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“We want to change the face of venture.” VC414 looks to fund undercapitalized founders

Almost every sector has made – or at least spoken of – a renewed commitment to diversity, equity and inclusion over the past three years. That commitment has not yet fully taken hold in the venture capital world, where less than two percent of dollars are invested in diverse founders, according to a study by the nonprofit organization Diversity VC.

A new Milwaukee-based venture capital fund – proudly declaring its foundation in the city by calling itself VC414 – is looking to chip away at that disparity.

Former BMO Harris executive Raquel Filmanowicz and longtime Milwaukee mayoral adviser Jennifer Abele left their jobs at the beginning of 2023 to launch the fund, and are now actively engaged in fundraising, even as they already have founders and startups waiting in the wings.

“We’ve got some amazing companies in our back pocket that we’re ready to come in with an initial investment,” Filmanowicz told Blueprint365. “We’re really excited. We’ve had really strong deal flow, we’ve got strategic partnerships, and we’re not concerned about that area of the business at all. We’re just actively raising the dollars.”

She said VC414 will focus on those traditionally undercapitalized founders: people of color, veterans, women, people with disabilities. 

“The profile of our founder is someone that is a go-getter,” she said. “They started from the bottom, now they’re here, but they really need help to build that business. They’ve had this idea. They need the capital.”

Raquel Filmanowicz. Photo supplied.

Filmanowicz said the fund will be pretty open-minded when it comes to hearing ideas.

“We’re industry agnostic at this point,” she said. “Everybody on the team has very diverse backgrounds and experiences in different sectors and verticals. We’re curious enough around different types of businesses that we want to not limit ourselves to a certain sector.”

There are a couple of points of focus, though: at this point, they’re looking to make pre-seed and seed stage investments. They don’t want to invest in anything that requires FDA approval, or in anything you couldn’t share with your kids. 

Laying the foundation

Filmanowicz and Abele have known each other for more than 20 years, having worked together at City Hall in several mayoral administrations. They parted ways professionally when Filmanowicz joined BMO Harris Bank and Abele later joined the chancellor’s cabinet at UW-Milwaukee, but the two remained close friends. (Filmanowicz also served a stint as CEO of the 2020 Democratic National Convention, returning to BMO in November 2021.) 

Abele began making angel investments on her own, while Filmanowicz took on a leadership role with BMO MPower, a $5 billion commitment to support communities of color. Part of her role was to make venture investments in emerging fund managers across the US.

“That kind of got my toes wet as far as venture capital,” she said. “I learned as much as I could, I studied, I read books, I was getting real kind of applied knowledge in the job at the bank, and realized I wanted to do more.” The bank was making investments in venture funds, but Filmanowicz wanted to take a step downstream.

“I wanted to make investments to undercapitalized founders,” she said. “Really still stick to the mission of what BMO was doing in supporting Black, Latinx, women-led fund managers, but I wanted to do that for entrepreneurs for founders of color.”

The pair are leveraging their deep Wisconsin roots as they build their fund.

“There’s a strategic plan around our fundraising. Jennifer and I, we’re really well connected within the state of Wisconsin,” Filmanowicz said. “We have developed a plan by which we’re actively reaching out to Wisconsin-based folks. We’re also eligible for institutional funding. The program I managed at BMO invested in emerging fund managers, which we are now. Financial institutions, insurance companies, family offices are all part of our kind of ecosystem of potential investors.”

They’ll also lean on their experience and expertise to help their investments grow, Filmanowicz said.

“We’re not just like writing a check, but we want to help them in all aspects of their business,” she said. For example, both of the partners have years of experience in government and supplier diversity, and can use that experience to help minority-owned startups get that first big government contract, which can be transformational.

Filmanowicz also said her personal journey helps her relate to the kind of founders she’s looking to invest in.

“I’m first generation Latina, came from nothing, bootstrapped everything in my life,” she said. “It’s a little daunting because I quit my job and I’m jumping into starting a company, but I believe in it.”

“Venture with a conscience”

There’s intention behind rooting the fund’s brand in Milwaukee, Filmanowicz said.

“We’re really excited that we’re starting this here in Wisconsin,” she said. “I’m born and raised in Chicago, but I’ve made Wisconsin, Milwaukee, my home for 30 years. I’ve raised my family, they’ve all gone to school here. It was really important for us to be seen as a Wisconsin firm. That’s why we call it VC414.”

She hopes to influence the venture capital and entrepreneurship scene in the state.

“The venture ecosystem in Wisconsin needs to grow,” she said. “A lot of these companies are not even bankable yet. At the bank, you need two years of revenue and cash flow and financials to get a line of credit. So to have venture as a viable option for business growth is really important.”

She noted that many startups owned by people of color are self-funded or launched with money cobbled together from families and friends.

“We want to change the face of venture,” she said. “We want to level the playing field. We want our people of color to understand, if it’s good enough and it’s venture backable, you don’t need to go into debt and ruin your personal financial profile to start your dream company.”

Along with that big ambition to change the face of VC, Filmanowicz thinks she can have a real impact for entrepreneurs and their families.

“I want our people to grow generational wealth, is the bottom line,” she said. “I want (to help) founders have successful exits, get a huge return, set up their families for generations to come. I have such a strong conviction about that. It’s nothing that I grew up learning. Successful families have trusts and estates and figured out how to protect their wealth, and we’re just starting to get there.”

She even gets emotional when talking about the fund’s mission and values.

“VC414 is venture with a conscience. For me, it’s not just, here’s a check, but I want to understand your journey,” she said. “I want to empathize. Why are they doing this? What’s their why? What problems are you trying to solve in this world? How can we help? You know, I think at the end of the day, I just want to help people.”

The intake form on their website is open for founders who want to inquire about investment, and Filmanowicz has advice for those founders: “Put the idea on paper. If it’s an idea in your head, it’s never gonna go anywhere. Develop your business plan. Seek out mentors. Look for incubators and accelerators that might support the area of business that you’re trying to do. Believe in yourself. If you believe in it, everything will fall into place.”