LP View: Breaking Bias to Drive Returns w/ Joanna Kuang, Illumen Capital

Sarah Chen-Spellings (Intro):

Hey folks, do we have a special episode for you this week? Amidst a global push for greater diversity and inclusion in various sectors, it is alarming to witness what feels like the polarization now of the very word diversity.

Against this backdrop, Illumen Capital, an impact-focused fund of funds, with about $250 million assets under management, remain steadfast that racial and gender bias not only lead to an equitable outcome, but the team is convinced that bias inhibits optimal financial performance.

I speak with Joanna Kuang, SVP at Illumen Capital, and we chat about how LPs are thinking today. The teams work with leading social psychologists at Stanford and how they combine investment capital with tools and training to reduce implicit racial and gender bias in order to unlock latent return and multiply impact. You don't want to miss this one.

Joanna Kuang:

I'm the daughter of immigrants. I always felt different and always felt that lived experience of why are people not thinking or behaving the same way as myself.

But I also think I was very privileged, in that I had great access to educational opportunities. It was something my parents prioritized, and I got a scholarship to go to college.

My time, kind of living and teaching in the Mississippi Delta for a summer where I was in a town that's basically still segregated down the middle and I was teaching middle school math, and really there saw the power of even a small amount of financial and social capital in communities of color in the US Context, and Mississippi is very rural as well.

So just really, really different from growing up in urban coastal New Jersey. All of these kind of experiences drove me to want to work in Illumen Capital, and to work in specifically impact investing, but with a strong diversity lens.

Because I felt like I could speak the language I would be accepted in the room. But then once I was in the room, I could help people kind of change their mindsets and meet people really where they are.

So the work of Illumen capital is that we're a fund of funds. We invest in private market funds, and specifically we support our portfolio fund managers in reducing their own racial and gender biases.

And I think that that work is really important from a stewardship perspective, because a lot of people want to act, but don't know what to do. And so I always kind of frame my work as being a coach, or almost being someone to walk on that journey with you.

Not to shame you at all, or make you feel like you haven't done enough. Work on your own to get to a place of knowing how to identify biases or how to change your own inherent biases but instead really be a thought partner in that work.

Sarah Chen-Spellings:

I believe Illumen has been in the market for something like is it going on seven years?

Tell us a little bit about sort of the genesis of this fund and how it's evolved with taking you on, you know, looking at the product side of a fund of funds in it in essence.

Joanna Kuang:

The reason we're structured as a fund of funds instead of a fund that's investing directly in portfolio companies is that as a fund of funds, we can have kind of another sphere or level of influence.

So we're investing in fund managers that say each of them has 20 portfolio companies. So rather than us only investing in 20 portfolio companies directly, we can invest in, say, 10 fund managers with 20 companies each. And so that's 200 portfolio companies that we can really influence.

But we can also influence that level of capital allocation. It's not just changing how this portfolio looks. It's changing how investors, maybe senior associates, who might go on to start their own funds in the future, behave and think about the value of using equitable processes that are sticky in their work for the long term.

So we closed our first fund in 2020, we're also deploying a vehicle that's specifically focused on emerging managers, called the Catalyst Fund. I think 1 thing that's interesting is that for our fund 1 and fund 2, we really focus on non-first time managers. So we're really trying to build that muscle of diversity, equity and inclusion in managers that are a little bit more established.

Because we recognize that everyone has the power to change the broader industry. It's not just having managers who already have that diversity of lived experience. How can we also bring people who may be look pretty homogenous on the journey of being allies of changing how dollars actually go out the door.

Sarah Chen-Spellings:

Yeah, so give us a little bit of a lay of the land there. You've clearly done some work and in particular I want to turn to also your 2019 Study which looked at black fund managers specifically.

Tell us about where we are. Post George Floyd, I think there was a flush of capital that went into black and brown fund managers, but off late, it feels like the tides have turned to the negative.

Joanna Kuang:

I'm glad you bring up that paper that we published.

Basically, we published a paper that was an academic research study that showed that when we sent out one pagers with the same track record, same education level, everything kept the same except for the race of the photo on the one pager.

We sent those to real life asset allocators who obviously didn't know what the study was about and asked them to evaluate whether they'd be willing to invest in the fund manager or not.

And we saw that there was a difference between likeliness and willingness to invest in the white fund manager versus the black fund manager.

So that show that race affected investor judgment. But I think what was most interesting was that at higher levels of performance, you actually saw a bigger difference.

So people with higher levels of performance, you saw a bigger delta in the likelihood of investing in the white film manager versus kind of not wanting to invest in the black manager. And so I think that that really speaks to why this work is important. we saw a lot of emerging manager programs come out a lot of commitments to diversity, equity and inclusion in 2020.

