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A West Point Graduate Takes Aim at Venture Capital

“What we are trying to do, without Black entrepreneurs, is impossible from my point of view.”

Call Dionna McPhatter an outlier. She's the chief executive and a partner at FutureOf, a New York City-based Black- and multi-culturally owned venture capital and investment firm. And as a Black woman in venture capital, she’s one of precious few. The number of VC firms led by Black men and women is woefully low. Only about 2% are owned by Black men and Black women rate a fraction of 1%.

Like other owners in venture capital, McPhatter's road to this point winded. She graduated from West Point and, instead of heading to the Central Intelligence Agency, pursued a career in data analytics at Procter & Gamble and then Reckitt, the British consumer goods company.

In 2014, she launched her own analytics firm, BLKBOX, which was acquired by Nacci, where she now serves as CEO. She's also a lecturer at Cornell Tech, Cornell University's technology, business, law, and design campus in Manhattan. 

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Now, McPhatter is leveraging her experience and connections to "re-architect and re-engineer" sustainable impact and change, she told RIA Intel.

Why did you name your fund FutureOf?

As we were working on our data storytelling and technology venture, Nacci, it was really clear that we would be limited in the impact we want to make on the world if we didn’t also have a very clear point of view when it comes to capital and governance. And we knew that we wanted to create new systems and literally inspire and help power the future of ‘fill in the blank.’ Be it health, entertainment, commerce, sport, work. We felt like we could help those systems reorient themselves to something more equitable, less extractive and exploitive and ultimately more valuable than they are today.

Describe the original mission.

Attract, invest in, and empower purpose-driven companies that will usher in a new era — leveraging our unmatched data science capabilities and operational experience to achieve market-leading ROI.

What motivated you to launch a Black-owned and multi-cultural venture capital firm?

Really we were just fed up. We were fed up with the powers that be and the resulting systems not actually living up to their promises. We were tired of seeing all the unintended consequences being ignored. I personally was tired of all the lip service around sustainability and ESG without real organizational and incentive changes at every level. And really if you are so comfortable complaining and talking about it then we think we should also be about it.

Who started it?

I started it with three guys who are also partners in the venture. Farhad Attaie, Scott McLeod, and Allen T. Lamb all helped me believe our crazy vision is actually possible in this lifetime. Farhad has a real heart for community, networks, social impact and innovation. Scott is a savant really when it comes to all things growth, digital, and product. And Allen is a real grounding barometer for us with vast finance and operational expertise. He runs all things related to capital, structure, and operations. And then you’ve got me who, of course, brings data and deep insight to the party but I also set the vision and the strategy for everything we do.

How many employees are in your firm? How many are venture capitalists?

There are about 10 of us working on this vision full time at the moment. I don’t think any of us would describe ourselves as venture capitalists as we really set out to create an alternative to that world. But five of us are directly involved in the investment side of things.

What does FutureOf specialize in?

We specialize in re-architecture and re-engineering in a way that generates real, sustainable regenerative impact and change. If you don’t believe that you can do good while doing well then you aren’t for us. And when we say doing good, we will measure the entire ecosystem connected to what you are doing: the communities you’re impacting, the environment you help create and facilitate and whether or not you measure those things alongside profit and manage accordingly. So we have a real bias towards other entrepreneurs who want to be the change they want to see in the world, not just during a few conferences and press releases a year, but in everything they do and in the entire system they are a part of.

Do you concentrate on funding Black and minority-owned start-ups?

It definitely isn’t our specialty but we without a doubt see diversity as a real competitive advantage. To talk about creating and powering a more equitable and generative future for all, to want to do that leveraging the power of storytelling and not have a lens that is looking to attract Black entrepreneurs would really be gaslighting at its finest and extremely hypocritical. So to do what we are trying to do without Black entrepreneurs is impossible from my point of view so I hope that we can continue to attract diverse entrepreneurs and especially Black ones.

What’s the typical investment?

Typical investment varies. We are an alternative to the traditional financing worlds so we really try to deploy capital smartly based on what makes sense for the companies and will help power growth in a sustainable way. We definitely have a longer term view I think than most.

Can you cite some companies you’ve invested in that have been most successful?

It’s in the early days still but I can tell you about a few I am excited about: Eli Health, OTV Studios, Gales, and Zentist.

Why invest in Eli Health, which enables women to track their hormone levels?

They’re the actual people having the problem that are trying to solve it. They’re female-owned. And they have a vision.  What you see on their website isn’t necessarily all they want to do. They’re building things differently. For example, in women’s health, why does testing have to be so painful?  Why do blood tests have to be painful?

Why capitalize OTV Studios, which offers short-form TV?

We think storytelling can change the world. The creators doing story telling have considerable power. If you can make a company more diverse, it can deliver better returns.

And Zentist, which offers automated dentist billing?

The thing that will bankrupt us is our health care costs. And insurance companies are greedy. And they are massively inefficient. It tries to bring the power of technology into insurance claims for dental costs.

You describe FutureOf, both as an investment company and venture capital firm. Please explain.

It depends on how you define it. Traditional venture capital doesn’t fit the way we’re trying to do things. Traditional venture rewards quantity over quality.

Describe the specific criteria you employ for determining which start-ups to invest in.

People with values and integrity. That’s the most important thing. We use the term data native but they don’t have to be using it as much as being open to it.  And they have to want to leave an impact on the world, making it better than it is today.  I’ve run businesses where data matter. It informs our decisions.  Even if they’re not there, they have to be open to it.

FutureOf has a diversified set of partners. What does that bring to table in terms of deciding which start-ups to invest in?

It breeds meaningful discourse. Diversity lends itself to diversity of thought.  I want the broader possible catch of fish and then pick the prize winner.  We all have blinds spots.

As you know there are few Black-owned venture capitalists and investment firms. What could be done to change that and introduce new ones?

Just because we haven’t done it before doesn’t mean we can’t do it. Believe us.  And the other thing is: be open to feedback about your toxic environment. The financial environment is toxic for the most part.  Most women don’t put up with it and get pushed out. There has to be a reckoning of the culture, and that’s why we want to be the alternative.

What’s the effect of so few minority investment and VC funding on minority-owned businesses?

Everyone talks about pipelines.  It’s our bias of humans to go to something that looks and feels like us. We’re deselecting them before selecting them. Both sides of the table are missing out.  Everyone takes a step back and says why isn’t there more diversity?  It’s about confirmation bias. We gravitate to what we’re most familiar with.

Two years from today, where do you expect FutureOf to be?

Two years from now I hope people are able to see that there is a billion-dollar minimum opportunity of what we’re trying to do. We expect to be playing with billions.  

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