TechVibe Radio Spotlights Ilana Diamond of 412 Venture Fund

Techvibe Radio talks to Ilana Diamond, 412 Venture Fund Managing Partner, to get more details on the Pittsburgh region's newest fund. 412 Venture Fund is run by people with with deep tech startup experience who have all had successful exits and developed an impressive network to get their portfolio companies moving. 

Transcription:

So glad you're spending your Saturday morning with us here on TechVibe Radio. This is Jonathan Kersting.

And this is Audrey Russo.

We have to jump righ into this today.  We have to set the table  so that people know what's going on with our guests what her journey has been. Yep. And who she is. So let's introduce Ilana Diamond of 412 Venture Fund. Yes. So glad that that you have been able to join us here but let's let's just let everyone know a little bit about who Ilana Diamond is. So you can start wherever you want start. Okay, well, thank you, Audrey and Jonathan. It's great to be here again. I always love chatting with you guys. Well, I'm actually an entrepreneur at heart. I spent 15 years building and growing an international consumer electronics firm that I moved here to Pittsburgh from Chicago, and we designed and developed products, but we manufactured and sold products all over the world. Our brands included some pretty well named no names like First Alert and MGM Studios. And we did a lot of private label for big retailers. So here in the US, our customers were Best Buy and Amazon and Walmart, Target and pretty much anywhere you buy consumer electronics. And we designed and developed our products right here in Pittsburgh. My first experience with venture capital, which is what I do now was when my company Sema products developed a commercial product in our first alert line and our entire product line was consumer products. We've never done anything commercial. If you know anything about the difference between commercial alerting, and consumer product alerting. It's like night and day things. Yeah, really different. So the board said, You know what, you guys have spent enough money on this. You if you want to keep doing this, you need to spend it out in a new company. And so we went out to raise capital and I met the folks at innovation marks and they were the first money in. And they stayed with us through the next rounds. And they got me involved in mentoring for their portfolio companies. So when I sold the company, I had a couple years experience already serving as a mentor for startups. And I was lucky to have the opportunity to help bound and build AlphaLab Gear. One of the first accelerator programs, I think in the world for hardware companies.

I think it was we'll just say it right now.

It was the first it was the first for sure.

Right, yeah. So now fast forward. Now fast forward, what are you doing now?

So what I'm doing now is I am helping to manage 412 Venture Fund, which is a new venture capital fund, located right here in Pittsburgh, and going to be joining three other general partners Andy Rabin, Lloyd Meyers, Evan Segal, who all founded grew successful companies right here in Pittsburgh and had amazing exits. CE city, you know, had close to half a billion dollar exit.

So under the under the radar to that whole thing happened.

So when they have an exit, you know, they were really successful. They had an exit and they just wanted to give back. And that was the impetus for 412 venture fund.

I'll tell you why. I was super stoked when I saw the press release announcing this and I saw your name on I was like, What? But she's with AlphaLab Gear for crying out loud. I'm like, Nah, this makes perfect sense that this be her next move would be setting up Pittsburgh's newest venture fund really exciting stuff.

And you know, the thing is, you had a really you had a really great view of working with startups at the earliest stages, so that you sort of had a view of what's going on and what's not going on in terms of capital raise. So where do you think some of the biggest gaps have been? And why do you think this is different?

