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This MBA Student-Run Fund Is A Template For Improving VC Diversity

·16 min read

Only 1% of venture capital-backed founders are Black, under 2% are Latinx, and fewer than 3% are run by women. Not only do women and BIPOC receive disproportionately smaller and fewer investments, they’re also rarely seen working in the giving side of venture capital.

Needless to say, there is poor representation in this exclusive space. But two MBA students at the University of Rochester Simon Business School are determined to change that. They’ve gotten a good start on their own campus — and now their ambitions are much greater.

Hawa Sultani and Keenan Heyward have made significant changes to the $2 million student-run Simon School Venture Fund since they became its leaders in spring 2020. They’ve helped to educate minority and female master’s students on how to become better investors and get a job in VC, and they’ve built a team of 33 analysts and associates from the MBA, part-time MBA, EMBA and MS programs in which 52% are women and 29% are under-represented minorities. Sultani, SSVF president, and Heyward, the fund’s chief operating officer, have also invested $25K-$50K — along with resources from the university — in companies founded by women and BIPOC.

With these and other moves, Sultani, Heyward, and their team hope not only to make money for the SSVF. Their aim is to lead by example and help increase diversity, equity, and inclusion in the venture capitalism universe.

“I want to make sure that the mistakes that we’re seeing in the corporate America world — where there is a lack of opportunity, diversity, and equity — doesn’t happen anymore,” Sultani says.

MEET HAWA SULTANI

Hawa Sultani: “If I want to see an impact and make a change for future generations, I need to be part of fixing the system.” Courtesy photo

Sultani grew up in Queens, New York, and was raised by two first generation immigrant parents from Afghanistan. At age 12, she and her family moved to Sacramento, California. Throughout her teens, she had her sights set on becoming a doctor. “My family didn’t have insurance growing up, so I saw a lot of my family members deal with the issues in our healthcare system, especially as part of an underserved community,” she says.

After studying neuroscience at UC Davis, Sultani realized that the problem with healthcare wasn’t that there weren’t enough doctors or money for underserved communities; the issue was much bigger than that. “I took a step back and thought to myself, if I want to see an impact and make a change for future generations, I need to be part of fixing the system, not fixing the people as a doctor,” she says.

Following her Bachelor of Science undergrad, she turned down a full-ride scholarship to go to medical school and had what she calls a Julia Roberts Eat Pray Love moment: She traveled the world for a year and quit her position as Clinical Trials Manager at the UC Davis Hospital upon return. Her soul searching continued when she then approached her mom, who owned a restaurant in Sacramento, with ideas on how she could scale her business.

“It’s a woman-owned business, and we specifically hire refugee women,” she says. “We work with nonprofit organizations to hire even those who don’t speak English and help them become financially independent. Those from war-torn countries are often disempowered in their rights to education, and it’s more difficult to get work.”

Sultani’s mom was skeptical.

“She said, ‘Hawa, you don’t even know how to cook. You did not leave med school to come and work with me.’ But somehow I was able to convince her to let me help and I turned her business into a local chain,” Sultani says. “I loved every bit of it, but I quickly realized the difficulties in being a woman — and a woman of color — in the way you’re treated by banks, landlords and people who can’t relate to you. Plus, if your English has an accent, it’s really difficult.”

While working at her mom’s business, she felt connected to these women’s stories, especially after going through similar struggles as their children and overcoming many hardships just to get a college degree. She says, “I don’t want that for the next generation of girls from my community.”

As Sultani worked with her mom, she saw firsthand the amount of struggle just to be taken seriously in her business. Motivated to help make a change for women like her and her mom, Sultani applied to business school with the intention of merging finance and accounting with her science background to eventually build her own company. She applied and was accepted to University of Rochester’s Simon Business School and was introduced to the SSVF by one of the students. Beginning as an analyst and then moving into leadership as the Fund’s President, Sultani’s winding path has helped clarify her mission and purpose: To one day become a partner at a venture capital firm investing in startup healthcare technology for women and low income communities. “Turning down med school and going in this new direction has been a roller coaster ride. But I’m glad I went along with it and trusted my gut because I’m so happy with where I am today,” she says.

MEET KEENAN HEYWARD

Keenan Heyward’s passion for business began as a child. His dad was the first in his family to get an undergraduate degree followed by his MBA. “To me, that was always the path I wanted to follow. My dad spent a long career at Johnson & Johnson, and I remember him coming home from traveling all over the world with amazing stories. I thought, ‘I want to do that,’” he says.

Heyward began studying business as early as high school, wanting to learn all of the intricacies of how business worked because of how exciting and impactful it seemed. Continuing on to study supply chain and technology management at Indiana University Bloomington, he began his career as an Analyst at an office supply wholesale company. “I was not traveling the world doing that, but it taught me a lot and I got a chance to grow as a professional.”

