December 14, 2022

The Venture Fund Blueprint: Shea Tate-Di Donna and Kaego Ogbechie Rust

With the rise of emerging venture capital, there are thousands of new fund managers building their businesses without resources or direction. My next guests help firms get clear through strategy and intention to grow and prosper.

Welcomed back to the Author Hour Podcast. I’m your host, Hussein Al-Baiaty, and my next guests are Kaego Rust and Shea Tate-Di Donna. They’re here to talk with me about their new book, The Venture Fund Blueprint. Let’s get into it.

All right everyone, I am here with my two new friends, Kaego and Shea. They’re here to talk about their new book, The Venture Fund Blueprint. I’m really excited because I’ll be honest, I know nothing about this topic but this is why I bring on gurus like yourself to talk to me about it. So thank you again for being on the show today, congratulations on your new book. Yeah, thanks for coming on, how are you guys feeling?

Shea Tate-Di Donna: Good, good, it’s a pleasure to be here, thank you so much for having us.

Hussein Al-Baiaty: Absolutely.

Kaego Ogbechie Rust: It is a pleasure and a privilege to have finished writing this book. So we are extremely excited to share it with the world.

Hussein Al-Baiaty: Amazing. Yes, I’m glad that you’re here talking to me about it but I want to start to give our audience just a little bit of a background on each one of you, sort of where you grew up, you know, high school, college, all that good stuff, if you went to college and then sort of, what led you to this work of you know, venture capitalism, angel investing and kind of helping clientele that you work with today.

But I kind of want to know your background, where you grew up, how you grew up, who influenced you, you know, all those good things. Shea, I’m going to start with you.

Shea Tate-Di Donna: Okay, great. So I’m originally from Pennsylvania and in the exact middle of the state in the middle of nowhere, there are more cows than people. So it’s a very, very rural area. My family actually farms and I was the first person in my family to go to college. I went to college in South Central Pennsylvania, private liberal art called Dickenson and studied English and Psychology then, I immediately moved to New York City to start working in finance and I started investment banking.

I was an analyst for the CEO of Barkley’s North America and then moved to Boston and started working in venture capital. So it was with the firm that I joined there that I moved out to the west coast and we’ve been out in California ever since.

Hussein Al-Baiaty: That was a very compounded journey but I have some questions — I’ll let Kaego go a little bit and share about your background, Kaego.

Kaego Ogbechie Rust: Yeah, of course. I can give you the up-until-this-point story. So I am Nigerian by descent, my family immigrated to the States back in the 80s, and brought myself in with my three brothers. So I am one of four and the only girl, had to fight for my life growing up but had a really, you know, sort of incredible experience living in different states but sort of had a home-based in Southern California.

So I went to high school down there, ended up doing my undergraduate at Harvard, and loved the east coast but was a lot colder than California so by way of many, many different sorts of moves around the east coast, I ended up in New York, working in finance at Goldman Sachs for nearly a decade and then sort of had a coming home back to California and then now based in San Francisco, just a hop, skip and a jump away from Shae.

Hussein Al-Baiaty: That’s amazing. So how did you two meet? Where in the story did you meet?

Shea Tate-Di Donna: We met through, Kaego was part of a group called Phenomenal Women, right Kaego?

Kaego Ogbechie Rust: Yeah, it was many, many years ago now.

Shea Tate-Di Donna: Yeah, we were introduced by a mutual friend and we just really hit it off and so we started collaborating and over time, we’ve worked with hundreds of fund managers, you know, on everything from launching their funds, to operations, to fundraising, to you know, portfolio cultivation and management and Kaego was a fabulous collaborator and has been an amazing coauthor because as you know, writing a book together is quite an interesting feat and so you learn a lot about each other and then she’s just a fantastic partner.

Kaego Ogbechie Rust: And Shae will skip over this but I’ll say, the reason why we hit it off is that she was one of the only people I knew who speak as fast as a New Yorker and I loved it because we could get so much done in a short amount of time. I think she is probably one of the most accomplished collaborators and sort of synthesizers I’ve ever met. So when we’re together, put a checklist in front of us and it’s done. It’s done and I love that about our partnership.

