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A former Salesforce exec and a Cisco veteran have teamed up to launch a new $50 million fund that aims to rethink startup investing ‘from the ground up’ so it’s more inclusive to women and people of color

A former Salesforce exec and a Cisco veteran have teamed up to launch a new $50 million fund that aims to rethink startup investing ‘from the ground up’ so it’s more inclusive to women and people of color

Leyla Seka Mallun Yen Operator Collective

Summary List Placement

In 2015, Salesforce AppExchange exec Leyla Seka and former chief people officer Cindy Robbins went to CEO Marc Benioff and told him that there was a gender pay gap at the company. Their alarm bell prompted the firm to do an internal audit which confirmed their beliefs, kicking off efforts for Salesforce to close those gaps.

Now, Seka has taken her experience to a new arena: venture capital and startups.

Last summer, she teamed up with former Cisco exec and enterprise tech startup founder, Mallun Yen, to run a new venture firm called Operator Collective that aims to make venture capital more inclusive and diverse. Changing who’s involved in a company from the very beginning can help make sure that more companies are reflective “of the communities we live in,” Seka said.

“Being on the side of the table that decides what kind of companies are going to go forward and get bigger and get more funding and get more attention and get more help is pretty powerful,” Seka told Business Insider. The status quo is bleak: 65% of VC firms don’t have female partners and 81% have no Black investors.

Seka and Yun intentionally set out to create a diverse set of limited partners, or LPs, to contribute money. Of the over 130 people who invested in Operator Collective’s inaugural fund, 90% are women and 40% identify as people of color. Yen and Seka also set a sliding scale starting at $10,000 for how much people could invest in the fund, which makes it more accessible to those who couldn’t fork up the larger, set amounts of other funds.

Secondly, they intentionally sought out execs and professionals who have a diverse array of experiences, including CEOs, founders, sales leaders, product experts, and HR professionals. In short: They were looking for “operators”: People that knew the ins-and-outs of how a company works.

The duo is trying to fundamentally rethink how venture firms are created and who has access to those opportunities, Yen said. The status quo sees a narrow group of venture investors pouring money into a narrow set of founders — with those founders often eventually getting into angel investing themselves because they make money from their well-funded startups. And so the cycle continues.

“What we want to do is expand wealth creation because there’s incredibly talented people who have built and scaled billions of dollars worth of business, but for whom venture wasn’t accessible,” Yen told Business Insider. “It’s a venture fund in structure, but we rebuilt it from its DNA, from the ground up.”

Over the past nine months, Operator Collective has raised over-$50 million for its first fund, and invested in 23 companies, mostly in enterprise technology and cloud software, including Outreach, DataGrail, Guild Education and IronClad.

Making venture funding more accessible

Yen and Seka came together thanks to a speaking event. Yen, who spent 8 years at Cisco, including as the VP of intellectual property, had cofounded SaaStr, an enterprise tech community that hosts industry conferences. Seka, who had built Salesforce’s AppExchange into one of the biggest ecosystems in cloud software technology, had been invited to speak at one of SaaStr’s conferences in 2019.

At that point Yen had launched Operator Collective and was looking for LPs — Seka joined while still at Salesforce helped recruit other contributors, too. When Seka decided to move on from her role at Salesforce last summer, Yen convinced her to come on board as a the only other general partner.

Right before the fund officially launched 9 months ago, Seka asked all the LPs if they’d ever invested before this, and 75% said no. When she asked why, most of them said they’d never been asked.

“This is another area where people are making money and women and underrepresented minorities are not getting cut in,” she said.

To make sure Operator Collective was different, Yen and Seka were very deliberate about who they asked. They surveyed their own professional networks, and then asked people to recommend their networks, and looked for people with experience building companies.

LPs in the fund include Zoom CMO Janine Pelosi, Slack’s head of customer success, Christina Kosmowski, Cloudflare’s cofounder and COO Michelle Zatlyn, and Verizon’s CTO Rathi Murthy, to name a few. It also has some institutional investors like the Kellogg Foundation.

While Operator Collective doesn’t specifically seek out startups founded by underrepresented groups in tech, both Seka and Yen think that the diverse range of investors they’ve gathered will inevitably led to investments in startups with a more diverse set of founders and executives than typically found in enterprise technology.

And the early results are promising. Operator Collective’s portfolio companies have 57% female founders, 70% founders of color (48% Asian, 13% Latinx, and 9% Black), and 35% female CEOs and 30% CEOs of color.

Also, by forming a group of investors who have practical experience building companies, the startups that Operator Collective also have access to an immense amount of expertise, Yen said:

“Once we do invest in the companies, then the ecosystem is here to help support that company as they grow and scale.”

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