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Inspired Capital raises $281M for its second fund

Penny Pritzker, Inspired Capital Founder and Former U.S. Secretary of Commerce, and Alexa von Tobel, Inspired Capital Founder, joined Yahoo Finance Live to discuss the VC firm's latest funding round and the kinds of startup they plan to invest in.

Video Transcript

ADAM SHAPIRO: All right, we have got a little more than 45 minutes to the closing bell. But we want to talk about $281 million and how Penny Pritzker, the former US Secretary of Commerce and a founder of Inspired Capital, along with another Inspired Capital founder, Alexa Von Tobel, intend to deploy that money. And we welcome them both to the platform right now. Congratulations on raising that money. And this is the second fund that you've launched. I'm on your webpage now, looking at how you deployed the first round of funding.

So, Secretary Pritzker, let me start with you. When you look at the diverse different kinds of companies from the first round, you know, Finix, I think it's pronounced, helping manage and monetize payments for business. Then you've got a data-driven real estate company. And then you've got a company that is helping support women leaders. How do you choose from everyone out there to start funding?

PENNY PRITZKER: Well, our fund, Inspired Capital, is really a generalist fund. And we're really focused on finding the best founders with the best ideas, whether it's in B2B and consumer fintech, or it's in healthcare tech, or, you know, in NextGen work, if you will. And Inspired, in our first fund, has had really a terrific group of founders that we're working with that we think are building really enduring companies, that are bringing real value both to the consumer and to our business customers. So that's really what we're focused on at Inspired Capital.

SEANA SMITH: And Alexa, going forward, building off of that success from your first fund, when you take a look at this second fund, I guess, is your strategy changing at all? Or are you still taking a very similar approach?

ALEXA VON TOBEL: What was great about this fundraise was it went very, very quickly because it was the same team with the exact same strategy. So for-- to steal from Penny, she always says we're staying very true to our knitting, which is really honing this craftsmanship of helping founders build businesses early. So seed Series A, investing across the country in founders of all types, all shapes and sizes, and really looking across all categories. And I think what we really care about being known for is just being excellent at helping founders really build businesses in a sea of endless capital. That is what we are excellent at.

ADAM SHAPIRO: Alexa, how do you all come together? Do you find the founders, or do the founders find you?

ALEXA VON TOBEL: It's a great question, in so many different ways. I would say each week, probably about 100 companies come towards us. But it's actually the companies that we go and seek out, where we have theses on categories. We've gone very, very deep, again, in categories like fintech and digital health, where we've spent most of our careers there. Those are places where we actually go seek out very specific parts of the stock that we're excited about and go tap founders on the shoulders.

And then, lastly, we'll even incubate from time to time. So when the stars really align and we have the right team, people that we typically have known, we'll go as early as first money in and then fund one. We have a great company called Aurum that we helped stand up.

PENNY PRITZKER: You know, and of the things that--

SEANA SMITH: That's interesting because-- yeah, go ahead.

PENNY PRITZKER: No, I was just going to say, you know, one of the things you have to think about is our team at Inspired really has really deep operational roots. I mean, we've started among all of us at 10 different companies. And so, you know, one of the reasons that I think founders are attracted to us is because they know we've been through what they're going through. And in a time when the world is awash in capital and founders are seeking investors who can bring value, not just a high valuation, but also can bring value to them and to their teams.

SEANA SMITH: And Secretary, that is a great point. And then another thing that also differentiates your fund from others out there is that you guys are female-founded. You're female-led. What type of advantage do you think this gives you? And I guess, why do you think some of these founders who are incredibly talented, who probably have interest from a number of funds, why they're finding you as the best option?

PENNY PRITZKER: Well, I think it starts with, first of all, our understanding of the importance of diversity. And I think a lot of our founders believe that they want to have a variety of people at the table. You know, most companies are not founded with just one source of capital. And so they look at us and say, wow, these, you know, Inspired folks bring operational excellence. They've been in the seat that I've been in. They're women, and half the population is women that they're trying to bring their products to market to.

So I think they look and say, you know, look, we do business with everybody. We're not just doing business with women. And our team is not just women. But they look at us, and they say, you know what? I can count on Inspired Capital for making sure that I'm going to get excellent advice with a diverse point of view.

ADAM SHAPIRO: I wanted to ask you, Alexa. I thought you were going to jump in there because you looked like you wanted to follow up. But for those of us who-- it's exciting to watch what VC does with businesses that get started. But it's a different model, VC versus private equity. And yet, VC does take, I don't want to say a management role, but a supportive role. How do you allow the founder, Alexa, to maintain some of their independence, but draw upon the resources that you bring to the table?