Hussein Al-Baiaty: That’s so cool to hear, man. I feel like, when you’re out in the world, you know, not just doing things but I feel like you meet the right person whether to work with, your partnerships, relationships, whatever it is, sometimes it feels like it’s exactly who you’ve been looking for but you’re also exactly who they’ve been looking for in a way, right? So it’s always what’s for you will never miss you, I love that.

That’s so cool. So you guys got to meet each together and then you started work in this world of finance, which is interesting. You come from farming and growing up in the middle of nowhere where like you said, more cows than humans and then you go into this world, which I think is like, the most complex part of our world, which is the financial world, which I think is profound how you two have met each other and then started working in that space.

But tell me a little bit about this book. So who did you decide to write this book for and whom are you trying to reach with your message?

From Founder Services to General Partner Services

Shea Tate-Di Donna: So as I mentioned, I started working in venture capital, and one of the firms that I worked with, I was part of the founding team of a fund called True Ventures and I both, you know, was part of the investment team and also built our platform at founder services. So every investment that we did had a direct line to the board member in a dotted line to me and I would sit down with the companies once we’d wired a couple and say, “How can we help people with the best business possible?”

Because when you’re the first institutional money in, as we were at the beginning, it’s all about execution and time to market, and through that process, I built this platform of founder services and this was back in 2005. We were one of the first emerging managers in the venture space and one of the first to build founder services. The reason that I share that with you is, you know, now, founder services are ubiquitous.

Almost every venture fund has them but at that time, that didn’t exist and we really wanted to flip the venture model on its head and treat the founder as a customer and build a whole layer of services, support, and resources underneath them and support of their effort. So startups by nature of what they are, are under-resourced organizations. So if a founder could say, “Thank you so much for that two-million-dollar term sheet. You know, how long can you help me or what else are you offering?” that was my goal and intent at that time.

So fast forward to today, Kaego and I really see an opportunity to use that same model with general partners for emerging managers of funds and to build out a model of GP services that is in support of their efforts. So all of these different fund managers are doing the same thing in their own silos. They’re doing deal flow process management, they’re creating a CRM, they’re managing an LP database, they’re fundraising, they’re all doing it on their own and they’re under resourced.

So, what we can do is come in and support them in their efforts and you know, both facilitate a period of knowledge exchange, kind of you know, establish this base level of knowledge and historically, venture capital has been a very closed or cottage industry that can be hard to break into and Kaego and I really want to further that diversity of intellect and make this knowledge more accessible and attainable to a much broader variety of people demographics and so forth. Kaego, I’ll turn it over to you.

Kaego Ogbechie Rust: Yeah, that’s so spot on in terms of our journey and just to sort of round that out, we really feel the audience is this sort of new generation of newly minted investors and newly minted venture capitalists. You know, Shae is completely right. Back in her days at True in 2005, the word origin manager or early-stage investor, those were new terms, you know? She really did coin that.

So we see there’s another phase of angel investors and really curious entrepreneurs and you know, individuals who have come out of really great exits from a lot of these big tech companies that you know, Square and Stripe and Facebook and so on and they know what it takes to really build an incredible startup and they want to invest in them. They’re really great at picking out companies and really great at having an excellent deal nose but they want to know how to start a business and that, you know, sort of the difficult part.

It’s learning how to run everything outside of just picking great deals and so we really wanted to speak to those individuals who again, have the know-how, they may not have the resources and the support or have been overlooked in some other way to do it but the other fun thing about the venture capital market is that there are so many books about the startup side and there are so many books about you know, how you can do deals.

But really, setting up the fund and really knowing tactically how to do that from operations, to legal, to fundraising and so on is something that we get asked about often and it’s been fun to sort of take all those questions that we’ve been asked over the years and put them into reality, a workbook format that can become, you know, scratched up by your desk and you can use along the way as you launch your own fund.