So you know, that's a really good point. Pittsburgh has been attracting major major tech companies for years now, right. And we have just amazing technology spinning out of our universities and out of our accelerators. But even though we have top tier VC investors coming from all over to invest in our region, the pool of local capital is critically low. I mean, I don't know of another institutional investor, that's, that's locally based, right. And when these out of town funds and don't get me wrong, I'm really happy that people from out of town are putting money into our companies. But when they come here, and they invest, and their limited partners are from outside the area, when the companies are successful, the funds flow back to the people who invested right on the coasts or wherever they are, and they're creating wealth there instead of creating wealth here. To me, that's just such a shame. Because if you look at the really successful entrepreneurial ecosystems, Austin and the Bay Area in New York, what happens is, you know, people have successful exits, and the money stays in that community, and they create new funds and new angel investors. And that goes on to fund the next generation, and the next generation. And I feel like we've got these great, this great technical talent, but we haven't had as much of the VC local talent right here. And so that's what we're hoping to address. And so when it says 412, what I think people need to also understand and correct me if I've got this wrong, is that it doesn't mean that you're only going to invest in Pittsburgh company. Now you, you're absolutely right, we we have a focus on our region and on the 412 region. But we define that pretty broadly doesn't mean that your headquarters has to be here, when looking to invest in companies that we say have a root, a tie or a bridge here. I'm in 724 I'd be okay, you're okay. I couldn't resist, I had to interject, that's okay. So when they succeed, there's an opportunity to enrich the region. So let me give you a couple of examples. You know, recently, we had somebody who got their PhD at CMU in computer science, and he founded a company and raised 10s of millions of dollars from the Bay Area moved out to the Bay Area, right. He's now funding his second company. I'm not sure he's gonna move. But he feels like there's so much machine learning tech talent here in Pittsburgh, he wants to have, you know, connections here probably wants to have an engineering office here. So even though this guy has his round is oversubscribed, by some really big names in the Bay Area. He's cutting out a small piece for our little fund here and invest in participants that we can help. And also, Audrey, you're I know that you're on the advisory board of 412X972. Right. It builds bridges between the and the Pittsburgh tech community. So we're looking at Israeli tech companies that are looking to establish a beachhead in the US, and maybe their tech really makes sense with AI. Right? Robotics, AI, machine learning. So those guys could, you know, get investment from us, and then establish a location here that I love. And I think that's something that people really need to understand is the importance of the of capital in a region is about people creating wealth in their location, the likelihood of them further investing in that region goes, grows and goes exponentially. That's the piece that people tend to not understand when they're not in this world. If they make money in Pittsburgh, and they live in St. Louis, they're keeping their money in St. Louis. And while we're appreciative for the few people that had a good exit, etc, but what changes is the commitment to the community and that says that is civic engagement. People don't want to, to acknowledge that that civic engagement, but that civic engagement at its finest, not necessarily just sitting on a nonprofit board, but it's saying no, we are going to work hard to create wealth, and creating wealth through these innovations. And these companies will then grow exponentially in that city or in that region. And and that's, that's something a lot of if you can just continually talk that way and articulate that point in every person that is me feel like we could we could somehow shift the conversation and people realize that's what it means to be a civic steward.

I like these orders are getting along. Those are very important. You got that all down?

I will take my marching orders from Audrey any day.

But doesn't that make sense to you, Jonathan?

I mean, you hit the nail right on the head.

Yeah. I mean, that's what resonates. That's what people don't understand. And it's very hard to feel passionate about Jonathan that's living in in the Pacific Northwest. If I'm not part of a circle, I don't know that he loves to ride bikes. I don't know that he's made a commitment to fret. I don't you know, what I'm saying? It's sort of just becomes this ecosystem, but we don't talk about it. Because a lot of times people say, Oh, that's, that's capitalism. That's too, you know, what does that mean? No, if I create more wealth, I'm gonna give money to Jonathan's nonprofit, it's gonna get reinvested in the community in some really good positive way. Oh, you were so right. And I have to tell you, that is one of the differences of Pittsburgh. It's not that we don't have old wealth. It's that it goes to strictly to philanthropy, which is great. It's wonderful. We've got great museums, and arts. But if we want to have wealth in future generations to fund those philanthropies, and to fund those institutions, I think that we need to be investing the folks we're going to create wealth. Right. Those are the startups I'm so with you, Audrey.

I know, that's one of the things that I've just been so passionate about listening to the pitches on, on 412. So what what's ahead, like so now what so now that this fund is sort of got at sea legs? What about people who are listening? Do you want to hear from people who have companies? Do you want them to reach out to a lot of diamond at for them to venture fund?

Absolutely, I want them to reach out, if you've got a company, if you're ready for investment, even if you're just looking for some guidance, you know, we we are a founder first fund. And what that means to us is that even if it's not a fit for us, for whatever reason, we're all founders, we all know what it's like to sit on the other side of the table. And so we're all about helping making connections, you know, providing advice, doing whatever we can to help you advance that company, whether or not it makes sense for us as an investment. So please do reach out. And the other thing I'd say is if this resonates with you, and you would like to get involved in some way, please reach out even if you don't have a company, we're looking to talk to people who our mission resonates with them very well. And the other thing is, what people need to also understand is if you have a great idea that you think it's a great idea, you never know who else someone else knows.

Exactly.

Okay. I mean, and that's another important piece, that who else whether they know someone who's a strategic partner, whether someone is, you know, obviously an institutional investor or you know, whatever it may be customer, those are the kinds of things that build the ecosystem so that the more Ilana knows, the more that foreign to venture can be helpful.

If you go to 412 venture fund comm on his contact information is on there and a lot of one of the friendliest people I've ever met in Pittsburgh, and I know she would love to talk with you. Even if it's just for 10 minutes to get an idea what it's all about. It never hurts to contact Ilana, but we're taking a quick break. We're coming back with more I want to learn more about this venture fund. Awesome and learn more about some of the crazy cool stuff a lot has done with alpha lab gear and with Sema because I think she really serves as an inspiration to lots of folks out there who are just out there kind of cutting their teeth for the first time that for the first time with the company and I think she can you say you can do a lot here in Pittsburgh and I can't wait to get more of her story out there.