Now we're seeing that, , a lot of those like first time managers, what happens when they're going out to raise their second fund, right? I think that's actually where our strategy comes into play of one, helping managers with making that work more sticky, making sure that they're not just hiring a person of color, but instead changing hiring processes so that it's equitable for everyone going through the hiring process.

Changing investment processes so that you don't have to have a warm introduction to even get in the door and get your first meeting as a founder who maybe didn't go to an elite university.

Sarah Chen-Spellings:

Tell us a little bit about the sample size there. This almost feels like the study with, was it HP, who did it with the female versus a male name?

And then when you sort of removed it all, where the performance was the same, the results were markedly different. Tell us a little bit about the methodology, just so that we get a sense here of that study.

Joanna Kuang:

So the study, basically with the one pagers was sent out to hundreds of real life as alligators, people who are doing this work every single day, making those decisions every single day.

And because it was under the guise of being more about decision making, we were trying obviously to not point people to the element of race being the thing that differed.

So that really showed that bias we define as a set of shortcuts. So it's something that you don't even often realize you're doing.

Our partners at Stanford Spark that we did the study originally with, always say that culture is like water. You don't realize you're swimming in it. These are people who are doing their work, often you have to move very quickly to close a deal, to win a deal.

And so these are people who are doing asset allocation work every single day. Hundreds of people who are doing it. In their life career and so that bias is something that comes out of just how they do their work every day.

And it's not something that people are actively thinking about, and we know a trigger of bias is moving quickly. So an antidote is to slow down, but it's very difficult to slow down, and so I think that that's also where it speaks to needing to have people come in and kind of encourage you to slow down to even reevaluate your biases or reevaluate how you've always done something almost that muscle memory, like changing that muscle memory.

Sarah Chen-Spellings:

Fascinating. So between 2020, it's now 2024, the start of, have things improved? What's the landscape? Are you seeing fund managers, LPs or GPs being a little bit more intentional with how they're thinking about diversity? Is this now, just a pillar of growth where it's mainstream.

What is the end goal here? And where are we today?

Joanna Kuang:

It's a great question. We're seeing a lot of intentionality being paid to it.

So we actually collect not only qualitative data, but also quantitative data to try to piece together both of these important elements when we try to understand progress around DEI.

So a lot of people are tracking, what do firms look like in terms of race and gender? What do portfolios look like in terms of which founders are getting funding? What do companies look like as they grow in terms of staff?

All kind of disaggregated by race and gender. And I think those quantitative metrics are really great because that's where you have that accountability.

If you say you care about diversity and inclusion, let's see it. Like, are you hiring people who come from different backgrounds?

Only 1. 3 percent of dollars managed globally by asset allocators is managed by women or people of color. So that's not even looking at the intersectional ones of like women of color. And so there's still obviously a lot of work and progress to be done.

But I think what's also powerful about the qualitative data is it shows whether people's mindsets are changing. And so one thing we try to understand is are people motivated to do this work?

And if they are motivated, what are barriers that are preventing people from actually effectively doing the work where you can see those changes in the quantitative data?

So for example, maybe you want to do the work, maybe you're really bought into diversity and inclusion mattering from both a moral perspective, because it's the right thing to do, and you believe it's good for the bottom line.

But you don't know what to do. You have a lack of confidence. You have a lack of best practices. And so there we're really trying to understand where there are barriers to this disconnect of everyone made these commitments in 2020.

Now it's 2024, we're measuring that quantitative data year over year if we're not seeing some changes at certain funds or certain parts of the market, we see a lot more diversity-focused funds at the venture level versus private equity, for example, for financial reasons and the size of the investment and then also the size of the subsequent fund that you need to be able to raise right to have strong portfolio construction.

We're really seeing kind of, that people, I think, continue to need support for how to do the work. How do I actually put things into practice in a way that will last? And I think that that's also where we see a lot more longstanding work.

If people were like, I'm going to deploy X amount of money in this one fund. It's easy to say, okay, I did it. My next fund, I'm not going to set that target anymore. You know, back to business as normal. But where we really see progress is when people have changed processes and changed systems and changed their minds as leaders, as people who are GPs and are really leaders in terms of determining what gets invested in.

And that that change can last for future funds and for future firms that get started and kind of really change the landscape a little by little.

So I would say my ultimate analysis is that, I think a lot of people continue to be motivated. I think the people who have it written into their thesis, have it written into their processes. For example, one of our funds has a DEI section of their term sheet with every portfolio company and we're seeing other funds learn from that where they're systematizing the commitment to diversity equity inclusion.

Some of our funds have a DEI policy that they have every single one of their employees sign and that also translates to ensuring that part of their portfolio support is making sure that every portfolio company has a DEI policy.

So all these little changes are really great, and I think that's where we see continued attention being paid.

Sarah Chen-Spellings:

I've got a ton of questions just from that, a lot of good stuff to dig into.