Hussein Al-Baiaty: It’s an interesting take on things. I meet with a lot of people whom you know, are seeking investors or seeking capital, they’re entrepreneurs, right? The entrepreneur side of things. They have the idea, they’ve been working on this thing that, whether it be an app or a business or a coffee shop, whatever it is and they are seeking capital or they’re seeking angel investors and of course they, you said, seek out those books.

Seek out those resources but you’re looking at it from the other angle where the fund itself and those people that grow those funds and help those entrepreneurs and those ways and create the deals. However, there is a pain in both sides, right? Whether it is investing, it is all risk in a lot of ways. So let’s start with that. What are the big, like pain points that you see that your clients have and that you’ve been able to come in and sort of help with?

What would you say are maybe the top two or three pain points that many of the people who run this fund have struggled with?

Shea Tate-Di Donna: So we get a lot of questions around fundraising of course, right? Like, because without capital it’s difficult to deploy it. So but that’s an even bigger question, right? It’s also how to establish relationships with LPs, how to build over time when you’re ready for institutional investors, who you should be pitching.

So for example, if you’re raising a fund that is — let’s call it, single-digit million. Let’s say you’re raising a five-million-dollar fund, that’s not a place where institutional investors can play. And sometimes, first-time fund managers aren’t familiar with that, right? That really it’s you’re targeting high net worth individuals, potentially founders of startups that successfully exited or maybe single family offices and things like that when you’re at the sub 10 million dollar fund size.

Then once you have limited partners, how you communicate with them, how you do your quarterly updates and have your annual meeting, those are great examples of how you can build out a robust LP program because really, we love to work with fund managers that want to build a durable and lasting franchise, right?

They’re not just in this for the life of one fund or they’re not just in this for the period of time that they’re deploying capital but they really want to build a lasting business for the betterment of entrepreneurs because we really believe that we’re building our future with technology and the role of the investor is to facilitate that and further that.

A lot of the work that we do is informed by our conversations with customers, right? So in our case, customers are GPs and these angel investors that want to build funds or these first time fund managers or second time fund managers and the great example of this is a firm we work with, called 1517.

So I first started collaborating with 1517 before they launched, right? When they were running this fellowship called the Peter Thiel 20 under 20 program investing in brilliant young minds, often with college and high school dropouts.

People who were creating clear vision at 14 years old, that type of persona and they came to me and said, “You know Shae, we think we have something here. We’d like to make a venture capital firm but we don’t know, you know, we haven’t worked in the venture before.” They were a former educator and ex-philosophy major who was working at the hedge fund.

Brilliant, brilliant people but just didn’t happen to come from the venture background and they said, “You know, you know a thing or two about the venture. You’re a part of the family team of a firm. Could you help us?” and I was like, “Oh, absolutely. I’d be honored and privileged” and so we started collaborating I became an advisor to them.

They’re growing, they’re outstanding and I was just on their annual meeting call last week to see what they built and what they’re investing in and the types of entrepreneurs and the technologies that they’re furthering, it’s so inspiring and so at the beginning, it was, what’s the annual meeting going to look like?

What’s your quarterly update to your investor going to be, how should we think about targeting for your next fund raise and you know, they raise a 20-million-dollar fund one and they are already set the next return on that fund. Yeah, it’s just in seven years, right? It’s just incredible to watch what they’ve built.

Now they’re on fund three, they were targeting 60 million, they were over subscribed to 80 when they closed and they’re backing these super impressive companies and so that’s a great example of kind of the life cycle and journey of the GP that we want to work with, right? So taking somebody who has this incredible raw talent may or may not come from a venture background.

Even if you did, even if you came from one of the big venture players, you’re probably really good at two things, deal flow, and board seats. That doesn’t necessarily mean that you’ve ever fund raised from limited partners. That doesn’t mean that you’ve ever grown or managed a firm, hired talent, set culture, set up the operational pipes of the firm and all of these things are new.

