Investing in diverse teams has a staggering impact. In fact, data consistently shows that it’s a superpower. And there’s no better showcase of this than the investments made by Ascend Venture Capital, a St. Louis-based firm and current CIC member. Featured in CIC’s 2022 milestone clients blog post, Ascend has since developed a program to double down on diverse teams to enhance portfolio growth.
For context, typically, only 1-5 percent of venture capital investments are placed in founders from underrepresented demographic groups, despite over a decade of data showing that these teams tend to outperform industry wide averages. In contrast, Ascend has invested 63 percent of its funds in diverse teams, despite having no specific mandate to do so; rather, it’s in direct pursuit of outsize returns. We spoke with Dan Conner, Ascend Founder and General Partner, to learn more about the Opportunity Fund initiative, a few standout portfolio members, and Ascend’s outlook for the year ahead.
How the Ascend Opportunity Fund 1.0 began
Founded in 2015, Ascend Venture Capital’s goal has been focused on making mission-critical, data-centric investments, while staying conscious of overall ethics and values. Since the pandemic alone, the team invested $9 million in capital across its 19 companies.
Opportunity Fund 1.0—a pledge to invest $25 to 50 million in minority-led teams—had its beginnings from this investment strategy. Of the 19 companies the group chose to invest in (the total pool was north of 20,000), 8 happened to be founded by people who identify as women, black, latino, Asian, immigrants, or LGBTQ+, far higher-than-usual proportion.
“In the venture capital business, you double down on your most high-flying companies as they begin to stand out,” said Conner. Opportunity Fund 1.0 aims to create global social impact while generating industry-leading returns, he said. And so far, it’s paying off. Arbol and OXIO, two companies founded by immigrants, generated over 10x ROI in just three years.
A few other companies in Ascend’s portfolio that have made promising milestones of success include rOS, a global fashion supply chain startup whose CEO, Lisa Morales-Hellebo made the cover of Supply and Demand Chain Executive and won the Women in Supply Chain Award in 2022.
Local to St. Louis, Pryce Adade Yebesi, Co-Founder of Utopia Labs, recently made the cover of the St. Louis Business Journal. The firm is focused on collaborative payroll and expense management for Decentralized Autonomous Organizations (DAOs).
In the climate change space, Journey Foods became the first data service to join the The Climate Pledge, a commitment by companies to reach net-zero carbon emissions by 2040. This initiative was started by Amazon and Global Optimism in 2019. Finally, Monica Landers, CEO of the innovative AI-story-and-audience-analysis tool StoryFit was recently featured in Fast Company.
Choosing “winners” and staying ahead
This year, Ascend has widened its focus on investing in telecom, supply chain and logistics, Insurance and FinTech, and energy systems, with a detailed and nuanced process to evaluate each. Part of this includes a simple notion of finding startups that solve problems that rank among customer’s top strategic priorities.
Before even meeting founders, Ascend heavily focuses on the efficacy of the business concept, Conner explained. “As a result, we’ve found exceeding successes where others have failed,” he said.
And in 2023, the outlook remains positive. Despite fears of an impending economic recession, Conner is optimistic. “While we never wish for an economic downturn, we’re bullish on finding terrific investment opportunities—even if markets are depressed,” he said.
He cites companies that flourished in the 2008-2009 economic downturn that have since become household names: Venmo, Uber, Square, WhatsApp, to name a few. Ascend aims to leverage this market opportunity, while expanding the circle of partners and investors that share their commitment and values.
Part of this includes not following the crowd, and taking unconventional paths to finding winners across their chosen industries. It’s the ability to “zig” while others “zag,” Coners says, citing words from John Madden, an American football coach. And if the zigging leads to winners, then it’s a victory for everyone involved.
To learn more about Ascend Venture Capital’s mission-critical, data-centric tech investments, visit their website here. To learn more about CIC St. Louis, including information on co-working, conference and meeting room space, and upcoming events, visit the CIC St. Louis page.