First I guess is, I’d love to hear some of the best practices that you're seeing, you know, systems and processes. Even for us at Beyond the Billion, it was a target amount, but that was a really, I call the pledge campaign a mechanism for change, right?

 Because what actually created that enduring change was things like, I'll share one from to start, two fund managers decided that their pipeline was not diverse enough, decided to remove the pitch process completely.

And only look at data points and tranced their investments. And just by that today, years later, 40 percent of their portfolio companies are women CEOs. And I think you and I wouldn't be surprised. But these are the things that clearly display where bias comes into play, even for those that are intentional about it.

And there's ways to change structures and that may have existed before for certain reasons, and legacy systems that may not serve us today moving forward.

I'd love to hear, you know, what are your fund managers doing? What are you inspired by? Are there any exiting stories that you can share?

Joanna Kuang:

Yeah, definitely. And I totally agree with you.

I think that a lot of these quantitative kind of targets were great mechanisms to drive accountability for people to actually change how they've always done things. I think reconsidering those norms, those industry standards have been so critical.

Your example, I would love to build off of it, we've seen in research that at pitch competitions men get asked more questions about upside and opportunity, whereas women get asked more questions about downside and risk.

Obviously, the question you get asked if you only have 15 minutes with an investor is going to determine the tone and tenor of how your pitch comes off. You probably would leave if you ask somebody only about risk and say, oh, that seems like a risky investment.

And so some of the things that people have been doing there is one, standardizing some of the questions that you ask at the beginning of your conversation with the founder.

You obviously can't standardize diligence all the way through, but you can make sure that one, the process is equitable in terms of, having people evaluate companies against the same criteria. And then some of our funds have actually taken it further and said in the introductory conversation we're going to start every conversation with the same three questions and then after that you can go in different directions that personalizes it to the company.

But that way you don't open a conversation leaning on your own bias that, oh, like I'm going to start by asking these men who are founders about the moon-shot opportunity, where could this be in 10 years if you were successful? And then you're not even realizing it.

But with women, you're asking, how are you managing risks? How are you mitigating potential risks that might come up and not giving them an opportunity to talk about that moon-shot opportunity or where they want to be in 10 years if everything goes well?

Another interesting thing is that, A lot of our funds have implemented through their CRM, like a sales force where they're tracking the flow through the diligence process.

They've added more specificity. And this is really great when there's a big investment team. So not everyone's looking at every single deal. Add a specific reason why they pass on a company. So that you can disaggregate that data later and look at are we saying that, women of color didn't have a good cultural fit, didn't align with our values, things that are softer, more disproportionately than, for example, men who are founders.

That's just a hypothesis, but you don't know the answer unless you have the data, right?

So having everybody name a very specific reason and add information in their real time workflow about why they said no to a founder allows you to have that data at the end of the year or mid-year to really go back and understand whether you have disparities.

We've also seen a lot of strategies where we have more than one person in every kind of room when you're meeting with a founder or a potential hire, so that you can have numerous perspectives because we know the whole point of investing and fiduciary duty is that not everyone has the same perspective on whether a deal or a company is going to be successful. And so allowing for more spaces for that kind of robust debate.

Another thing we've seen is changes to how investment committee is run. That's when push comes to shove. That's the final decision of whether or not you're going to invest. And often, it's just about who spoke up, right?

And if I'm 21 and it's my first job out of college, I'm not going to raise my hand and say, I disagree with my general partners because I want to get promoted. I want to protect my own reputation.

And so how are there ways that you can contribute more? One of the tangible examples we've seen is some of our fund managers have a way to provide written feedback.

So they'll have everyone vote prior to investment committee all on a written form. That way, if you're not being invited in to speak, or you don't feel like you have the psychological safety to actually speak honestly, you can still get your perspective heard and it can actually determine how dollars go out the door.

These are all really small changes, and I could, you know, continue to share so many more, but I think overall it's creating a picture for your employees that that's something that you're paying attention to, that you value all of their input, even if they're not a general partner who owns a vast majority of that fund.

Sarah Chen-Spellings:

And now I want to turn to, I guess, the heat of the moment.

It seems like the work that you're doing really stands in contrast to the many anti-DEI laws that are being passed today or have been passed. The lawsuits that are wearing its ugly head in many different ways.

How are you at Illumen Capital thinking about this? What's sort of the reactions of your own LPs? Are they still steadfast? How are they reacting to the heat of the moment?

Joanna Kuang:

One thing we're fortunate about is that our LPs, we strived and continue to strive for them to be values aligned.

Especially our, you know, earliest LPs, they're people who were bought into our vision for the world, really reducing racial and gender biases and kind of tying that to the broader potential performance of the fund and the firm before 2020.

Some of them, the earliest investors came into our fund when it wasn't as much of a popular topic to talk about. We're also through our annual impact report. We're trying to be transparent about the progress and continue to also show ways that that diversity and attention to diversity is really also being tied to the financial element of our work.

