Speaker 1:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership, and vision and global business. The dream drivers that have made the NYSE and indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism right here, right now at the NYSE and at ICEs exchanges and clearing houses around the world. And now welcome inside the ICE House.
Lance Glinn:
When you think of the most nerve wracking moments in life as children and teens transform into young adults, a few common instances come to mind. A first date, a driver's test, going off to college, final exams. All these bring excitement, but stress and anxiety often find themselves at the forefront of emotions felt. However, while feelings of thrill, anticipation, concern, and apprehension come during that childhood to adulthood transition, no event marks the change more than the first time someone receives a bill that they not their parents have to pay. How do I pay it? Should I mail a check? Can I do it online? Do I have enough money in my account to even afford the bill? Can I just give my parents a call and ask them to spot me one more time?
Now, I'm not immune to the challenges young adults face in a society today where everything is more expensive and money seems to diminish more quickly. In fact, I'm not far removed from paying my first rent check when my then girlfriend, now my wife and I moved into our first apartment together when I was just 23 years old. Now, fortunately, I had a steady job and an income to afford what I needed. I decided early in my college years that the entrepreneurial spirit was something I just did not possess. And I decided to like many, work for big companies. But for those who do want to work for themselves, they often rely on venture capital firms and investors to help fund their dreams.
One of those firms Inspired Capital, and our guest today, founder and managing partner, Alexa von Tobel is at the forefront of early stage investing. With a portfolio of 40 different companies representing a wide range of sectors, Alexa and her team focus on founders, a company's underlying technology, and the visions behind the ideas. She joins us inside the ICE House to talk about her own entrepreneurial spirit and the company LearnVest, which she founded in 2008 and sold in 2015. We'll also discuss Inspired Capital's present and future and the firm's recent closing of its third fund. All that and more with Alex Von Tobel coming up right after this.
Speaker 3:
When you think of investment risk, do you consider climate risk? Changing weather patterns are impacting the way we live and the value of businesses large and small. This can mean disruption to supply chains, changing demand for products and shifting regulation. What does this mean for your business, your clients and your investments? ICE offers data and markets that can provide critical insight. Manage your climate risk with ICE.
Lance Glinn:
Welcome back inside the ICE House. Remember to subscribe wherever you listen and rate and review us on Apple Podcasts so others know where to find us. Our guest today is Alexa Von Tobel, founder and managing partner of the venture capital firm, Inspired Capital. Alexa previously founded online financial advisory company, LearnVest in 2008, which was acquired by Northwestern Mutual in 2015. After the acquisition, she served as Northwestern Mutual's first ever Chief Digital Officer and in a variety of other roles. Alexa, thanks so much for joining us inside the ICE House. Welcome back to the New York Stock Exchange.
Alexa Von Tobel:
Thank you. I love being here. And Lance, thanks so much for having me. Every time I come here, I always get the feels. This is where big magic happens, so thanks for having me.
Lance Glinn:
Now I say welcome back because I personally went through the archives and you were here to ring the closing bell back in March of 2012, still leading LearnVest at the time with TEDx Wall Street. What do you remember about that moment being up on the podium and closing out the US equities market that day?
Alexa Von Tobel:
It's really funny. I'm so happy you brought that up. I'd just given a TED Talk on what I wished existed for The Wallet. Oh my gosh, in my head, I was a baby at that time. I think I literally was like 24, 25, 26, something like that. I just given that TED Talk and it now has over a million... I haven't checked in a long time, but lots of views. And I just was so honored to stand up there and dream about companies that get built that smash through their goals and get to stand on that podium. And I just sort of pinch myself. It's pretty fun being up there.
Lance Glinn:
And one of those million views on that TED Talk was my own as I was watching your discussion a few weeks ago-
Alexa Von Tobel:
Thanks, friend.
Lance Glinn:
Of course, absolutely. Always happy to chip in where I could. I was watching your discussion a few weeks ago, and as I watched it back, one thing you said really caught my attention. Now note that in 2012 I was a junior in high school at the time working at Dairy Queen, a subsidiary of parent company, Berkshire Hathaway, that's NYC ticker symbol BRK. Making minimum wage and tips, not really thinking about my financial future. I was making money, how was I going to spend it? You said in that talk, and I'm going to quote you here, "Right now personal finance isn't taught in high schools, colleges, or graduate programs in the United States."
