The Venture Capitalist Changing The Face Of Investing

As a founder who built a legal SaaS (software as a service) company and hit roadblock after roadblock trying to fundraise, Janine Sickmeyer understands the challenges women entrepreneurs face. That’s why, after selling her company (which she ended up bootstrapping), she dedicated the past few years investing in and mentoring aspiring founders who had been previously overlooked due to systemic bias. Sickmeyer’s company, aptly named Overlooked Ventures, is now a $50M venture fund focused on supporting and investing in early-stage companies with these historically ignored founders. The firm, which she co-founded with another entrepreneur-turned-VC, Brandon Brooks, has already made nine total investments in companies with mostly Black, Latinx, and women founders.  

For context, only 2.3% of all venture dollars went to women founders and less than 1% went to Black founders in 2020. Morgan Stanley reports that VCs are missing out on a trillion dollar market by not investing in underrepresented founders. 

I spoke to Sickmeyer about why this is still happening and how she is hoping to change the perspective of investors with the creation of her new fund. 

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Amy Shoenthal: Why did you see such a need for Overlooked Ventures?

Janine Sickmeyer: I was a startup founder myself raising capital for a legal tech app. I was told by VCs that I was too early, the market wasn’t big enough and I was even asked questions about when I would start a family. After I got engaged, and investors saw my engagement ring, I was asked when I would be getting married. I quit fundraising after a few months and bootstrapped my way to revenue and eventually a successful exit. 

The venture capital industry has come a long way since then, however, there is still a lack of diversity in the funders and those being funded. After I sold my company, I began angel investing with a focus on overlooked founders. I heard so many brilliant ideas, but they were failing to raise, just like I had. No one was opening the door for them. 

72% of decision-makers in VC are white men and only 4.9% of VC partners in the U.S. are women. It was obvious to me that something needed to change, and I wanted to be a part of it. 

Shoenthal: Can you tell me more about your experience as a founder and how that shaped your perspective as an investor?

Sickmeyer: In 2008, I started a virtual paralegal firm. For two years, I tried to get it off the ground but nobody really understood what I was trying to do. I had to educate people across the country about working remotely- imagine that now?  

A lot of the investors I met with asked me if I was “coachable.” I asked if that meant they thought I was too assertive. I was always asked where my co-founder was, where my technical counterpart was. After I got engaged, one investor saw my ring and said, ‘looks like you don’t need us anymore.’ After that, I put my ring in my pocket, stroked their egos, and made sure to be assertive but not too assertive. I didn’t raise anything. I ended up quitting the whole fundraising process after eight months. 

So I just bootstrapped it. My goal was to make one dollar. I took on photography projects on the side to make money. I eventually made enough to apply for a bank loan, hired three people, and from there I kept growing. I eventually got to 25 employees. We were approached for acquisition in 2019. Everyone on the team was an equity owner and it was a great outcome for all of us. 

After the acquisition I started angel investing. That was always my goal. I saw the stats, and figured if it was this hard for me, it must be even harder for Black women, for Latinx founders. So I started doing founder mentoring calls with overlooked founders. After doing around 50 calls a week, I realized they weren’t only looking for capital, they were looking for mentorship and networking. I realized they didn’t have access to the kind of network they needed.

A first time fund manager is like being a first time founder. You have to learn everything all over again. I had to learn how to go from angel to VC. Part of that process is how I met my co-founder, Brandon Brooks. I messaged Brandon after reading a devastating stat about how Black founders only receive .67% of funding, and a week later we started our fund together. We went through a few ideas for what we should call ourselves and since we were all about changing the lack of diversity and our whole thesis was about overlooked founders, so that was the name!

Shoenthal: Do you have specific types of industries you primarily focus on?

Sickmeyer: Overlooked Ventures is industry-agnostic, however, we are particularly interested in the health and wellness space, death tech, marketing tech, and companies that are making things easier through technology.

Shoenthal: A lot of the founders I interview talk about the pivot to virtual fundraising over the past year. Some love it, some hate it. You’ve been vocal about how you think it leveled the playing field. Can you tell me about that?

Sickmeyer: We actually launched our fund during the pandemic. By this point everyone’s used to doing Zoom pitches.

