Sydney Thomas was working for an early stage venture capital firm when she noticed that some of the firm’s portfolio companies from unconventional backgrounds would get “lost in the sauce” when they went to raise followup rounds from investors. She realized she needed a more focused approach to address the gaps for founders from overlooked communities or creating solutions for them.
That led her to launch, with former entrepreneur and Y Combinator alum Shruti Shah, Symphonic Capital, a pre-seed venture firm that invests in founders building solutions for underserved communities.
“The thesis was, how are we investing in companies that are closing access gaps around health and wealth for overlooked communities?,” Thomas told Sherrell Dorsey on this week’s Plugged In Live. “A consistent theme that we saw was that climate intersects with both of these.”
Adaptation
Climate change is no longer a future concern, as increasingly volatile weather patterns show. “We have to start thinking about, ‘what are the things that need to exist in our society to be able to adapt to a changing climate?’” said Shah. Limited partners are paying attention.
“For LPs, in my opinion, this is actually a risk mitigation strategy. So many limited partners are investing across asset classes, which means they hold real estate assets. It means that they hold insurance assets, they hold bonds,” she said. “All of these things are going to be impacted by climate change. So investing in products and services that allow them to mitigate that risk is actually extremely important.” .
Some examples: insurance tech, data and analytics for detecting disasters, or products and services that help employees adapt to extreme heat.
Seed-strapping
In a tough fundraising environment, more startups are using their initial seed funding to get to profitability before they raise a follow-on round – what’s become known as “seed-strapping.”
“A couple of companies in our portfolio have very much adopted that strategy and I’m a big fan of it,” says Shah. “It really does give the founders a lot more control over the destiny of the business, and also gives them the opportunity to really focus and build something that people really find valuable.”