Personally, I didn't take a lot of personal finance courses or if any, I didn't take any in personal finance courses during that time. It wasn't really anything that I or my peers were sort of worried about. We all sort of felt the same. We all just wanted to spend the money that we made. Smart Lance would've saved a lot of my Dairy Queen money. It wasn't a lot of money, but it was something as a high school student, but actual Lance spent it on sports tickets and video games. There wasn't much personal finance education when I was going through school. But now over a decade later, do you believe there's been progress in recognizing the significance of teaching personal finance at a younger age so that students could save more earlier?
Alexa Von Tobel:
I do believe that personal finance in the country, people appreciate how important it is. It is still not taught in most high schools, colleges, or graduate programs across the country. It is probably more important than ever because of inflation. The cost of goods has gone up and we live longer. Life expectancy tables have literally gone out to 120, so that means you need more retirement savings, et cetera, et cetera, et cetera.
By the way, punchline here is I just wrote my third book that comes out March 26th called Money Matters with a brand called Rebel Girls because I have little kids and I decided that I needed to... No one else is going to solve this problem, it will be me. I will happily put my hand up and do the work. I wrote a book for kids to make sure that we can empower people as early as possible to learn about personal finance. And I think the punchline here is, Lance, if you can do third grade math, you can manage your finances. It's not that the math is complicated, it's that you just need to learn some basic principles. So anyways, third book coming out March 26th. Money Matters, aimed for kids because I was disenchanted to see how it's still not taught everywhere.
Lance Glinn:
Do you think there's an age that's too early or you mentioned obviously third grade math and before we pressed record, we were obviously talking. My wife, a third grade teacher. She's right now in the process of teaching that third grade math. Is there an age too early where we should start getting kids and young adults and the youth acclimated to what it means to be financially literate and to really pay attention to their finances?
Alexa Von Tobel:
No, there's not an age too early. If you think about it, it's hygiene. We teach our kids to brush their teeth and get good sleep and eat fruits and vegetables so that they can live a long healthy life. Money is a lifeline. It's part of every single day of your life. And if your goal is to empower your child to be in control and to be stable and to have choices, money is a huge part of that. And so again, Money Matters, this new book that's coming out is really designed for kids as early as they can read. And honestly, you could read it if you were in your twenties. It's really simple and it's the basics on money that you must know.
Lance Glinn:
So in 2008, amidst the challenges of the Great Recession and staggering US consumer debt exceeding $12 trillion that year, you founded LearnVest, an online financial advisory company. What motivated you during those turbulent times to jump into the FinTech space and to establish a company dedicated to enhancing financial literacy and aiding individuals and planning for their future?
Alexa Von Tobel:
So I grew up in Jacksonville, Florida, went to Harvard undergrad and have always been entrepreneurial and really realized that. In my senior year at school, I've always been really good at math and I've always loved business and finance. And my senior year in college, I remember wanting to learn about money, and there's a very personal reason for that. I lost my dad when I was younger and my mom had to manage our finances. And I just remember thinking to myself, "I'm always going to be financially stable, period, end of sentence." So I was trying to learn about it. There I was at this great college, thought I can get everything I need educationally, and there were no classes. And I started digging in and there was no classes anywhere and it really got under my skin. And after college I was working at Morgan Stanley and nights and weekends started dreaming about a company. I just, for the first time, making my own income, and it was really under my skin.
And I said to myself, "I want to go build a platform that's aimed at young people to help them learn and manage their finances." And the more I dug in, it was one of those issues, Lance, where the deeper it got, so I learned all sorts of things. I ended up, by the way, becoming a certified financial planner, wrote a bestselling book, Financially Fearless on the topic. But as I kept pulling the thread, it kept getting worse. Whereas if you make a ton of mistakes with your finances, it's really hard to get out of it. And it actually just kept making me more upset and in a really good way. I truly, I felt like it was an injustice that if you have lots of money, there's tons of people to help you with your money.
So if you're really healthy, there's doctors who want to hang out with you. But if you have no money because you're young and by nature of being in your twenties, you are often broke. There's no one who wants to help you with your wallet or if you just don't have any money, no one wants to help you with your wallet. And I kind of said, "That just is broken." And anyways, got under my skin, started writing a business plan.