So this is Jonathan Kersting. And this is Audrey Russo.

We are from the Pittsburgh Technology Council learn more about us at PGH tech.org. Listen to this quick break and stick around with us because we have a lot more Ilana coming up in just about one minute I swear.

So good to be hanging out with a Ilana Diamond from 412 Venture Fund here on TechVibe Radio. This is Jonathan Kersting.

And this is Audrey Russo.

I love having this conversation. I'm just so pumped up for one two venture fund is happening. Like I said, when I got that press release, I was like, Man, this is something that the region really needs. And I know it's raising a lot of eyebrows. And when I saw that Ilana was involved with it as of course, was involved. This should not be involved with this, it seems like something perfectly right up her alley way.

No, listen, there's a couple of things before a lot of gets back on and I'm so thrilled that she's joined us there's a couple of things out women running or being general partners in venture funds, just take that as one variable. That's like, less than 3%. That's like super rare.

You just don't Okay, so that's like less than 3%. All right. So next, you then we have the number of women and people of color, and LGBTQ that are starting companies and getting funded. So like you take those variables, and just continue to slice it and you start to get like these numbers that are not visible to the naked eye. So here we are it with 412 ventures we spoke about earlier, when we kick this off, about the importance of creating wealth, the importance of investing in capital, etc. But there is something about investing in people who aren't the typical archetype that has been around since the 50s, investing in venture capital, and that's women and people of color, and people who identify through lgbtqi. And we're missing a whole bunch of the population. If you know, the population is, I like to say that you can't you need the diversity because you need to make sure that you're grabbing the best and brightest, the best and brightest cover all of us, not just one particular skin color or gender. So I'm excited because they've made a commitment at 412 venture fund to really take this piece seriously, which includes having a lot of being a managing partner, which is a lot is now part of the less than 3% probably in the world that 1.1%. Right.

Is that the new number now?

Was 3.1. Yet she made she made us go up. Yeah.

All it takes is one and the number goes dramatically up, unfortunately.

Okay, so Ilana. So tell me about Tell me about your view on investing in women. Tell us about what you know why that's so important. And what that means in terms of the work ahead for you. And of course, when repeated congratulations for being that person. That's a managing partner role.

Thanks, Audrey. Well, I want to I'm actually going to start with the investor side, because you made a good point. There are not a lot of women who are running funds or even in the room when we're reviewing companies, right. And just recently, there were some studies that were released, that showed that funds that have female general partners outperform funds that have less diverse teams. So it's not even just that companies that have a diverse team outperform companies that don't, even on the investment side. And we're a very data driven team. You know, all the data shows that diverse teams outperform less diverse teams. And our partners really share a strong belief that investing in female black Latina x lgbtqi and other upper underrepresented founders is probably the largest untapped opportunity in our region and probably nationally as well just makes business right.

Why do we think that is? Well, one thing is when you think about from the investor side, a team comes in and pitches a product. It's targeted at women, or it people of color or it LGBTQ, folks, right.

And everybody in the room is male, white and over 50. How does anybody know if that's a good idea or not? There's no way to know that. Right? The way, the way you find out if something's a good idea is having a wider lens. So, you know, it's no surprise to me that more diverse investment teams make better investment decisions. And one of the things we're doing is, we have committed to creating a venture fellowship program, where we're going to be inviting different individuals who have interest in learning about venture capital, but come from a diverse set of backgrounds, whether it's racially diverse, or gender diverse, or even just regionally diverse. So that when we are looking at companies, it's not just one kind of person looking at them, we have different voices in the room, and we avoid groupthink. And I think it's the same thing that carries down to a company. If you have women, or you have people of color, or you have people of different genders on your management team. When you're making every decision you make, you're you're getting different outlooks and you're you're getting different lenses on every single decision. And that's the best way to avoid groupthink. So to me, it's just No, it's not surprising, it's kind of surprising that nobody thought of that before to me.

Well, here's the thing, if you don't have representation, you don't know your customers. That's, that's really like the bottom line. I mean, Henry Ford taught us that, right? Pay your people well, and the people on the line are gonna buy your product, and make something great, and the people are gonna gonna buy it, and they're gonna have pride in it. And so if we lost that, somewhere along the way, we lost the fact that I, as a woman, buy cars, right? I, as a woman make the decision in terms of buying a house, you know, those kinds of things got lost along the way. And now it's time to say no, there's a whole world out there. And when you think about the amount of education in around the world, of women who are going to call its people of color, who are advancing and are creating some wealth, not enough, but some, they're making decisions with their pockets. And, and we're cutting out customers, by not having that view in the room. And that's what always blows my mind. It's like, No, we know best we know best for you know, if you're if you're a white woman, you you don't know a lot about hair product that isn't for your hair. And you you don't need to have us in the room talking about that kind of stuff. You meet people who will consume that product in the room, and understand what that market opportunity really is.

