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How Valence Aims to Provide Better Access and Funding for Black Founders & Executives
“I gotta say it was a good day.”
I’m so fricking pumped today. Really, truly. Yeah, Valence announced > $5 million in funding led by GGV and Upfront. That IS a big deal, but I’ll get to that. But Kamala Harris was picked to be the Vice Presidential candidate for the Democratic Party. That means she’ll be the first female Vice President of the United States, the first female Black Vice President and the first Indian-American Vice President. I don’t take this for granted, be ready for a fight. But let’s be clear. WE WILL WIN. We might have to fight for it after the votes go our way but let’s get ready for the fight.
So let’s get it.
Valence. It is a company with a mission to create better access and more funding for Black entrepreneurs and executives. Valence is led by a talented CEO, Guy Primus and was the brainchild of my partner, Kobie Fuller. If you want to follow two great Black executives who work at the intersection of technology and venture capital make sure to click on those links and follow them on Twitter.
So what exactly is Valence and why does it matter?
18 months ago, my partner Kobie Fuller was inspired to build a solution for a problem he faced regularly: as one of the few Black partners at a VC firm (an estimated 3% of GPs in venture are Black vs 14% of the US population), he was consistently asked for warm intros to Black professionals, to Black VCs, and to talented Black operators and entrepreneurs.
Venture firms wanted to meet talented Black founders but didn’t know where to start to find them. And Black entrepreneurs wanted access to decision makers but didn’t always have the easy connections. In fact, one of the biggest criticisms I personally get when I suggest that founders should “get introductions to VCs” is that this might reinforce existing racial imbalances by providing easier access to White professionals than people of color.
An imbalance clearly exists in access and networks that has resulted in a tech industry where an estimated only 1% of venture dollars go to Black founders and only 3% of the workforce is Black and a country where Black individuals hold a disproportionately low amount of the wealth — only 3%. As Kobie says, he didn’t have a “magical database” of great Black talent, so he set out to build a solution not just for himself, but also for the community.
Personally I believe that to fund more people of color you need to put check-writing authority in their hands the same way that if you want to see more women funded you need more women GPs. My greatest criticism of our industry is that women and people of color feel the need to leave larger VCs to create their own firms. We have a responsibility to help propel them to the top ranks of our biggest firms to make our check writers more representative of our society overall.
There is a very clear economic rational and strategic advantage for doing so. There are amazing Black entrepreneurs, Indian entrepreneurs, Chinese entrepreneurs, female entrepreneurs, gay entrepreneurs and so forth. OBVIOUSLY! If 90% of the check writers are White, straight men then it’s clear if you are different than that you’re going to have an advantage. As I always say, being great as an investor is about having “edge” and edge means knowing somebody or something that very few others know. It’s about swimming in lanes where others aren’t present. Being diverse in the VC industry is a VERY LOW bar and a clear differentiator.
At Upfront we believe in improving access for founders and entrepreneurs to networking, professional development, and economic opportunities, and that’s what Kobie set out to do with Valence, which he incubated in our offices. Huge hats off to Kobie for the idea, energy, direction, evening hours and the foresight and salesmanship required to bring on Guy to take the helm.
By the time Valence launched in late 2019, the team had built the necessary systems and technology to seamlessly engage and onboard the community — not just the users, but also some pilot corporate partners who also believed in the mission and opportunity and who wanted to leverage and support this amazing database of talent. It was also important to Valence to not only connect users, but also to celebrate the successes and spotlight great Black leaders through high-quality content and design.
As soon as Valence launched in November 2019, the business quickly had proven demand from the community, not only from senior business leaders but also from so many young, talented professionals who could benefit from the inter-generational networking that Valence supported so seamlessly. Since launch, the Valence platform has supported more than 5,000 micro-mentoring sessions (AKA Boosts)— allowing the kind of invaluable network support that’s so critical to success and advancement for even the most talented founders and operators.
You can hear more about the importance of mentoring from Kobie Fuller, Valence advisor James Lowry, and John Legend — yes, THE John Legend — in this video from the 2020 Upfront Summit.
So things were going well for Valence in 2020, amazingly even in a pandemic. And then in May the world was galvanized by the tragic murder of George Floyd (and Breonna Taylor. And Ahmaud Arbery. And Rayshard Brooks. And the many Black women and men before them whose lives were taken at the hands of the police.)
In these months, not only did we see widespread civic protests but so many industries, including ours, faced a reckoning that despite even the best intentions, lip service wasn’t enough. We all needed to take action to address the imbalance of access, and to literally put our money where our mouths are. Suddenly a spotlight was put on everything that the Valence team had been building, and there was even more energy around the business.
I always say that you can judge a startup’s future based on how fast they’re able to execute when it counts. Well, I can tell you that within weeks of the civil unrest, Valence had:
- Introduced the Valence Funding Network, where GPs from more than 30 of the top venture funds representing more than $60B in assets under management joined Valence with the goal of linking Black entrepreneurs on the platform directly to venture decision makers.
- Increased membership by more than 20%
- Hired a CEO, Guy Primus, who was previously the CEO of The Virtual Reality Company as well as the COO of Overbrook Entertainment. He’s been a leader at the intersection of media and tech for many years and we’re grateful to partner with him.
- Announced their Series A funding round, which Upfront participated in and which was led by Hans Tung from GGV. Hans has been a great peer and collaborator on other portfolio boards and we’re excited for him to join Valence at this pivotal time. We have worked closely with GGV for years and they were a natural fit for helping to build a network like this given their investment in Chief (for women) and The Mighty (which helps families with people facing health challenges).