Realizing he wanted to transition into a role he felt more passion about, he decided to apply to Simon Business School to get his MBA. He says, “I always thought back to the perspective of my mom. She would always ask, ‘What are you doing for others? How are you supporting the people that look like you and the people that can gain inspiration from what you do?’ To feel fulfilled in my career, I needed to be doing work that uplifts others. I needed to be in an industry that helps create opportunity for people who look like me to shine.”

Once Heyward began working as a Senior Analyst for SSVF, he began thinking about the power of money. “Business can uplift people and create opportunity. Everything that I do will go towards improving human lives.”

Keenan Heyward: “Everything that I do will go towards improving human lives.” Courtesy photo

IS LACK OF DIVERSITY IN VC REALLY A PIPELINE PROBLEM?

Inspired by the potential to create impact for women and minority populations, Sultani completed a summer internship at Kapor Capital, a social impact investing firm in Oakland, California, in summer 2020. “I realized that this space is where I can help people who look like me — minorities and women of color — have a chance to build something for our communities,” she says.

While the lack of diversity in many industries — including VC — has been pegged as a “pipeline problem,” Sultani and Heyward don’t buy it.

“In Silicon Valley, this is a huge conversation,” Sultani says. “To some degree, I don’t believe it. I think that (VC firms) don’t know Black minorities or women of color within their own network. It’s not an excuse; our student-run Fund has pools of educated minorities and women.”

Heyward also has a hard time believing that the “pipeline issue” is the cause of the limited amount of BIPOC in VC, noting that his consortium classmates from other schools are involved with venture capital fellowships and student-run funds like the SSVF. He says, “There’s a big groundswell of Black and Brown people that are there. They’re not going to take no for an answer in terms of getting into the VC space. It needs to be diversified.”

THE DREAM TEAM

Sultani and Heyward’s mutual passion of using money for good led to their friendship and subsequent working relationship at the SSVF.

They’d regularly make time to go for coffee — mainly to discuss their frustrations with how the Fund was being operated. “We wondered, how come we don’t see founders that look like us? Our portfolio looked like we weren’t representing ourselves,” says Sultani.

Despite the Fund having $2M donated from alumni and a board of investors, Sultani says that it wasn’t operating like a real fund, nor was it leveraging the potential impact that was possible. Determined to make a change for the better, Heyward and Sultani decided to apply for leadership positions.

“We came to the agreement that if Hawa was president and if I was the COO, we could make things happen,” says Heyward.

CREATING IMPACT

Sabeen Khan. Courtesy photo

When it was time to apply for the leadership roles, the former management team put Sultani and Heyward in a room with eight people who were to ask them questions. But Sultani took a different approach. “When I walked in, I was so frustrated with the way things were working. I was like, ‘I don’t want you guys to ask me questions. I have a full presentation. I need you guys to see my vision.’ In hindsight, I can’t believe I did that. I walked in and told them to put down their laptops and look at my presentation,” she says, laughing.

“I’m the Robin to Hawa’s Batman,” jokes Heyward. “It almost seemed like we were destined to lead this fund.”

In addition to Sultani as president and Heyward as COO, they have three vice presidents: Nelson Rosa, VP of deal sourcing, who drives the mission of bringing in women of color and minority founders into the pipeline; Khushi Vijayakumar, VP of portfolio management, who deals with new partnerships and ensures that companies are able to recover from Covid with free resources, interns or consulting; and Sabeen Khan, VP of education and outreach, who makes sure that there’s no discrimination in terms of how much knowledge analysts have when they’re recruited, and that there’s equal opportunity for those interested in venture capital.

The process goes like this: the management team sources deals based on companies that fit the fund mission and portfolio; the fund’s 27 analysts perform due diligence by reviewing pitch materials and conducting market, financial, and valuation analyses; the analysts then present the deal to the SSVF board of investors, where an investment decision is then made; and finally, the Fund provides value by building portfolio connections and offering university resources to promote company success.

The fund is industry agnostic, meaning they invest in a range of industries, such as healthcare, technology and energy. While priority is given to alumni funding, they also invest in companies with no prior relations to the university. “There’s always a risk, but we want to find founders we can believe in. We can add value to founders and help make their dreams a reality,” says Heyward.

Despite Simon Business School being small from a numbers perspective, Heyward still believes in the potential of its students to make a big impact.

“We give a lot of credit to the last management team,” Heyward says. “They built a great platform operationally. They gave us a chance to make a leap. Now, we want to push ourselves to bring it to the next level.”

A Zoom meeting of the Simon School Venture Fund. Courtesy image

IMPROVEMENTS TO THE STUDENT-RUN FUND

With Sultani and Heyward leading the SSVF, they’ve made “many amazing changes,” as described by Sultani.

