Five years ago, Boston’s fintech scene was barely getting off the ground. Meetups were small, investors were few, and the investors who did write checks to early-stage startups often ended their involvement after that.
For husband-and-wife entrepreneurial pair Adrian and Senofer Mendoza, it was a clear gap in the market. The two founded venture capital firm Mendoza Ventures five years ago to fill the need for hands-on investors, ones that would go beyond writing checks and help founders grow their footprint in the earliest stages of entrepreneurship.
Adrian and Senofer, who head up Boston-based Mendoza Ventures as general partners, were entrepreneurs in the Boston tech ecosystem prior to starting their VC firm. They recalled an incredibly positive experience with a Waltham-based investor and wanted to replicate that in their own firm.
“Being operators, we knew that money wasn’t just one thing — it was domain expertise,” Adrian said. “We went out to prove it, and there were three spaces that we knew really well.” Those spaces were AI, fintech and cybersecurity.
In 2016, Mendoza Ventures brought in a pilot fund and invested in three companies: Alyce, Good Dog Labs and Rise Financial. Five months later, GoodDog Labs, a cybersecurity startup, was acquired by Rhode Island firm Lighthouse Computer Services.
The Mendozas realized they had good traction with early-stage startups and decided to focus exclusively on those investments. In 2018, Mendoza Ventures started an early-stage fund and made another eight investments.
Now, the firm has two limited partners and a Northeastern University associate on the team in addition to the Mendozas. The firm has also recruited senior managers and C-level executives as domain experts from places like State Street, Amazon Web Services and Microsoft.
Senofer said what has allowed the firm to be successful is its strict due-diligence process. Founders must demonstrate that they not only have domain expertise, but that they are willing to do the work and that the tech they developed is performing well.
The process, Senofer said, can take about two to three months.
"Our entire due diligence process is based around ‘help or get out of the way,’” she said. “For us, it's a combination of creating a strong funding syndicate at the early stage of that company to set them up for success."
Mendoza Ventures also prefers to invest alongside at least two other funds.
One way that Mendoza Ventures has been able to remain successful is by investing in companies outside of Massachusetts. The decision has better enabled the firm to have a diverse portfolio, as has Senofer’s presence on the leadership team. The majority of Mendoza Ventures’ portfolio consists of startups led by immigrants, people of color and women — diversity is key to the firm’s mission, Senofer said.
Adrian added that he was surprised to learn that Mendoza Ventures is among the first and only Latinx-founded venture firms on the East Coast.
"The narrative of diversity and inclusion has found us because we wanted to fix some very real problems in venture capital, not because Adrian is Mexican and woke up and was like, 'I'm going to do this,’" Senofer said. “We just invested in who had good companies, who came to us and who was in our pipe, and that's where we landed.”
Later in 2021, Mendoza Ventures plans to begin a growth fund to continue to support the early-stage companies in their portfolio that need hands-on mentorship.
The firm will continue to have a physical presence on Newbury Street in Back Bay and stick to its core values: “Be a family, be profitable and be inclusive,” Senofer said.
“We’re one of the most diverse VC firms with one of the most diverse portfolios, but it’s not that we’re free of bias,” she added. “We still have to do the work that everybody else has to do all of the time to make sure that we’re creating as much opportunity as we can.”
Jordan Frias is a contributing writer for BostInno.