And so by facilitating that knowledge and being here as a resource for those managers, we’re able to help them achieve more faster.

How an Investor Finds an Entrepreneur

Hussein Al-Baiaty: Yeah, it’s really powerful. It just sounds like you have this innate human ability to sort of help people see a little bit of your prospect and how they can, not only just manage but really think through how to build this fund and how it can grow. It’s kind of amazing how you’re able to attract those types of people to what you do and I think as a person who is seeking capital, as a person who is seeking investors, you got this brilliant kid whose got these ideas.

He’s got these things, how does a fund track those kinds of people that have those kind of deals down? Where are those opportunities for people listening out there, right? Well, how can one position themselves to attract the people that you work with just looking at it from the entrepreneurial side now, right?

But you know, I got this idea or I have been building this business or those kinds of things, how does one stand out to a fund like the people that you work with and how do those deals happen? How does one stand out I guess is the most important thing I feel like for an entrepreneur, right? Because they are head down, they are working on this thing, this project, this business but they need money, they need capital, they need access. How does one standout?

Shea Tate-Di Donna: So let’s approach it from the GP angle because that is the target audience for the book. For the GPs, they source their deals from a huge variety of sources and one of the things that’s so important to Kaego and I, as you mentioned earlier is accessing that diversity of intellect and that diversity of talent because when we change who the capital allocators are, we change who gets funded.

We all know that diverse team performs better, we have seen the statistics around that and the performance of that overtime but when the capital allocators are all one gender, all one race, all one background, and all come from the same five schools, we are not seeing and we mean diversity in the broadest sense, right? But we are not seeing that diversity of intellect resourced so that they can fund those broad and diverse deals.

That was our inspiration to write the book, that’s really what we hope to see and the change that we want to be, right? So when we are able to change that, the deal sourcing comes from everywhere. So of the labor, the 1517 example because we just mentioned them, their model is to invest in these brilliant young minds, right? So they visit college campuses, they run youth summits, they travel, and they are on the road.

They’re going to hackathons, they host network events and summits, and all of these different things. Truly, you know, they’re not sitting in an office on Santa Road waiting for people to come to them. They are in the market activity on campuses, actively in different hackerspaces and environments and so forth and we see that again and again with different funds. There is another fund group that focuses on ed tech, right?

They’ve built an entire ecosystem with a fellowship for those founders and entrepreneurs that you mentioned who want to fund an ed tech company and are looking for the right path, the right customer set, how to further their technology, so they build a whole ecosystem. Now, they fund some of them but they have created a broader offering for benefit of the community to pay it forward first, which is so important.

Hussein Al-Baiaty: Wow, that is so profound. I love this idea of how we’re not just going to sit around at the table and wait for these things to come to us. That is probably the hardest part but they are actually active in the community going out there, diversifying, and seeking opportunities where they are brewing, right, where they’re actually being initiated. That’s really profound.

If there is a piece of advice Kaego that you would give to the people that you work with directly, like the clients that you have, what would be something that you would advise them on just to give a different perspective on how they can see diversity sort of expanding in there I guess portfolios and their work?

Kaego Ogbechie Rust: You know, I think echoing what Shea mentioned, we really see the importance particularly now, right? That venture capital, private funding is pervasive. That’s everywhere, there’s capital, you really want to become the type of fund, the type of emerging manager that is giving your portfolio investments something that goes well beyond the capital. It needs to be more than just cutting a check.

Harkening back to Shea’s time at True and really build this idea of, “If we are servicing our portfolio, then we are giving them more than just the money.” We are giving them education, we are giving them playbooks, we’re giving them you know, who are the top three vendors I can use for X. We are giving them introductions, we’re helping them find co-investors like do more than just cutting a check and being a name on the cap table.

