First Followers Fellowship

Building a Conscious VC Fund

Hi there,

I am Sagar Tandon, founded First Followers in 2021. It started with my substack, writing about my learning and experience building multiple impact venture capital funds in Asia and globally. My purpose in life is to mobilize capital to build a conscious world by being a first follower to conscious entrepreneurs, fund managers, and initiatives.

Left to Right - Robin Lim, Suzanne Biegel, and Sagar Tandon

"The First Follower is what transforms a lone nut [aspiring fund manager] into a leader”- Derek Sivers, How to start a movement?

~9 years ago, I started an activist initiative during my college days, called "Let's Stop Sexism," after spending a significant amount of time understanding gender inequality and inequity existing in the world, especially around gender violence, gender biases, and sexual objectification. I was an angry feminist/gender activist.

I took those feminist principles to Gray Matters Capital (GMC), Indonesia Women Empowerment Fund (IWEF), and Beyond Impact Advisors Sarl. That led to my journey of bringing feminist principles to capitalism.

I start seeing a familiar pattern in the fund management industry. Most of the fund managers are men, primarily white men. This led me to start digging in data, and to my shock, I found even in the US, women- and minority-led funds account for just 1.3% of the US $69 trillion investment industry.

“Diverse approaches lead to better investment decisions as they avoid ‘groupthink’ and allow the analysis of a single issue (or investment opportunities) from many different angles.”- Ndeye Thiaw, Managing Partner, Brightmore Capital

The case for diversity in fund management

Until now, the asset management community has been challenging to enter due to persistent barriers that particularly impact first-time female and minority fund managers. Cultural and gender biases can make it difficult for women and people of color to raise capital for private and institutional investors. And fund managers generally need to commit 1-2% of the total capital for a new fund themselves, which prevents many women and minority fund managers from entering the industry.

It’s a chicken and egg situation: Unless we break these societal, cultural, and financial barriers, we can’t bring diversity to venture capital or asset management in general. And without more diversity in the industry, these barriers will be hard to break. That’s why we need to make a concerted effort to democratize venture capital to make it more accessible for people from diverse backgrounds, making it easier for them to start venture funds and play a role in creating a conscious economy.

With more women fund managers, there can be a much more scalable and significant trickle-down impact on the overall gender-lens investing in women-owned or led businesses.

The economic case for driving capital to gender diverse fund managers

There are three reasons why investors should consider directing their capital to emerge funds run by diverse fund managers from underrepresented groups:

1. Performance: Most emerging firms raise smaller funds than their more established counterparts. As a result, smaller funds generally outperform larger ones in venture capital, as even a single successful investment can generate solid fund-level performance. And data shows that first-time fund managers usually outperform more experienced general partners.

   

2. Pipeline diversity: Smaller funds provide access to a unique pipeline, especially if their managers come from diverse backgrounds. Less-diverse fund managers often talk about the pipeline issue when explaining their lack of investments in companies with diverse founders — but data shows this is a myth. In contrast, studies show that gender diversity among investors leads to more investments in diverse enterprises — for instance, female VC partners invest twice as much as their male counterparts in female founders. It’s clear that investor diversity can have a significant trickle-down impact on the diversity of a portfolio.‍

3. New fund models: Greater diversity among fund managers promotes unique, impactful, and efficient venture fund models that are better suited for emerging markets. These might include revenue-sharing funds, venture studio funds, and blended investment vehicles.

Hence, First Followers Fellowship

To promote diversity at the fund manager level, I decided to launch the cohort-based educational fellowship for next-gen gender diverse first-time fund managers, co-created by Network Capital.

First Followers wants to become a launching pad for women First Time Fund Managers (FTFMs) who naturally see the power of ventures led by women and can yield 10-20% higher ROIs on AUM than all-male fund manager teams.

We are looking for exceptional investing and businesswomen professionals like yourself interested in advancing their skills as first-time fund managers. We want to work with future venture leaders to increase diversity in the fund management industry and accelerate our shared vision.

​This three-month-long fellowship co-created by First Followers and Network Capital starts in March 2022. If you are interested, apply here now!

“It is absolutely essential that we increase investments in women fund managers in order to benefit from their increased access to women entrepreneurs, women impact businesses, and insights about women’s markets, and to realize the dividends of diverse decision making on teams,” - Suzanne Biegel (gender-lens advocate)

Any questions? Check out our

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About Sagar Tandon

Sagar has eight years of experience as an entrepreneur, operator, venture capitalist, and gender-lens investor. He has built and launched multiple impact venture capital funds in Asia and globally. He has led investments in 18 early-stage startups in India and SE Asia.