Cover Story
The unconventional capitalist
Nora Bavey is the general partner at Unconventional Ventures, a niche investment entity run by under-represented founders like women, LGBTQ+ and BIPOC. Her personal mission is to shine a light on venture capital’s huge challenge with homogeneity.
6 Apr 2022

If you move around in the startup and venture capital scene in the Nordics, soon enough, you will come across Nora ­Bavey. 

Born in Iran, she came to Sweden in the 1980s and had a rather challenging childhood, ultimately moving from home in her late teens. Then she embarked on a career path that took her through various roles and companies, but always operating in the intersection between marketing, sales, business development, and innovation. In addition, she has always worked with and supported the community, aiming at helping those in society that need it the most.

Nora also had her first child in her mid-twenties, living as a single mum, something that formed her life path in many ways. She is the embodiment of a street smart, self-made woman, who is very purpose-driven in her life choices. 

For the past couple of years, Nora has operated as General Partner of Unconventional Ventures, a niche investment entity focusing on impact tech, at the pre-seed/seed stage, founded by under-represented founders; i.e. women, LGBTQ+ and POC (­persons of colour).

They also publish The Startup Funding Report annually, where it’s evident how broken the VC space is when it comes to diverse investing:

2020 was a record year for venture capital: decision-makers invested over €3 4.5 billion in Europe according to Dealroom. But, of all the capital invested into the Nordics, investors gave 92 % of capital to all-male teams, leaving 7.3 % for mixed teams and a scant 0.7 % for all-female teams. Compared to the previous year, it’s a slight improvement for mixed-gender teams (6.6 % in 2019), but not for all-female teams (1 % in 2019). And obviously, the diversity issue goes way beyond gender, where venture capital and entrepreneurs are hugely behind what society looks like.

Nora has made this her mission and speaking to her feels like speaking to a boxer, a fighter. She is also a naturally outspoken, enigmatic, and empathetic person that quickly has risen to be the voice of the under-represented. Scandinavian MIND met Nora to unbox a bit more what her views on venture capital, ­entrepreneurship, and diversity are.

 Stockholm, February 2022.

You are currently raising a fund as part of Unconventional Ventures, is it the first?

— It’s the first traditional fund, but we have an unconventional entity in which we invest through SPVS, which is as you know, special purpose vehicles, where we then fundraise for that separate entity. That has led to nine investments in our portfolio.

Could you elaborate a bit on those nine investments? What kind of companies are we talking about?

— All of them are impact tech companies built by under-represented founders. When we talk about under-represented founders, we mean founding teams that are 50 % above in terms of gender, ethnicity, sexual orientation, age, and so forth. 95 % of them are female founders. We have an amazing FashionTech company building an ai tool for a recommended size that is based on your style and not your measurements, which is minimising returns. We have another incredible FinTech company that is actually an exchange for music. We have another incredible EdTech company that is targeting young girls, teaching them how to code through their incredible hardware product.

Out of curiosity, given that you are an impact tech evangelist, what do you feel about VCs such as Backing Minds, which have more or less, I would say, the same kind of profile. Would you compare yourself to them, are you different from them, or…?

— Yes. I think it’s amazing that they exist because they prove that this is not just a thesis. Therefore, there’s a huge opportunity that’s not being tapped into. I do believe we’re different because we’re still evaluating companies at much earlier stages than they do. Because we need more VCs focusing on very early stages. We’ve seen the whole world of VC moving into later stages. I think what we’re seeing now is a shift because the competition is too big at later stages, the sizes are too big, the valuations are getting too big. We aren’t going to see much more focused on early stages, which I really welcome, but we need to differentiate the model in which we evaluate founders, because it’s not going to make it any more accessible for those that do not fit the mould that is being used currently.

The fund you’re raising at the moment, is it going to focus on the early stage, like seed level or even earlier?

— Yeah, pre-seed, and it’s an impact fund. Coming back to your previous question, Backing Minds is more of a generalist fund, but we’re a full-fledged impact fund focused on diverse founders. That’s how we are different.

If you can elaborate your view on how you define an impact fund. That will be interesting.

— Of course. Impact funds measure how the business ­model creates results that are sustainable and measured beyond the financials. For example, how the business model impacts the ­environment, the climate, or society for the better.

Could you argue that even more traditional VCs now are actually impact funds, or turning into impact funds? Maybe not deliberately, but through the way they invest, through the way they evaluate founders, through the way they evaluate impact. What’s your view on this?

— Here’s why I’m challenging that; because we don’t believe that you can have an impact without diversity. Unfortunately, what we’re seeing is that more and more traditional and, obviously, bigger funds that are moving towards impact are still leaving the broader diversity aspect out of it. The same excuses that were used for why there aren’t more women in the tech space — there aren’t enough to invest in — those same arguments are now being used for founders with different ethnicities.