Which is essentially saying, “Hey, be more than just the individual who sends the funds and goes away.” See how you can help those companies day-to-day, see how you can help those companies within what they need to achieve. I will brag on Shea again, even in the work that we do with fund managers as investors and as sort of the bird’s eye view, going back to the believer point of 1517, you know they joke and call her the oracle, right?

Because when they were relaunching their fund, they came to her with so many questions. You could really ask her anything, right? “Hey, how do we host our first LP meeting? How do we figure out a way to cut smaller checks for more companies like what are some of the programs we could do?” and those are questions that you can ask every investor.

So it’s funny the way that the entire spectrum of startup and venture capital works and institutional investing works is that you sort of see the same relationships trickle down, right? The way that a startup is seeking capital from a venture investor, it is the same way a venture investor is seeking capital from an institutional investor and we see these relationships repeat over and over again.

So if you’re sitting in the startup seat and you are looking for that venture capital, figure out a way that you can really differentiate yourself but in the other direction, if you are a venture capital investor, you’ve got to figure out a way to stand out to be more than just the money and we really do emphasize this with our fund managers that it’s got to be more.

Hussein Al-Baiaty : Right, your expertise, your experiences, sort of like you know, I would assume it is more like mentorship in a way, right? When people come to you for advice on how to run a specific meeting, whatever, right? You are offering more than just advice on how to make sure all of your planning and strategy is there but is really like really thinking about whom you’re working with, and what their culture is like.

Like you said, beyond the paycheck, beyond that check is experience because if I am seeking someone to help me with my coffee shop, I really want them to see even broader than I can think about it, right? Beyond that horizon, if you will, and that it usually can come from experience, right? So I love that, that’s great advice.

Shea Tate-Di Donna: To what Kaego said, it’s not just us sharing information. It’s really these unique and brilliant individuals sharing with one another, right? It’s that pure like knowledge exchange and us really creating a space to facilitate that because when they come together around the challenge they’re facing, a problem, an opportunity, sharing knowledge, it’s fire. It’s magic just to watch it happen and so what we’re really good at is setting up that basis to facilitate that kind of inner change.

Hussein Al-Baiaty: I love that and give me an example of that, like I want some texture. So when somebody wants to set that kind of culture up, what are some things that you sort of share to help to facilitate those ideas to bring it together?

Shea Tate-Di Donna: Absolutely. We run a GP forum for fund managers who are either prelaunch, they are on fund one, fund two, fund three, by fund four, you’ve kind of got it figured out. You are growing, there’s a different set of challenges and opportunities there that kind of prelaunch through fund three is the sweet spot that we found where we can create these spaces for this purely knowledge exchange to happen.

So it is around everything from, you know, how to run an LP program, institutional investor readiness, SPVs, legal questions, fund formation. Often times, we’ll bring in an expert to kind of facilitate or participate in the discussion, really bringing these fund managers together around this shared knowledge that is we find to be incredibly powerful.

Hussein Al-Baiaty: So powerful and you have tons of experience and I feel like, yeah, it could be anything, right? For someone that doesn’t know how to go about doing something specific, it is so great to bring people on like you, who have experience in that field that can share ideas that can really drive the train forward. It is very powerful and this is kind of like a, I guess, a personal question.

What would you say your favorite thing is about like helping these clients, helping these funds grow? What would you say the favorite part of the job if you will? So this is a question for both of you obviously like I am always interested in like this is my favorite part of doing this thing, what is that? What is that for you?

Kaego Ogbechie Rust: You know, this might sound extremely nerdy but –

Hussein Al-Baiaty: I love nerdy, let’s go.

Kaego Ogbechie Rust: I think for me — and Shea certainly shares a lot of this — I think it’s the economies of scale, which to us is, how can we take a unit of effort that we’re going to put in and help that unit of effort make everyone else’s work just a little bit less, just a little bit easier and we love that, right? You don’t have to reinvent the wheel. Shea and I have worked with so many different types of businesses across dozens of different sectors and industries.

