windup to ask you, what is that new version now for you? What are you working on right now that you're really excited about, that you want to tell us? So, that's part one.
And then part two, what are you going to challenge our listeners to do? Because we often talk about, "Give yourself permission to take action." Right? So, what's your parting request for inclusion champions and practitioners and listeners to take on this fight as their own? Right? What is the thing that they need to opt-in to? Let's talk about what you're excited first, but then your challenge for our listeners.
Isaiah Deporto-Plick: Yeah. What am I excited about? I mean, well, one, there's a portfolio company in my portfolio called Kiddie Kredit, which is run by an entrepreneur named Evan Leaphart, that's using technology to teach kids about credit and teens about credit. He's an awesome human being. He's an awesome founder who's built multiple businesses and it's just amazing what he's doing.
Second company is a company that I committed to funding not too long ago, I think, on Wednesday. Amber's building a neobank for Native Americans and for tribes. All I had to hear was the idea, and I knew I was going to invest. It's going to be really hard because there's a lot of challenges, but that's an idea that will fundamentally change the world and make it a better place and make it better for a population that is underserved in this country, that people don't understand how tough it is to live on a reservation and be a Native American in this country.
So, those are two things that I'm super passionate about. I'm super pumped about helping those entrepreneurs. And then two, parting words, one, take care of yourselves from a mental health perspective, it's massive. If you need to take a break, step back, take that break, because if you get burnt out doing this and we lose you, it's just not good for any of us.
But keep pushing through. Keep pushing through the cycles of DEI's good, DEI's bad. DEI is good, DEI is bad. If you keep level, keep steady, don't let the highs get too high. Don't let the lows get too low, you won't feel a reaction. Yes, you'll still get angry. Yes, you'll still be upset, but you'll keep doing the work that you need to do. And keep speaking up, keep using your voices, because if we lose your voices, we lose a significant piece of the ecosystem.
Jason Rebello: I love that. Isaiah, thank you so much for coming on and speaking about something that I think, again, more and more people need to be aware of, not just because of the individual incident, but the larger ramifications and downstream effects that are connected to it, that we all need to be paying attention to.
I think now is the time for all of us that are pushing this incredibly large boulder up this hill of equity, inclusion, and really just trying to create a value-creating, humanistic shift in society, right? One where we can really get the collective energy working on some of the larger problems that we face as not just, I think, as an American society, but as a global society as well, as an interconnected society. So again, thank you again for coming on and sharing your perspective and for your words to us as people in the space at a very crucial time, given the environment as it relates to these topics. So, gratitude and appreciation.
Oana Amaria: Thank you so much, Isaiah.
Isaiah Deporto-Plick: Definitely, Jason. Definitely. I mean, if our ancestors went through such a massive fight for us, things have gotten better since then. They're not great, we all know this, but we got to continue fighting.
Oana Amaria: Yeah. Thank you so much.