Fast-forward to 2008, I was at Harvard Business School, Lehman Brothers went under and I literally dropped out. I walked into the admissions office and said, "I have to go start a company to solve a problem that I see in plain sight and LearnVest was born. And it stood for learn, earn, invest. And you said entering the FinTech category, FinTech wasn't even a category. I was sort of blown away by how few companies were even being built at that time in the rearview mirror. But I moved to New York City and said, "I've got to go build this company. It's under my skin and it's in my soul, and if I don't go build it, I'll regret it."
Lance Glinn:
How scary was that moving to New York and in 2008 of all years?
Alexa Von Tobel:
Lance, it's funny. I think one, I kind of always have been comfortable being a contrarian. I always say when the world zigs, zag. When the world zigs, zag, and I say it all the time because you have to be comfortable charting your own path. And I think I've always been okay doing that. But simply and factually, it was a very scary time. The world was in a true worst recession at the time in 81 years. I was 23, 24 years old, I dropped out. I put all of my own savings that I had made in my first job at Morgan Stanley, all my bonuses, $75,000 into the company, which is not a good financial plan, by the way. It was my plan, but it was not a good financial plan. And I said, "I'm going to go for it." And I went all in and I cried the whole flight when I moved from Boston to New York and I felt like I'd flipped my life upside down.
And in fact, what was really important is at the time, it was so rare to go build a company and now it feels like everyone builds a company. But at the time it was so rare that my own best friend said, "Alexa, what are you doing? You have a pristine resume. You've lined up the best jobs that we could all pray to get type thing, and you're just going to walk away from it all?" And I had to listen to that little voice in my head. I cried the whole way, woke up the next morning, opened my laptop and was like, well, I burned that door behind me, so I've got to only go forward-
Lance Glinn:
You're here, so might as well go for it.
Alexa Von Tobel:
And I didn't look back and I trusted my instincts and my instincts were kind of screaming that this was what I was supposed to do. And it just... It's funny, I kind of know when things click, they click and I'm like, "That's the right decision, let's go." And I didn't look back.
Lance Glinn:
Yeah, you didn't look back. And you mentioned that at the time there really was no such thing as a FinTech sort of category. So I want to talk about that sector right now. And toward the end of 2023, Thomson Reuters came out with an article titled, A Brighter Future for Fintechs in 2024. In the article, Arthur Tad Simons wrote, I'm going to quote him here, "Heading into 2023 the outlook for FinTech companies wasn't especially bright, but the situation heading into 2024 isn't nearly as dire as many had predicted. In fact, some indicators are quite promising." So you were one of the first to really start a company into this space. Now as we sit here in 2024, are you still as excited about that space as you were when you founded the company in 2008?
Alexa Von Tobel:
Of course. And in fact, so Inspired, our firm, we say we are here to build an inspired future. We look for entrepreneurs with huge ideas, excited to build an inspired future, and we believe that the economic engine behind venture capital is one of the most powerful ones on the planet because you can incentivize humans to go and build exceptionally innovative new things that bring the world forward. So punchline, yes, I'm excited about FinTech because the world is becoming flat. We think about global FinTech. How do we take the technology that we almost take for granted here in the United States and how do we empower the world writ large to get better access to information and data and their wallets and have more transparency and clarity? So that's part one. Part two, I think we're in a really unique period where we're star.
Ting to see financial products that just didn't before that can be born, that can dramatically improve our lives. And I'll give you an example, there's a company called Hobby in Latin America that allows people to, for the first time to... We almost take it for granted in the United States, to know what their home is worth and to sell it quickly and get access to a mortgage because that's not a typical thing. And it's those sort of innovations that, again, we have many of them in the United States and then preparing us for a future where automation in AI and robotics are going to continue to do lots of jobs. You have to retool society and think about the wallet in a very different light because of that. Punchline is inspired as a generalist fund. We invest in all companies, but my personal passion and a place where I spent a lot of my time is obviously in FinTech.
Lance Glinn:
So you had this plan in place for LearnVest during one of the worst financial periods in our nation's history. How did you manage the risk that came with that decision? Did you ever have, and I know you talked about obviously crying on the plane and your best friend telling you what are you doing, but did you ever have a sort of, while you were going through this plan in New York City a what did I just get myself into sort of moment?