It really all comes back to the same type of business building. You know, you got to pick a great team, you have to have a process, you need to follow up, you know. It is a lot of the same things that work in any industry and if we can make those sort of subsets and siloes of doing air quotes now, industries smaller and smaller so that a fund manager who is on merit day 100 can gain knowledge from someone else who did it and be on their day 100 a few weeks ago, that excites me.

That excites us, that makes us feel like, “Okay, someone is basically now able to spend more time doing the thing they love” right? They love finding deals and digging into these companies and truly changing the phase of what the world looks like day to day in some of these companies. Let’s help them get back to that, right? Spend the time doing the thing that you love, let us create these economies of scale for you so that you are efficient.

Shea Tate-Di Donna: A thousand percent agree with that. I was going to say, one of the things I love about Silicon Valley in the mythical Silicon Valley sense — I don’t mean a physical place, I mean a mindset — is the pay-it-forward culture, right? If I’ve spent five hours researching something, it physically pains me to see you spend the same five hours. I will so much rather share it with you because time is the one resource that we don’t have enough of.

You can often get more capital and talent and other things but time is really it and so as Kaego said so beautifully, it’s where we can share those resources for these general partners and emerging fund managers to get back to their unique brilliance. Whether that be ed tech, whether that be AI, whether that be you know, machine learning or whatever their particular vertical is because some of the funds we work with are generalist and some are very niche specific but they each have a unique brilliance.

So where we can help them achieve these best-in-class standards so that everything can run more smoothly and save them time, that is where the real reward is for us.

Hussein Al-Baiaty: Well, you two seem like just an amazing team that is out there really making our world better. I feel like people like you who come in and really help people really structure, you know, create a better like you said Kaego earlier, like just create a better experience for whom they’re working with, why they’re working on it, go beyond that check, really serve whom you’re intentionally backing for that growth to happen.

So congratulations to both of you. Your book is going to be amazing. I know it is going to be impactful. It is very niche but it is very important so I feel like you know your audience very well, your clientele out there I’m sure will eat this thing up. Your book comes out real soon, congratulations. If there is one thing you want people to walk away like if walked away from your book right now and I got a fund or starting a fund, what is one thing you hope that I now sort of know or that I’ve picked up from your book?

Shea Tate-Di Donna: For me, it’s that right now, oftentimes when GPs are fundraising it can feel like this mad dash for, you know, to get capital and, “How do I access the right people and how do I raise this fund?” it can feel like such a slog and I totally empathize with that and what we’re trying to do is create the future we see where LPs and GPs can work in full alignment where we can kind of in the same way that working on founder services, we kind of flip that pyramid on its head and treated the founder as the customer.

How can we treat the GP as the customer here and create an alignment between limited partners and their goals with their capital and general partners and their goals with their funds and how they are deploying the resources, how can we create an alignment there and facilitate that exchange around interest, around shared goals and really build that future. That’s what we’re hoping to do.

Hussein Al-Baiaty: Do you want to share anything or add to that?

Kaego Ogbechie Rust: Echo all of that and it really is just we see and this is through experience, this is through our day-to-day and just our personal beliefs that it is only with a diversity of intellects that we can really create a variety of solutions down the line. So that’s what we wanted to do.

Hussein Al-Baiaty : I have no doubt in my mind that your book will do that and help so many people. Again, I learned so much today, thank you for sharing your stories and your experiences. The book is called, The Venture Fund Blueprint: How to Access Capital, Achieve Launch and Actualize Growth. Besides checking out the book, where can people find you two?

Shea Tate-Di Donna: Yes, please, please sign up for our newsletter. Find us on our website, it’s, you can get some updates there and we also have a blog. So we’re already starting to share articles and tips and tricks, that’s on LinkedIn. So

Hussein Al-Baiaty : Love it. Thank you guys so much for coming on the show today. I appreciate you and your time, I know it is super valuable but I know this episode is going to be amazing in helping so many people just see things a little differently. Thanks again for coming on, I appreciate you.

Kaego Ogbechie Rust: Thank you.