I could not agree with you more. And I can even just say, and I am a white woman. And so I've got my narrow, right. But you know, when people would come into the room and pitch something that was targeted at women, and I'm the only woman in the room, whoever it is leaves the women, everybody says is that a problem? They don't know. Right? Right. And I don't know what problems, you know how to solve problems for black customers, or for Latina x customers or for lgbtqi customers. So we need to have we need to have those voices in the room. And the way you get those voices in the room is you train those folks as venture capitalists, right? We need a wider group of people who who make investment decisions. And then I think we will also have a wider group of people that we invest in, are you going to make sure that the 412 venture fund has a wide representation of people who are looking at these companies that are pitching?

Yes, that's the whole point of that venture Fellows program that I mentioned, which is going to launch next year. The idea is to fund you know, so you got to pay people if they spend time on something, but pick people who have an interest in learning about venture capital, and specifically to target it to people that are underrepresented groups that are underrepresented in the investment field, and then pay them to spend time with us meant to learn about investment process, but to also lend their voice in the run when we look at companies.

You know, it's so funny. The other day, Jonathan and I we had a business as usual, and that's show that we run every day at 12 noon, and we have the CEO of the company called Tobii Dynavox. Dynavox was started in Pittsburgh. Started and they had been working on giving people voices who were not able to communicate and In the field of disabilities, and it's so funny because they have their own advisory groups now, and families who actually guide the product. So it's, it's, that might sound like radical, but that's how it should be for everything.

Absolutely, that's what we tell startups, right? We tell them get out and get out of the room and talk to customers, right? So it's the same thing as investors, we should be getting out of the room, getting past our own, you know, points of view and getting folks into the room who can give us more diverse perspectives.

What advice do you have for women and women who might want to learn how to be investors or, you know, participate in this work? What advice do you have? And for anyone, it can be women, men, people who care about this stuff, what's your advice?

My first piece of advice is to get involved in the entrepreneurial community. We're very fortunate here to have a wide range of entrepreneurship programs, whether it's alpha lab, athletic gear, athletic health, startup, boost, ascender idea foundry, and I'm sure I'm forgetting somebody, so forgive me. But my first thought would be get on their mailing list, start going to events, meet companies, offer to help get involved with startups learn what kinds of needs, they have talked to the people running the programs and ask them how you can help become an advisor on a startup board, become a mentor at one of these accelerators. That's the first step. Once you've done that, maybe reach out to folks like 412 Venture Fund, or you know, other investors in the community and say, hey, I want to learn, I'll tell you when I sold my company and decided I wanted to learn about venture capital. I approached Steve Robinson and Ed Engler who were running a group at that time called Pittsburgh Equity Partners, hey, right. And I said, I'll be your Sherpa, whatever you let me sit in the room. And I remember Ed Engler said, okay, you can be our intern or unpaid intern, Jen, her net and such as you cannot call a CEO of a company, an intern, at least color an Executive in Residence, and I said, Did you hear what they call me?

Want to learn more?

I think you need that perspective. I want to get in the room. I want to hear what's going on. I want to figure out how you guys do this. Give me all the grunt work. I'm happy to do it, just to learn. And I really do think that's the way to learn is to watch. I think that's great advice,

I would add one other thing, okay, that open up what you can tell them aging because I'm gonna use this term, open up your contacts list, your Rolodex, the Rolodex, come on, up your contacts list. And share it because you never know who can be a customer who can be someone to give you feedback. And that's how you can provide tremendous help to companies. Absolutely. And it doesn't take much. So if people are interested and you're listening, you can reach out to 412 Venture, the link, I mean, you can google it for him to venture funds, you can find it a lot of diamond is on that site, easy to get ahold of easy to figure this out. If you're interested. I totally agree. Do it participate, help create wealth help create change. Good stuff,

I want to we can't thank you enough for stopping by and spending a half of every time I need another half an hour to learn more about the other stuff that you're up to what but a great time learning about what you're up to. And we just think that for one to venture funds can be transformative here in Pittsburgh, one of those foundational steps this region need to take to have an organization like that. So I want to diamond, thank you for being part of tech, but today we do appreciate it.

And thank you for having me. It's been it's been such fun. You guys are always fun to talk to.

We're gonna have you back on as soon as possible for updates. That's for sure. This is Jonathan Kersting. And this is Audrey Russo more about the Pittsburgh Technology Council by going to PGH tech.org and have yourself an awesome weekend. Appreciate it. Thanks for listening to tech vibe radio coming at you from Huntington Bank Studios. Transcribed by https://otter.ai