Alexa Von Tobel:
I think someone just recently asked Jensen, the founder of Nvidia, after I think four or five decades into building his business, "If you knew what it takes, would you do it?" And he laughed and said, "Absolutely not." Even though I think he's built one of the most valuable companies on the planet. Here's the thing about entrepreneurship, if you're doing it for money or doing it for fame, it will literally never work. If you're doing it because you are so fired up and committed and a problem is burned into your soul and you're doing it for a reason that is much deeper, you will get through it. I think there was never a day ever literally not one where I thought, "I shouldn't have done this. I should go back." In fact, there was... I always joke, "I only plan A." There's only plan A, we got to make it work.
But there were some of the hardest days on the planet. I can think of many days where my husband once picked me up at the airport outside of New York, which he was my fiance or something at the time. I think maybe husband actually, he picked me up at the airport because I'd had such a bad day at work. He knew I was devastated and I had had so many problems happen at the same time that thar nice man I married got in a car and came and picked me up. Which again, nobody picks anybody up in an airport in York. That's a real love sign, but those are the things you do.
There were days where you get punched in the face so many times that it really is overwhelming. And I always joked, "I didn't run the company, the company ran me." Meaning you just had to keep rising to the occasion to do whatever was necessary to make it work. But there was never a day where I wanted to quit and there was never a day where I wasn't going to put... I always joke, "You can trust that I will leave it all on the field and figure it out." We may not win, but you will see that we left it all in the field.
Lance Glinn:
Now, with Inspired Capital, some of those traits, what you look for in entrepreneurs you are deciding to allocate funds to. Are those some of the same kind of traits?
Alexa Von Tobel:
Of course. Of course. So Inspired is an early stage fund in so many ways, we are building the firm that I wish existed as somebody in New York City building a company, I kept turning around and being like, "Why are we flying to the West Coast to get capital? This is New York City guys." So really came back and built the firm that I wish existed. And what we look for is... So first and foremost, we're a generalist fund. We look for entrepreneurs taking big, scary epically, big swings.
So I always say we sort of skip incrementalist ideas. We're looking for the next major innovations that can move the world forward in a really powerful way. And then we look for entrepreneurs where it's really burned into their DNA. They're building a company that is an extension of their purpose. It becomes... They really almost, it's their life's work. And you go so much farther when it really is something that you're building out of your core being. And those entrepreneurs are smart and resilient and resourceful and clever and creative, and they have a vision because they're living in a future that none of us can see yet. And they're very clear on where they want to go and resilient and hardworking in ways that really truly are exceptional.
Lance Glinn:
Now I know you said you didn't do it for the money, you didn't start LearnVest for the money, but in 2015 you did sell to Northwestern Mutual for 375 million. On that day, when you decided to make that move, was that sort of like a I succeeded sort of moment? What were the emotions like deciding to sell the company that you had started from scratch for this large sum? And frankly, no one I think would have knocked you if you decided that an early retirement was going to be in your future. So what was just that day like and the emotions like when you made that decision?
Alexa Von Tobel:
Sure. I'm only laughing because anyone who knows me knows that I will probably never retire. It is just not how I am wired. No, I think... So first of all, that day was an incredibly emotional day. And in fact, I was only 30 at the time and I had love to think at 30 I thought I was mature. I was still a kid.
I actually felt an incredible legal and fiduciary responsibility. As a board member, as a shareholder, my job was to bring all the best offers to the board, which I did, and get everyone's input and feedback. And I actually, which this sounds nuts and in the rearview mirror sort of nuts. I kind of reserved my own decision for once I had everything in front of the board was the moment when I was going to really make my recommendation. But my job as CEO was to bring all those options, all the decisions and lay them out clearly. I remember literally the night before we were signing was when I started really processing that this was happening. And also crazy fact, Lance, I was nine months pregnant with my first child.
Lance Glinn:
That's got to be crazy to balance that and this crazy responsibility you have as CEO to the board.
