Mac Conwell is Founder & Managing Partner at RareBreed Ventures, a pre-seed fund that invests in exceptional founders outside of large tech ecosystems.

He started his career as a software engineer for the U.S. Department of Defense. He is a two-time founder with one successful exit. He worked at the TEDCO — the investment arm for Maryland — where he worked on the seed investment fund. During his time at TEDCO, it was struggling to invest in underrepresented founders, and Mac was able to start a pre-seed fund called the "Builder Fund," the first and only state-backed fund for women and minority founders in the U.S.

We highly recommend listening to the full conversation below:

But if you’re looking for some immediate insights, here are the three main takeaways.

1. Investor-product fit helps, but there are ways forward even if you don’t have expertise in the specific product or industry.

Mac: "There's really four things to look for. The first is, is it a market large enough to support a billion dollar business? Got to start there. Once we get past that, then look at customer acquisition experience and retention. Because if you can show me you know how to find your customers, your customers are buying it, they're enjoying the experience, and they keep coming back, well, I don't really need to know much more about the industry. That is a way for me to evaluate companies where I'm able to take my biases out.

What I've learned as an investor is that a lot of the biases we have come from our experience. So if you were a former operator, you know everything there is to know about your industry, or you're going to see so many companies doing so many different things, you're going to learn a lot about different industries. But that information you have in those industries becomes dated really quickly. Like if you look up to three, four years later, information you had on industry is completely different. And so things that were terrible industries are now great industries, things that used to be great industries, and now terrible industries to invest in. But if you can show me that you're in a big market and you know how to find your customers, your customers love you and they keep coming back, then there's probably something there. So that's how we become the investment firm that never misses out on an opportunity like a wig dryer, or Spanx. I don't need to know about women's undergarments, I need to know that they really love the product, they keep coming back, we could probably figure out how to make a big business with that as a starting point."

2. A network is one of the most important things for investors.

Mac: "One thing I wish I had known, is that I should have spent more time building my network with other General Partners and other VCs all across the globe. And having more conversations earlier about what the process was, one, to break into venturing, two, to start a fund. The lack of a network was the biggest thing holding me back when I got started. And so I had to grow that on Twitter, it was amazing for that. But if I don't have Twitter, I don't have the fund. And that's because I don't have a network. I wish I had spent more time earlier building that network. I'd be much further along."

3. Increased diversity in junior roles is important, because of the experience it provides. But initiatives to fund diverse ventures should be incorporated into overall company operations, rather than separate.

Mac: "Funds are now hiring junior people of diverse backgrounds and the ability to move up in a firm can be really very limited. Well, it's true for everybody, right? But we do need to get more diverse talent in, especially the junior positions so we can have more people who have the skill set. It's not going to be helpful if we just hire a bunch of diverse people into partner roles at firms who don't necessarily have the experience. And if they don't do well, then everybody's going to point back, “so this is why we shouldn't hire them to begin with”, well, no, they might not have had all the training, they might not have had the experience. So having those junior people get in and get experience is important. And with most firms the ability to move up is really difficult, there's only gonna be so many partners in any fund.

Historically, what we've seen is that junior people at firms end up joining startups, starting their own startups or starting their own funds. All three options are really great for diverse people. So if you’ve got diverse candidates who are at your firm, they will then go join a portfolio company, but they're probably going to get a high ranking position at a startup that they didn't have access to, or the ability to get a job at before. They're going to go start their own startup and hopefully, because of their background have a better shot of getting funding. Or they're going to go start a firm, which is good for everybody. So I actually don't think that's a bad thing. But for those who have already been in the industry and have experience, maybe have been doing angel investing have, shown to build some track record, them getting opportunities beyond just those junior level positions, I think, is a key point to what you're saying.

The other point about the diverse pools of capital, even as a diverse fund manager, every institution I've raised capital from to date has been a diversity initiative. So does that mean I'm not good enough for the regular funds? They tell me how great of a GP I am. But it took you creating diversity initiative to even have the ability to write me a check. So what does that mean? Same thing for the startups. But if nothing else, at least capital’s flowing to the startups and to these funds that wasn't going to before. But to your point, you can't be initiatives, right? initiatives are time based. They don't last forever. It's almost like you're doing an experiment. So what point does it go from this experiment to like, this is just what you do. And so I tell people, they don't need to make initiatives they need to find ways to make this part of the company culture or the fund’s culture."

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