Since day one we have anticipated great things for Valence and with this groundswell of support at the civic level as well as the industry level, we hope to see meaningful improvements in access and dollars for Black professionals. Please join me in congratulating Guy, Kobie and the team for what they’ve built so far, and what’s to come.
Sonny’s Switches Sponsors
Genstar has acquired Sonny’s Enterprises, a manufacturer of car wash equipment and supplies, from Sentinel Capital Partners.
Sonny’s is the largest manufacturer and distributor of conveyorized car wash equipment, parts and supplies in the world with more than 12,000 SKUs. Customers of the company include both small independents and large national car wash chains throughout the US and internationally.
Sonny’s also offers an educational program known as CarWash College, an active learning experience where car wash operators, and investors come together to take courses in maintenance, repair, and management of car washes. Sonny’s has a 135,000 sq. ft. facility and headquarters near Ft. Lauderdale in Tamarac, Florida. The company was founded in 1949 by Sonny Fazio and today is led by CEO Paul Fazio who has worked at the company for nearly 30 years.
Sentinel acquired Sonny’s in December 2017. “Working closely with Paul and his team as they pursued their vision of market leadership for Sonny’s has been an absolute privilege and pleasure,” said Scott Perry, a partner at Sentinel. “Over the past four years, Sonny’s has significantly expanded its market leadership as a total car wash solutions provider by broadening its product offering, consolidating distribution, and expanding geographically to the West Coast through both strategic acquisition and organic growth. Sonny’s installed base of car wash tunnels has grown considerably and contributed to its exceptional financial performance.”
New York City-based Sentinel invests in management buyouts, recapitalizations, corporate divestitures, and going-private transactions of businesses with EBITDAs up to $65 million. Sentinel targets eight industry sectors: aerospace and defense, business services, consumer, distribution, food and restaurants, franchising, healthcare, and industrials.
“The Sentinel team has been an outstanding partner to Sonny’s since our relationship began and we’ve built lasting friendships with them,” said Paul Fazio. “With Sentinel’s help, we have increased our growth trajectory, expanded into new product lines through transformative acquisitions, and moved closer to realizing our vision of being the premier one-stop provider of products and services to car wash professionals. We look forward to building on our success with our new private equity partners.”
San Francisco-based Genstar invests from $50 million to $400 million in middle-market companies that have enterprise values from $50 million to $1 billion and EBITDAs greater than $15 million. The firm targets investments in the financial services, software, industrial technology, and healthcare industries. In February 2019, Genstar held a final closing of Genstar Capital Partners IX LP with $5.9 billion in capital commitments.
“Sonny’s draws on over 40 years of industry leadership to drive deep relationships with over 6,000 active customers nationwide. They operate as true partners with their customers and invest in their growth, from expert guidance during site planning through construction and operations, forging a long-term relationship as they grow together,” said Rob Rutledge, a managing director of Genstar. “We are very excited to work with Paul Fazio and his team to grow the business both organically and through strategic acquisitions.”
Fully committed debt financing for this transaction was provided by New York-based Owl Rock Capital as the administrative agent and lead arranger.
Private Equity Professional | August 11, 2020
Spire Expands Testing Platform
ERI Solutions, a portfolio company of Spire Capital since November 2018, has acquired DBI Group.
DBI is a provider of non-destructive testing, mechanical integrity inspections, pipeline integrity inspections, and heat treating services. The company, led by CEO Jeff Hilfiker, was founded in 1992 and is headquartered in Lenexa, Kansas.
The combined DBI and ERI will be led by Nathan Vander Griend, the current president and CEO of ERI.
“DBI’s great industry reputation, top-notch team, blue-chip client roster, and safety record make them a great addition to ERI,” said Mr. Vander Griend. “Furthermore, we believe that this integration will lead to significant business growth, providing opportunities for the members of the team to grow professionally, for our combined clients to have access to a more diverse suite of service offerings, and for our shareholders’ value to increase.”
ERI Solutions provides non-destructive testing, safety, industrial hygiene, environmental, and insurance services. The company’s services, the majority of which are federally mandated, allow its more than 200 customers to mitigate business risks and maintain compliance with regulations. ERI’s customers are active in the biofuels, agribusiness, manufacturing, milling, petrochemical, construction, and distribution sectors. The company was founded in 2007 and is headquartered near Wichita in Colwich, Kansas.
“With this combination, ERI and DBI will serve a broad base of energy and infrastructure customers across the US, playing a critical role in mitigating business and regulatory compliance risk,” said Brad Johnson, a vice president at Spire. “As a single company, ERI and DBI will be able to provide comprehensive service offerings to customers across the country. Spire is excited by the growth prospects of the combined company and looks forward to working closely with management.”
Bridgepoint Investment Banking was the financial advisor to DBI. “Our team ran a great process during an extremely difficult time dealing with COVID-19 and we were able to deliver a terrific outcome for DBI’s shareholders,” said Mike Anderson, a managing director at Bridgepoint. “It is a pleasure to help partner another Kansas City-based business with a capital provider that brings both capital and experience to help them take their business to the next level.”
New York City-based Spire invests from $15 million to $50 million in companies with revenues of at least $10 million and EBITDA of at least $3 million. Sectors of interest include technology-enabled business services, media, communications, and education.
Private Equity Professional | August 11, 2020
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