2023 has not been easy on the venture capital industry.
The year started off on the heels of months of major technology firm layoffs, and with an uncertain economy marked by high inflation and a challenging stock market. In March, the collapse of Silicon Valley Bank, a key institution for startups nationwide, infused more anxiety into the industry.
But while they had to make adjustments, the leaders of Milwaukee's newest venture capital firm said they see the current landscape as an opportunity.
"Valuations for startups are really low and there's not a lot of capital out there," VC 414 co-founder and managing partner Jennifer Abele said Thursday at the Milwaukee Business Journal's 2023 Diversity in Business Awards event. "We just think it's the time to lean in."
Abele and her business partner Raquel Filmanowicz founded VC 414 earlier this year. The firm intends to raise a series of funds in the coming years to invest in early-stage startups founded by women and other individuals from groups that have historically been undercapitalized.
The VC 414 managing partners were the keynote speakers at the Diversity in Business Awards, which honored 11 Milwaukee-area businesses and professionals. In addition to sharing details about their experiences starting VC 414, Abele and Filmanowicz shared advice for entrepreneurs and business leaders in attendance.
VC 414 has had to adjust its fundraising target and staffing model in response to the economic challenges facing the industry this year, Abele said. But the firm's deal flow — its pipeline of companies to potentially invest in — has remained strong, Filmanowicz said Thursday during an on-stage interview with Milwaukee Business Journal editor-in-chief Mark Kass.
Filmanowicz noted that companies often start during economic downturns, citing Uber, Venmo, Pinterest and Instagram as examples.
"If we look back to the Great Recession, there were some amazing companies that started out of founders just wanting to do something different," Filmanowicz said. "We feel like we're almost in a really good position to be able to back some of these amazing companies."
As VC 414 grows, the firm intends to expand its team and work with universities to bolster the pipeline of talent in the venture capital industry, Filmanowicz said.
Previously, Abele and Filmanowicz had successful careers in higher education and banking, respectively. After working with venture firms and startups in various other capacities — Abele as an angel investor and Filmanowicz as a manager of a BMO Harris Bank social impact fund that backed venture firms with diverse fund managers — they saw a need to do more to help increase access to capital for women and people of color.
"I was in a position of privilege and power and wealth," Abele said. "I feel that it's very important for people who are in a position like me to take the power that they have and use that to empower other people."