First, they tweaked the education platform they used to onboard new analysts to be more experiential. They added bootcamp training sessions, simulations, seminars, and workshops. Plus, they changed the process of analyst recruitment, onboarding students regardless of background, experience, or Master’s program at the university to ensure that each person has equal opportunity to the experience and education provided.

“When we came in as leaders, our goal was to educate students so that no matter who comes out of this fund, they get the same level of education,” says Heyward.

“Venture Capital is so exclusive to get into,” adds Sultani. “It’s also heavily male-dominated. We focus on recruiting women and women of color and put them in higher leadership roles to make sure that they don’t feel imposter syndrome. It’s hard to go to a board and pitch a group of White, powerful men. We coach them to be successful.”

With the main goal of the management team being to increase representation of women and BIPOC in the VC space, they tapped into their diverse networks to find minority students who wanted to be part of the Fund. “A lot of them feel like they’re not good enough,” says Sultani. “We would push them to apply and help them to get through the interviews. Now, many will be the next leaders.”

The team also brought in diverse speakers and portfolio companies with hopes of helping more students to see themselves in the VC space. With each month corresponding to a specific theme, such as Black History Month in February and Women’s Month in March, the events are open to the rest of the school so that it’s not only the SSVF analysts that get the exposure needed to become better investors and founders.

Along with the operational improvements since their leadership began, Heyward is also designing a program called Pieces 2.0., where he and several other volunteers teach financial literacy to fourth, fifth, and sixth grade kids in a nearby school district. The program aims to give students a sense of how to manage their money, apply a growth mindset, and even start a business. “We’re giving these kids some next-level knowledge that they’ll be able to take with them through their careers and whatever they do. Opportunities like this create the kind of impact we wanted to have with the Fund,” he says.

THE DISCOURAGING STATE OF VC

Khushi Vijaykumar. Courtesy photo

While interning at Kapor Capital, Sultani realized the immense responsibility of MBA programs in developing the next business leaders. Aside from race and gender, Sultani believes that the biggest barrier to getting work in VC is lack of experience. She stresses the importance of business schools having a student-run fund to help people gain practice in the field. “That way, students can put this experience on their resume to show that they understand VC,” she says.

Heyward expresses his discouragement with the VC space for the way in which it’s created a wealth gap. “If a Black founder brings a deal to a group of all White men, there’s a good chance they’re not going to understand that market,” he says.

From the wealth gap to the unequal opportunity, Sultani is equally as frustrated with the current state of VC — especially in terms of the space’s hierarchy. “There’s the bottom pool, which includes the people who want to become VC analysts. Yet there is no pathway for them to go up the ranks or become a partner,” she says. “There aren’t enough seats at the table; it’s overcrowded and the only way for you to get a seat is to start your own fund. And then the only way you can start your own fund is to get funding from people who don’t look like you or understand what you’re trying to do. It feels like a lose-lose situation sometimes.”

Sultani says that despite some opportunities being given, to really make an impact you need capital and title. “For women who want to start their own fund to invest in female healthcare tech companies, for example, you can’t expect a guy to understand labour or menstruation cycles. We need money. There’s legitimate problems we experience and we need more women doing the funding.”

However, Sultani feels encouraged with the new accountability from VC firms to be more inclusive, likely spurred by the Black Lives Matter movement. With more firms opening up internship programs, she says that the jobs are becoming less exclusive and that there is effort in trying to be less biased about who is selected.

Although a miniscule percentage of venture capitalists are Black, Heyward feels encouraged about those who are in the industry, and hopes that numbers will only increase. “There are some unbelievable General Partners and Black voices in the game right now, and they serve as inspiration,” he says.

GOALS FOR THE FUTURE

On the career front, Sultani and Heyward have exciting things on the horizon.

With hopes to gain more knowledge and experience in technology, Sultani will be joining Microsoft in Seattle in their Global Health Care Cloud Team following graduation. Her goal is to understand how to sell technology and have a better understanding of how it works so that she can go back into VC and become a better investor and advisor to her portfolio companies. Ideally, she’d like to work for a healthcare VC or a women investment firm.

For Heyward, he’ll again be following in his dad’s footsteps as he heads into the pharmaceutical space working at Merck & Co in a Global Vaccine Strategy role. Beyond that, he has dreams to open an innovation hub to help create the next Black and Brown founders that people will look up to. “I want to create a community that uplifts everybody. I want to be able to be a springboard for people to be able to create their dreams,” he says.

While they’ve made incredible progress in terms of diversity, equity, and inclusion at SSVF, there’s more work to be done. As Sultani and Heyward near graduation, they’re in the midst of tying up loose ends with the Fund and getting it ready to transition to the next team.

“We need to be able to translate the momentum we’ve built to the next team and make sure that they know the standards we’ve set in terms of diversity,” says Heyward. “We want them to outdo us. That’s the goal. A diversified investor is a smart investor.”

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