Alexa Von Tobel:
Yeah, you can't make this stuff up. This is back to, I said, sometimes the company rid me. I was literally in a position where I had a very important legal job and I take, again, as you get to know me, I take responsibility very, very, very seriously. So my job is to put it together. And I also happened to be literally nine months pregnant. It was an emotional day on a hundred levels. But the morning of March 25th was when we voted to... The board from Northwestern Mutual called and said, "We have voted to approve acquiring you." And actually they were incredible. They called it a merger collaboration and really viewed it as trying to bring the company's cultures together to build a better product.
And we voted and it was one of those moments where we signed the docs and there's this photo, and it will be a famous photo for my family where I thumbs up to my husband that it had all signed off and I was nine months pregnant. And I literally went on TV the next day and then I went into labor and had my baby girl, Toby. And no, it was a lot. And I was sort of running on true fumes, but yeah, emotional to say the least.
Lance Glinn:
And then you decide after some time at Northwestern Mutual to start Inspired Capital. How did your previous experience with Morgan Stanley coming to New York in 2008 with LearnVest, ultimately with Northwestern Mutual, how did that all influence what you've decided now to do with Inspired Capital and when you decided that Inspired Capital, and then being a venture capitalist was where you wanted to pursue and take your career next?
Alexa Von Tobel:
So by the way, one other just thing I want to say. So I ended up going with Northwestern Mutual because it had been a Northwestern mutual life insurance policy that had majorly stabilized my family when my dad passed away. And I didn't tell anybody that until after we had signed all the documents. And I was like, "This is really why I'm doing this." I know the power. And to this day I love Northwestern Mutual. It is one of the best, highest integrity companies on the planet that thinks about its clients every day. And anyways, it's a beautiful company.
So how did that lead to Inspired Capital? Great question. I really at my core have always been an investor. I led my way in the LearnVest because I was trying to figure out the wallet and learn the wallet and understand how to think about making great investment decisions. And I had spent some time at Inside Venture Partners, and then worked on the prop desk at Morgan Stanley and went back to Harvard Business School. And through all of that period, I realized that the category of investing that I loved was this early stage company where you're building something from scratch.
So after I sold LearnVest, I stood up an angel fund where I was starting to actively invest. I finally had some assets to be able to actively invest, let's be clear. I started actively investing in Excel Venture partners who had backed me. I did some investing with them and then also Northwestern Mutual while I was there as Chief Digital Officer and Chief Innovation Officer, I oversaw their venture fund. And I know myself well where when I start daydreaming and nights and weekends start gravitating towards something, I was just watching the pattern of obsessing over companies and entrepreneurs and that's all I would talk about.
And when I went back to that moment, it was December 18th, 2008, when I dropped out of HBS moved to New York, I literally remember the next three months running around the city as somebody who had taken every risk that I humanly could. I dropped out, I had no job, all my money was in the company and had a moment where I was looking for Inspired Capital. I literally, I was looking for what we are. And I said to myself, I was 24 at the time. I was like, "Where is the capital that makes me feel seen, understand the swings I want to take and how big and how I want to change a category and start helping really evolve a category?" And FinTech didn't exist at that time. And I remember when they put me on the cover of Forbes is like the millennial wallet change. Those are the entrepreneurs we want to find.
So back to 2018, my husband looked at me and was like, "I see what's happening here. You're building another company in your head and it's coming together." And what was amazing is it literally came out of my mouth and I was like, "It's Inspired Capital." And the name hadn't been taken. And I grabbed it and truly within seconds, that was it. It was just like I know how I function and the firm was born and I haven't looked back. So we just turned five. And again, we're just trying to build a generational firm here in New York City focused on the biggest swinging entrepreneurs who are taking really true decade long building iconic companies and solving honestly some of the biggest problems in the world. And if it's not entrepreneurship solving these problems, we're not going to get where we need to. So the inspired future is something like we talk about every single day at Inspired.
Lance Glinn:
And you have a pretty notable partner in former United States Secretary of Commerce, Penny Pritzker. Take me through how that relationship began. What's the story behind... Is there a story behind that first meeting and ultimately the decision to really take this and go into it together?