The access with virtual fundraising is, for one, just so much more affordable. It costs so much to fly all over the place. You can’t use points for everything, hotels, flights, food. Especially getting back on a flight after a no was devastating. It happened 82 times for me. 

Shoenthal: You counted?

Sickmeyer: Oh, I counted. When you’re flying there and back you can’t have 3-4 meetings in a day. I would try to stack them but having to run from office to office in one day was so challenging.

In general, the power dynamics behind a computer are so different. You and I are both sitting here in workout clothes, we couldn’t have done that before. For Black founders especially, the code switching is real. You have to put on a suit, act a certain way. Women have to wear a skirt and be a professional version of ourselves who we may not necessarily really vibe with right now. Being ourselves is a lot easier virtually. It’s also a lot safer. For women, you just never know what is going to happen. Investors wanting meetings at night, in hotel rooms, I’ve heard a lot of negative things. 

It’s also great for people with families. I’ve got four kids, so if I’m traveling, it better be worth it for me to leave my family for a period of time.  

I don’t think there’s anything lost for the investor in all of this. I actually wrote a whole Twitter thread on why I think virtual pitching is better. 

Shoenthal: How do you plan to achieve what I imagine are some very lofty goals?

Sickmeyer: We have already seen over 700 applications from startups in the three months since we launched the fund. This tells me there is absolutely not a pipeline problem and also that founders want us on their cap table. We are committed to being founder-friendly VCs who they can trust. One of the ways we do this is by being very transparent. This is one of the things that is so great about raising as a 506c. We are able to raise our fund in public, which demystifies the process and hopefully allows more access to those seeking to start a fund themselves.

Shoenthal: How do you feel about the term “friends and family” round? Are you doing anything to address the ripple effects of how that has historically worked and how it could perhaps be improved?

Sickmeyer: I believe we should change the “friends and family” round to a more accepted name such as the “launch round.” Many founders don’t come from wealthy backgrounds and don’t have access to friends and family who have enough money to invest in their business. It isn’t fair for venture capitalists to avoid investing in early-stage companies because of their lack of raising “friends and family” rounds or by making assumptions that early founders can start building without outside capital. Many investors hope to see that founders have already accepted money from people around them but this is not something many historically ignored founders can do. 

Overlooked Ventures is focusing on pre-seed and early-stage founders. We essentially become their “friends and family” round. More venture capitalists should consider doing more pre-product and early-stage investments.

Shoenthal: Talk to me about the fundraising process. How are you working to make it more equitable, especially for founders who don’t have built in networks?

Sickmeyer: We have a deal flow process that we follow for each and every founder to help ensure an orderly, fair and equitable process. We do not accept warm intros from anyone. All founders can apply through the link on our site and we review each application independently. The partners remove the names and company names and focus on the market and business itself, removing all confirmation bias or other biases. If we feel there’s an initial product-market-fit or semblance of getting there, think this is someone we can work with long term, can add value either personally or via our network, we move to a first meeting.

Then, using an internal scoring framework, the partners assess the opportunity by looking at a framework that includes: Team, Product, Market, Growth Potential, Execution. We use the scoring framework to evaluate and assess returns for the fund. From there, the team prepares a final memo and the partners review before making an investment decision. 

The whole process should take 3-5 days once we get caught up on our huge application pool that we’re working through right now.

Shoenthal: What are you most excited about right now? Other than working through that huge application pool, of course.

Sickmeyer: I honestly wake up every day excited about the work I’m doing. It feels like everything I have done up until this point was to get me here. I genuinely love working with the founders, reviewing company pitch decks, meeting with investors, and even all of the minutiae that comes with managing a fund. But what I’m really excited about is making a dent in the horrific stats we see about women, Black, and Latinx founders not getting their fair share of investment dollars. I am excited to see those numbers change over time. I really believe that as we become louder about the mission and band together, we will see more funds do the same. 

Then I will be excited about the opportunity to continue on to Fund 2 and 3 and 4 and eventually having Overlooked Ventures back emerging fund managers that look like me and my partner. I’m also very excited about welcoming more diverse investors to our cap table so we can see the makeup of our investors look the same as our team, and as the founders we back. We want to bring generational wealth to those who have never had it before. We want to kick down the door for those who have never had the door opened for them.