Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.
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Hatzimemos / Libby Ventures was founded in 2009 and built a venture studio model and firm that helps founders start their journey. With its venture studio, the firm invests in companies along with helping to build them from scratch, Managing Partner Oliver Libby told me.
Since then, the New York-based firm has invested in more than 30 companies that have gone on to raise more than $1 billion, Libby said. The firm likes to lead and co-lead rounds, and is willing to be the first believer, he added.
One of the areas the firm prides itself on is having a portfolio that is diverse. More than 70 percent of the firm’s portfolio companies have diverse teams, and 100 percent of those receiving investment from their later stage fund are female or people of color founders, he added.
Libby spoke to me about his mission to work with diverse founders, investing in renewable energy, and other sectors he has his eye on.
The following was lightly edited for length and clarity.
How did H / L Ventures get started?
Libby: My business partner, Eric Hatzimemos, and I were working at a consulting firm. This was at the beginning of the global economic crisis and, when everything goes bad, the advantage is you have a fresh perspective on ventures. We thought about a venture holding company, and under that, an ecosystem for building companies. We would put together a “Swiss Army Knife” of things needed to build companies. Enter H / L Studio, where almost all of our eventual portfolio companies get started. We meet founders and then make investments off of the balance sheet and avail them with hands-on support.
We have two principles: Daily active engagement, being in contact with founders virtually everyday, and then from that call we discuss different activities.
The second is building early-stage companies at the nexus of growth, impact and diversity, with an immense focus on diversity. It is the right thing to do and a smart way to invest.
How do you like to work with founders?
Libby: By asking critical questions. People talk about the spectrum from “founder-friendly” to not. There’s founder-friendly, and then there is us, who are way over here. Because we have a holding company and raised a round of funding, we can afford a big team of 40 people. And around them, we have a trusted partner network of over 200 experts and service providers to bring in, kind of like a hub-and-spoke system. We can pull in experts and advisers and constantly act like switchboard operators to connect them with our founders.
Your firm prides itself on making investments in diverse founders. Has this been the strategy from the beginning?
Libby: Yes, it is one of the reasons we started the firm. Eric and I are moved by social impact, and we thought there was an artificial gap in the market. In venture funding today, there is still a fractional percentage of dollars going to women and even smaller, 1 percent, going to Black entrepreneurs.
If you believe those numbers, you might think there is much less creativity in those populations. The reality is the opposite: There is so much talent and opportunity, but they are underinvested. We take more than 10 years to build sourcing pipelines with colleges and organizations to make connections.
One of the areas you invest in is renewable energy. What are you seeing there?
Libby: When we were starting out, Obama was supposed to get the climate bill through, but did not. Back then, there was success in solar companies, and now they are looking at a new take with the joining of solar and finance, like financing strategies.
We have invested in some similar thesis with BlocPower and Sealed, which are both providing credit solutions for energy. It’s like fintech for energy. The last energy boom depended on government support; this time they welcome it, but we believe companies are commercially viable on their own.
If the big Biden package comes through, it is good news. But do companies need it to be successful? No. One of the biggest problems is there is so much energy consumption in at-risk communities. They need to have a diverse group of people solving these challenges because it is where they come from.
What other sectors are you keeping an eye on?
Libby: We are industry agnostic, though I just spoke on sustainable materials. We are looking at the future of food, as well as health and wellness. We also focus on financial technology when it is for social good. We aim to reinvent a new kind of venture company, and we are just hitting the moment where we are changing, and it is a big moment.
Photo of Oliver Libby courtesy of H / L Ventures.
Illustration: Dom Guzman
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