Alexa Von Tobel:
So first I'll start by saying we have the most incredible partnership. At Inspire there's four partners, it's Penny and I who founded and stood up the firm and Mark and Lucy, and I'll come back to them in a second. But I met Penny when she was in the White House. She was US Secretary of Commerce, and her and Barack Obama emailed me, which I mean, I literally remember getting this email. I think I was like 26 years old or however old. I was young. And it said, "We would like to make you an ambassador for the country." I was just like-
Lance Glinn:
Were there any thoughts of, "Oh, here we go. Another one of those scam emails trying to get-"
Alexa Von Tobel:
Obviously. No, no. I mean obviously I was like, "This is not real." I was like, "We'll reply just in case it is, but it's definitely a phishing attack." But they had decided to make 10 ambassadors for the country, for entrepreneurship. And Penny is US Secretary of Commerce and overseeing business for the country. And Barack Obama realized that one of the most valuable things that the United States has is our entrepreneurial spirit. We in America... And I love America. You will get that coming through through. In America, you can come here and you can build something and you can change your life and you can build... You really can come and build anything. And that is a pillar, a foundational part of our country. And they said, "We have an ambassador to Spain. We have an ambassador to Great Britain, France. Why don't we have any ambassadors for entrepreneurship? This incredible asset."
So punchline, I was like the kid. I was like the baby. I was not even... I mean wasn't even important and LearnVest didn't matter at the time, it was so early. And I was so confused that they picked me because it was all these other storied entrepreneurs, Steve Case of AOL and Hamdi of Chobani, and I mean people who just really had these amazing stories but built billion dollar businesses. So I got to meet Penny. I went to the White House. Truly almost had a panic attack meaning Barack Obama. He fist pumped me, I almost died. It was amazing. But we really became friends and Penny and I got to travel with her, with my mom, and we really got to know each other and share a few things.
We have a very shared value system, which is we believe deeply in high integrity. We believe deeply in that business moves the world forward and we love to build businesses. That is what we do as our hobby, as our job, it is everything. So I made a phone call to her when I decided that it was time for me to stand up the firm and we were chatting and at the end of it, she actually said, "Can I build it with you? Why don't we do this together?" And I didn't have to think twice. And I said, "Absolutely, let's go."
And my two other phone calls, one is Mark Batsiyan, who I'd already been working with at that time for eight years. We were partners at the venture fund in Northwestern Mutual, and he'd been my head of strategy at LearnVest and is truly one of the most brilliant minds. And Lucy Deland, who co-founder of Paperless Post, my Harvard classmate Best Friend for now 20 plus years. And we stood up the firm and Paperless Post has grown literally a hundred plus million users. I'm sure you've gotten a bazillion of them, but she was really my red phone in building LearnVest. And we kind of came back and said, "Let's go build a really, really unique firm focused truly just on the values of helping your biggest minds build the biggest companies on the planet."
Lance Glinn:
So you say that you and Penny Pritzker, you both loved to build businesses. Now Inspired Capital's mission obviously to support those early stage founders, and your firm has a focus on helping the next wave of innovated companies. How would you characterize the current landscape though, of early stage investing in 2024? Do you think that with the financial environment we're dealing with inflation, high interest rates, everything you can't go a day without hearing about. Is it a friendly environment to start building a business?
Alexa Von Tobel:
Obviously 2020, 2021, I think it was a wildly, I would say irrational environment. Fast-forward to 2024, I think this is one of the best years to build a business. And the reason is I think a lot of the sort of voyeurs of building businesses have decided it's really hard. I think this has been your best entrepreneurs come out because they're really building things for the right reasons. And I think first, if you're an entrepreneur, it's never been easier to build a company. There's every single tech stack and asset that makes it easy and affordable and incredible to go get lights on in a business.
I think the world has never had bigger problems than we have right now, which brings me back to the inspired future, which is there are some massive issues that we are facing as a planet on many levels from the loneliness epidemic to our health epidemic, to obesity, to the climate problem. And it has never been a better time to go and say, "I want to go and change the world and do something that really, really matters and use my time here on earth to move the world forward."
So we sort of think in decades, Lance, we don't think in 2, 3, 5 years. We back founders for decades to go build really truly exceptional companies. And then we are a force of nature of sturdiness behind them to allow them to go swing with all of their might, which is incredible. And we can open up networks and obviously Penny was US Secretary of Commerce, and I was on the board of Microsoft and chair of Harvard. So we can also do incredible things to help our businesses gain unfair advantages in their mission and their pursuit of doing greatness.