”The problems that we are facing today that tech could solve, but that  it’s not solving, is because of the lack of perspectives.”

Isn’t what you’re describing a structural problem in society where we’re not allowing these groups from society at a very early stage to flourish as individuals, to see all these different opportunities? Will a VC fund solve that problem?

— A VC fund can accelerate the potential that lies in a more inclusive infrastructure. A VC fund can also accelerate, in many ways, the conversation that we need to have. Why have we invested 90 % of all funding towards mostly white male founders? The problems that we are facing today that tech could solve, but it’s not solving, is because of the lack of perspectives. Because if we’re only solving problems for a very small per cent of society, and also allowing that very small percentage of the society to code and create algorithms for the rest of the world, then we’re in deep shit to say the least.

Yes, as you say, a VC fund can accelerate and has the money to do that. But the impact they have is quite late in life,  let’s say, you would meet an entrepreneur in their mid-twenties or thirties. The challenge you are bringing up here starts much earlier. Growing up in the suburbs of a Scandinavian city you might lack business role models, and maybe they’re not encouraged by family structure and cultural heritage to pursue certain careers. That’s part of the structure problem. How do you fix that with VC money?

— Here’s the thing, and I strongly believe in entrepreneurship as an enabler. Building companies with that diversity DNA that understands the potential as well, there’s one thing affecting where the money goes, but there’s another thing affecting what kind of new structures we are building? Those companies will be more inclusive. They will hire more diverse people. They will solve more problems. We’re enabling a more diverse workforce where there’s opportunity. Because it’s the lack of opportunity that excludes people.

I don’t know the numbers now, but let’s say that Spotify recruits from dozens and dozens of nations, from different backgrounds, from every continent. Wouldn’t you then argue that Spotify are actually great as a platform for fixing diversity issues?

— Both yes and no. Here’s the thing, and that’s why I am on top or closest to the power, you might say, or the capital. Spotify has done incredible hr branding. They are hiring diverse people. I’m super happy that we have a company that actually does that. But we know it’s catalytic when it comes to leadership. It starts at the top and goes down. It doesn’t go bottom up. If you look at the top, top, top, the problem is, that it’s the same kind of people from the same socioeconomic backgrounds, from the same schools, colleges, universities, in the same networks. The only thing that you’re actually shifting is gender. What we’re seeing is a lot of companies that are hiring diverse, but these amazing talents are not being promoted at management levels. That’s kind of what I’ve seen since the day I started in the whole tech space.

So there might be progress when it comes to gender equality, but much less when it comes to the full diversity spectrum. So how will you fix it? 

— This is a mother’s frustration as well. I said in 2020, I have a 20-year strategy. I’m here for the next 18 years now, but it feels much shorter. It’s all about doing as much as I can to influence the tech scene to be transparent, inclusive, and collaborative with the current ecosystem we are building. Obviously, I know Unconventional Ventures is one of the smallest players, but with the biggest ambitions. My hope is in the next five years we will cement our ecosystem in Europe. I truly believe that we can do that.

Explain the ecosystem, what are you building exactly?

— We’re building an ecosystem of stakeholders focused on impact and diversity. We’re building access to networks and knowledge, company‑building knowledge, tangible knowledge. People are over-mentored and under-invested. It’s literally about company building. Then building a platform for pre-seed stage companies, ideation stage, giving them the ecosystem they need and the beliefs that they need. We’re very data-driven and understanding where our activities are is giving us results. That’s the ecosystem where we welcome everyone to be part of it.

One solution that you bring is creating this ecosystem, bridging the gap between capital and a diverse group of individuals in society. What is the next step with the fund itself?

— We build a bridge into competence, mentorship, and network. Now what we’re doing is that we’re bridging that through more capital so we can invest in those companies. We need to move beyond preaching about diversity in tech to actually fully invest in founders and support them on their journey.

Do you face challenges raising your fund?

— All day, every day.

Can you elaborate?

— I can say this, the support we have from the people that believe in this, I’m incredibly humbled and grateful to have their support, as they are incredibly important for the ecosystem that is now supporting us in the work that we’re doing. But it is a hundred times harder to raise for a fund than it is to raise for a company. I know that fundraising as an entrepreneur was easier, and that wasn’t easy. Female‑led fund managers in Europe are six per cent and they manage only one per cent of the available capital. And if you add ethnic diversity into the mix, the data is even worse. What we’re seeing is that many in the u.s. get it. They do measure beyond gender, and they are like five years ahead of us when it comes to more diverse fund managers, as well as more funds focused on diverse funders.

Can I ask you a question on this? In the U.S. there’s a culture of talking openly about race. You have to put yourself in one of those boxes or society does it for you. In the Nordics, talking about race is not politically correct. We would never label someone as Caucasian, Afro Nordic, or whatever. How do you manage the fact that ethnic diversity is not freely spoken about? Would this fund be easier to raise in the U.S.?