ALEXA VON TOBEL: I think that's a wonderful question. So first, I'll say we literally pick founders that we ourselves would go and work for. So I think that's a really important point, which is they are that special. They are that talented. And then we are there to, we always say get in the boat with them and bring a variety of resources to them from introductions, strategic support, helping them build teams. In the New York tech ecosystem, where we're headquartered, we've employed close to 1,500 people here alone ourselves, and so just trying to help bring those advantages.

And what's amazing is for each founder, we say we're going to operate the way you want us to. We can be here. We're on text thread, Slack threads nonstop for anything they need, night and day, quite literally. But then sometimes we're there to, like, get really in it with them on an offsite in a big strategic moment. So, in whatever ways the founders want. Often, they are so talented that they know exactly where they want to go. And we are really there to give them extra ways.

And I'm just so grateful for all the things that we get to bring to our companies. Obviously, with having somebody like Penny as a founding partner of Inspired, we can do so many things. And somebody like Penny has seen so many things that we do give our founders unfair advantages.

SEANA SMITH: And secretary, one of the things that has changed since you did start, since you did launch your first fund, is we've gone through COVID. And we've seen how so many businesses have been transformed as a result. So many founders have been forced to pivot and change their strategy in order to adapt to this, quote unquote, "new normal." But I'm curious, has it changed, I guess, how you approach any of these businesses or how you're identifying attractive investments?

PENNY PRITZKER: Well, look, the digitization of our economy has only been accelerated. So absolutely, it means we have to be accelerated. We have to move faster. We have to be, you know, on our toes and move at the same speed that they're being forced to move at. And so-- and the other thing what we've seen is exactly those companies that have adopted digital solutions, not just the companies we're backing, but their customers, those that have adopted digital solutions faster, performed much better during the height of COVID than the average company.

So, what it's taught us is, things are speeding up and moving more quickly. Adoption is happening faster. And we need to be more attuned to what's the next stage of what is a company, what do the customers need. And that's where we get new ideas about new products or new incubations.

ADAM SHAPIRO: Secretary, we keep talking about your role as the Secretary of Commerce, but the two of you are accomplished businesspeople. And I wanted to ask you first, Secretary Pritzker, if you could advise the current Congress or administration, because the tax proposals that have been put on the table might impact firms like the one you both are involved in now. Could they kill the golden goose with these tax proposals? Secretary Pritzker first.

PENNY PRITZKER: Well, look, I think, first of all, you've got a lot of things going on right now in terms of the budget bill, the infrastructure bill. The part that nobody's talking about is the US Innovation and Competition Act, which I think is extremely important. It's really that's an act that will support R&D that will also support early stage technologies and semiconductor development.

And so, you know, I think the tax bill, you know, the fact that the president's been really clear he's not going to touch anyone making under $400,000 a year, I think that's right and smart. But right now, we're in the middle of the sausage making, so it's unclear. We don't see the marketplace being affected right now.

ADAM SHAPIRO: Alexa, did you want to weigh in on this? Or do you want to take a pass?

ALEXA VON TOBEL: No, I was going to say I think Penny said it perfectly.

ADAM SHAPIRO: Then let me follow up with you on this. As we look at the companies that you're going to be targeting, can you share with us anybody that's caught your interest without-- Alexa, without divulging? Because we don't want your competitors to jump in. But the kinds of things, even though it'll be similar to fintech that you've already had, but that is disrupting what we all know.

ALEXA VON TOBEL: Absolutely. I mean, there's a number of categories that we are pretty excited about and whether or not we make an investment is really about finding the right team with the right strategy. But I would just start by saying things like fintech in Latin America we think is really interesting. The future of NFTs and how that's going to hit the consumer and what that's going to do to the wallet, we think is really interesting. In general, fintech on the continent of Africa is getting incredibly interesting.

So we've gone very, very deep on thinking through a few categories there. The future of labor markets, you know, obviously, this is a category near and dear to both Penny and I's hearts, but we're watching automation take 10 million jobs out of the market over the next decade. So what is that going to mean for everyday workers?

And then, finally, just the tsunami of the creator economy in the independent worker economy and what that's going to mean for the wallet is another place where we've gone very, very deep. So just giving you a flavor of how we like to work. We like to put together white papers that are anywhere from 5 to 25 pages long, where we really think deeply about a category and then go find the right team.

ADAM SHAPIRO: All right, I hope you will both consider coming back because one of the things you just said, Alexa, that really caught my eye was looking south of the United States for potential growth. And I think, having relatives, this is an area that often gets ignored. And there is so much potential. Unfortunately, we have to say thank you for joining us to talk about Inspired Capital. Both founders, Penny Pritzker, the former US Secretary of Commerce, and Alexa Von Tobel, all the best to you both.