Lance Glinn:
So with so many changing technologies, obviously the biggest one is the invent and the implementation of AI in pretty much everything we do. How has it impacted your investment strategy?
Alexa Von Tobel:
So the way that we think about AI is almost like a layer of the internet. In the same way the internet came and it touches and impacts everything. AI is a horizontal layer. It will literally touch every category, every type of business, every sector. So it's a step change in what's possible. And it's also incredibly important to say it's exponential in the speed of where we will see innovation. The innovation curves is speeding up. So again, Inspired, we're an early stage generalist fund. So we back companies napkin to series A in all sectors, predominantly in the United States. And I would argue that every company being born will have an AI strategy or be an AI company in some capacity, whether you are in healthcare, in FinTech, in climate, in industrials and vertical software in all of them, AI will be an important layer. It's a critical part of everything that's being built.
Lance Glinn:
So with the implementation of AI and with the various traits that you look for in investors, your portfolio, the Inspired Capital portfolio spans dozens. And as we said earlier in the introduction, 60 companies throughout a number of different sectors and previous investments of both yours and Penny Pritzker's include a couple of NYC listed companies like Uber, NYC ticker symbol UBER and Lemonade, NYC ticker symbol LMND. When you are deciding where to invest next, what is that decision process like? How do you go through about scouting out or skimming through, I'm sure the thousands of prospects that sort of come your way? How do you figure out, okay, this is the company that we want to put our money towards?
Alexa Von Tobel:
First, both of those companies, Uber and Lemonade, were my personal portfolio where we were fortunate to back some amazing companies and I was pre standing up Inspired, how do we make a decision to invest in a company has a few vectors. First and foremost is the founder. I would say that's the most important decision, is this truly a superhuman human building, something that is their life's work, and that's probably the most important quality to bet. And then after that, we are pretty, I would say ruthless about business model and understanding... And what we like to look at is, so first to put it kind of simply, it's like you want a fabulous surfer on a great surfboard riding a tsunami. That's what you look for every day in venture. And that tsunami, what we like is often we'll see a thesis and we're very thesis driven and inspired where we love a category.
And then what we do is we think about what is the best way to express that category bet that we believe with the business model that gets the biggest, the fastest. So we have this concept where we say you want to be in a position where as the business gets bigger, it gets better. Meaning there's pricing power, there's data moats, the product becomes richer and in itself creates bigger moats around it. And then we like to marry all of that with ideally capital efficiency.
So this business can get really, really, really smart, really big, and doesn't need to raise $500 million to win. That doesn't mean that we won't back one of those businesses, but that's sort of how we think. We put those ingredients together, an incredible entrepreneur riding a tsunami expressed in a way where their product wedge niche will continue to give them unfair advantages as the chapters of the business play out. And then finally, the last piece is it a capital efficient business where we believe it doesn't need to raise so much capital. And then the final thing is we step back and once you lay all of that out, we just ask ourselves, does this have the chance to be an iconic company, a company that changes an entire generation? And when the answer is to your core, yes, that's when it's an Inspired company.
Lance Glinn:
So in 2021, Inspired Capital announced the closing of its second fund that brought the firm's total assets under management to nearly half a billion dollars. This comes after a debut fund that raised 200 million. Well, you just completed your third fund in February of 330 million. So congratulations first and foremost on that. Raising that total assets under management to nearly $900 million, how has the firm grown from round to round and how will this latest fund help Inspired Capital continue to progress and help early stage founders moving forward?
Alexa Von Tobel:
I think what's really special about Inspired is that it's the same team, same strategy. We are staying so true to our knitting. We're not evolving outside. We always say we're looking for the same bullseye, and our job is to continue to practice the art of throwing the dart at the exact same bullseye. And we do that over and over and over. So what's been amazing is we really are building a long-term generational machine that can be the ideally first stop for any exceptional entrepreneur who wants to go build a special business. We keep it simple, which is we keep our heads down, we've got to do an incredible amount of work. But with this new fund, we are set up really nicely to now focus all of our activities on investing for the next three years in Inspired Fund III, which we're really excited about.