— Yeah, of course, so three things to that. We have been very intentional in raising this fund with Nordic investors, because we want to impact the Nordic ecosystem, we want to impact the European ecosystem. Therefore, we are really focused on these limited partnerships, but obviously, in conversation with U.S. investors we never have to explain the opportunity that lies in investing in diverse founders. That’s one of the things. The second thing is that we have an incredibly rich history of emigration, but not immigration, and one of the things that I know Nordics love to say is, ”As it’s neutral…” We love neutrality. That’s one of the Swedish cultural things, that we love to be neutral.

So we say, ”we don’t see colour”. That’s one of the things Nordic people love to say. The problem in saying that is that it’s a racist saying, because it’s actually the opposite, because every behaviour and every barrier is telling us you see colour. Because you don’t see colour, you are not creating a culture that is allowing our differences to be included, and you are not creating any kind of belonging for anyone who doesn’t fit the mould. Society is leaving incredible talent out.

What’s the size of the fund you’re raising?

— It’s a € 30 million fund.

”The same excuses that were used for why there aren’t more women in the tech space — there aren’t enough to invest in — those same arguments are now being used for founders with different ethnicities.”

So, a relatively small fund?

— Yes. Since we don’t have those 10 exits to prove, it’s been hard. That’s why in terms of size, I’m confident we could more than double that because of the incredible ecosystem we built and for the pipeline that we do have. 

At the end of the day, maybe it is not about your gender or ethnicity. It is about proving the business acumen. Would you agree with that? 

— I would have agreed with you if I had not known that there is a structural problem, the funding gap affects female ­emerging fund managers too.

Yes, that’s definitely an important aspect to take into consideration. Where are you five years from now?

— Five years from now, we’ve built a second fund, we have created an incredibly diverse LP network, as well as invested in incredibly diverse founders with products and services that are both saving our planet, but also helping our society.

And what makes you as a person tick? Where’s your passion in this?

— The thing that I would love to talk more about, and now that you’ve asked the question, I’ve been called an entrepreneurial whisperer. I get founders’ vision, I get the strategy, and my strength is combining the business with the market insights that you have. I’m super passionate about supporting founders to build and scale.

Do you have any role models?

— Of course. I think maybe the combination of those three things kind of brings it together for me, but obviously Arlan Hamilton in the VC space is a huge inspiration. Muhammad Ali was also an incredible role model.

Where do you get your influences from, your inspiration?

— Founders. I get so much inspiration from seeing how they are so creative in solving things, and the passion that they have for solving things, and their willingness to. That’s kind of why I know that I can’t give up. That’s not an option. I truly get it from the ecosystem, from the startup ecosystem, from amazing founders.

How do you stay on top of trends and what blogs, magazines, or podcasts do you consume? I mean, any tips?

— I love things that are consumer‑oriented­, it tells us a lot about consumer behaviours, so a lot of industry reports. Obviously I also read traditional TechCrunch, Financial Times, and Forbes. I listen more in conversations than to podcasts to be honest. I’ve been very bad at having time to listen to podcasts. For now, it’s very much trying to get a hold of people that are much smarter than me, and really learning from them. It’s the strategy.

If you, or, when you succeed. Not if. When you succeed and you become financially independent, how do you think that could change you?

— I don’t think it would change me, but it would change the opportunities I have supporting my family and others around me. To be honest, what I do want to do is start an organisation for single moms. That’s a side story. That’s kind of what I want to do if I get financially independent.

Could you elaborate? What would that organisation do then?

— The organisation would support ­single mothers and fathers as well, because I was a single mom for seven years. It’s really hard to be able to provide for your child, even in the world’s most progressive region. I truly believe it really starts with giving children hopes, aspirations, and dreams. If I’m able to be part of starting that soon and making even the smallest things possible, then I’m happy. In terms of activities, I would give them opportunities to see things that they never thought were possible, travelling is a big part of how we are formed.

If you would have a reader that is, let’s say 16, female, from a Middle Eastern background, and you’re going to give her three tips so she feels encouraged to pursue a career in business or as an entrepreneur, what would they be?

— Number one, get informed. Get informed as much as you can about the problems so you know what kind of solution you want to offer. Second, try to reach out to people. Try to find people you can ask questions to. Then three, I think one of the biggest things that I’ve learned is don’t be afraid of getting a no. Getting rejected is part of the game. A no is a direction. Learn how to take no. Learn how to take critique. There’s very few people who’re going to believe in you. Even fewer people are going to believe in what you want to do.

— Make sure that you believe in yourself, and that you’re strong enough to understand that there will always be people saying no or not believing. That says everything about their own limitations and not about the opportunities you can create. 

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