And as I said, we really do have this lens of an inspired future. We believe that it is innovative minds that come and solve some of the biggest, hardest problems that exist on this planet. And as an example, we're going to have to retool tens of millions of Americans for work because of AI and because of robotics. And what does that look like? There's a many, many generational companies that alone could be built out of that category. We need to reimagine the financial stack as we reimagine AI, and that's an exciting topic. So healthcare, we're going to live to 120 and we now can make personalized medicines that are made perfectly just for you and your DNA, but they currently cost millions of dollars. That's a really big problem for the planet and for the world. And not to mention the fact that the planet's on fire and flooding and natural disaster. So those are the sort of things that we think about and we want to welcome entrepreneurs who really are bending the possibility of what's even rational, and those are the people we like to sit with.
Lance Glinn:
So we've talked about this wide range of sectors that Inspired Capital invests in, but with specifically this third fund of 330 million, is there a plan when it comes to deploying it? Are there specific sectors that you are going to target? Are there certain traits or characteristics of companies that you're going to be looking for when determining this is the company I'm going to invest in?
Alexa Von Tobel:
Sure. Yeah. So again, we are napkin, which I always say will be first money in, and we've actually napkin to Series A. We write checks from one to $15 million, and then we really join the company and we're on the ride for decades. What's really important about that is we like entrepreneurs who really have the patience and the guts to get it right, meaning sometimes that means you have to be patient. Sometimes that means going slowly at first to get it right long term.
We often say we like founders and entrepreneurs who don't cut corners and really are the steady set of hands building something that is truly special. As I said, we are sector agnostic. We really are looking for, and often we back things, it's FinTech meets healthcare or FinTech meets climate or vertical SaaS and industrials, and we really are very thesis driven. So you'll be able to go to inspiredcapital.com and actually see some of the areas that we think are some of the biggest problem areas in the world where we think special minds should go build. And then I think one of the other thing that's really great is we have an incredible network of experts and very, very, very special minds who are behind us to help those entrepreneurs get a leg ahead.
Lance Glinn:
And as the size of the total assets under management grows, do you ever foresee Inspired Capital's strategy, overall investment strategy changing from when it started in 2019, or you're always going to be that early stage investing fund to help those young investors like you once were that we're looking for Inspired Capital?
Alexa Von Tobel:
We are plain and simple focused on building the best early stage fund in America, and that alone could be my life's work. So no, we are really focused on building an exceptional firm where your best, best, biggest, swinging, hardest charging entrepreneurs who want to do things that really, really matter, want to show up and talk to us.
Lance Glinn:
So Alexa, as we begin to wrap up our conversation with the growth of the firm as well as its goals and ambitions, as we've been talking about, what does the future hold for Inspired Capital? As we look 5, 10, 15 years down the line.
Alexa Von Tobel:
We actually wrote a 25-year business plan. I love building businesses, as you can tell. And what was amazing as part of that plan was we basically kept a temple. We have to do a few key things well. We have to attract the biggest, brightest minds in the world who want to build companies that really matter. We have to follow through on our promises and treat them extremely well, which means literally being... We always say we want to be your first phone call because we know firsthand that building businesses is brutal.
As we said, Lance, it really is brutal and it becomes... It's your life's work. And we want to give them the psychological safety to know that they can call us at any time for literally anything. And then we want to be their partner through building five years, in 10 years, in 15 years in until they actually can follow through on their core mission of what they set out to do. And doing that every single day, I joke, is not a job. It is truly an absolute pleasure to get to come to work and do that. So what you can expect from Inspired is a lot of the same. And really, our team overlaps 75 years, which is pretty unique. And just the strength of that culture, you can feel it. And I think that really sets us apart.
Lance Glinn:
Attracting the biggest, brightest minds that matter moving forward. Alexa, thanks so much for joining us inside the ICE House.
Alexa Von Tobel:
Thanks so much, Lance. This is amazing.
Lance Glinn:
That's our conversation for this week. Our guest was Alexa Von Tobel, founder and managing partner of venture capital firm, Inspired Capital. If you like what you heard, please rate us on Apple Podcast so other folks know where to find us. Got a comment or question you like one of our experts to tack on a future show, make sure to leave a review. Email us at [email protected] or tweet at us @icehousepodcast. For Ken Abel, Pete Dash, I'm Lance Glenn, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. We'll talk to you again next week.
Speaker 1:
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