Ultimately, our work is our fiduciary duty, but really showing that that actually could be a driving factor in the work. I think that that's one way to combat some of this anti DEI sentiment.

Luckily we haven't had too many of our existing LPs kind of shy away from the moment. I will say a lot of our fund managers we've had conversations about how do you reframe the work?

How do you think about the work? So it's less focused on my criteria is you must have at least one diverse person on a founding team, for example.

And thinking more about the equity piece as a process to drive towards outcomes without saying you're committed to those outcomes. Cause that's where we see a lot of the kind of legal, the lawsuits coming into play around, if you are only willing to invest in people who fall into a certain race or gender.

And I think our work and making it sticky has been more focused on how do you have processes that invite in more diverse founders. You have a way that you process cold outreach.

Some of our funds even go as far as to have kind of what you mentioned, open office hours where you're not allowed to use a pitch deck and you can just come for 5 minutes or 10 minutes and talk about your company and you don't have to have gone to the right university or go to some email inbox that no one's ever going to respond to.

A lot of our funds recently have asked us, how do we make sure we're creating an inclusive atmosphere now that we've hired a more diverse team? For example, how do we actually retain those people? How do we make sure that they're actually? We're tapping into the value of diverse teams rather than having them there as a figurehead and then no one's actually listening to them internally.

And so I think that that's where we're trying to drive the work forward in a way that moves away from just diversity in terms of numbers or criteria. And moving more towards something that's sticky, but also something that is just considered working well together.

It's almost like strong collaboration and leadership rather than just falling into the DEI bucket.

Sarah Chen-Spellings:

I mentioned this earlier in the call before we got started here that we do have a global audience that are perhaps a lot further along. Some are a lot earlier in this journey of thinking about diversity as part of driving performance, right?

Driving returns through diversity. If you can talk to us a little bit about sort of the investment strategy and how that's tied to performance.

I guess the question that we often get is you can't just be investing in a diverse person just because, that doesn't make sense. At the end of the day, you're a fund manager. You're here to deliver results.

Joanna Kuang:

That's a really great point. So I think for us, for our fund one and fund two, diversity is definitely one of many factors we use. We have a standardized scorecard that we use to move people from the pre diligence stage to advanced due diligence, and we apply the same criteria to everyone.

We are looking at financial performance. We are looking at what your portfolio to date, what your investment strategy has been, and whether or not that will continue to, to be true.

We're looking at everything that a traditional, fund of funds is looking at, you know, is the team strong? Has the team been working together? What is the performance of previous funds?

And I think the beauty of it is that for our fund one and fund two, we don't invest in first time managers, so we have performance numbers to look at, right? We're looking at fund twos and beyond. some of the funds that we've invested in have been primarily white men led teams, and we don't shy away from working with them.

Our work is really focused on having a strong investment strategy that sets us up for a strong partnership throughout our investment period from a stewardship perspective. So once we've invested, even if you're, it's all white men GPs, say they still have a strong thesis around impact or a strong thesis around diversity, we can work with that if you're willing to show up to our diversity program.

And that's something we actually write into the side letter. So it's a legal agreement with all of our fund managers that they're going to show up to a certain amount of bias reduction coaching and engage with our bias reduction curriculum and toolkit that we've created soley for that.

So for us, that's our value add. We're trying to make sure that that stewardship piece is really where we can drive the positive year over year change in terms of seeing an increase of diversity and increase in equity and increase in belonging.

And it's less focused on just, what does the fund look like and investing in diversity for the sake of diversity?

We don't frame ourselves as concessionary returns or anything. In fact, we are almost seeing ourselves as providing free value or basically a DEI consultant that's here for free, for you to be able to work better together as a team as a general partnership in order to make better decisions. More efficient decisions.

One example is one of our portfolio funds. They had a deal that people really disagreed on. One person had the lived experience of the target customer it was all equal GPS, like all equal ownership. And that person felt like they weren't being heard, even though they literally matched the target customer demographic and had the exact experience would have used this product in their own life.

And that's not a case of purely diversity. It's just how are you going to work together across having numerous GPS and get to a place where you don't leave with resentment and you're on the same page about how that decision got made. You can communicate it to investors as something that all of you are aligned on.

Sarah Chen-Spellings:

Fascinating.

At the end day, people forget that investing is also brings in a lot of the human experience, right? And we're just not only looking at the numbers, but the reality that many of us are living with day to day.

So I'm curious to hear, between fund one and fund two, understand it was not emerging managers as a thesis, but it was really more established managers.

How has the thinking changed between fund one and fund two? And then maybe we can talk a little bit about why you think emerging managers is the next, key strategy to be driving forward.

Joanna Kuang:

Between our fund one and fund two, a large portion of our fund two, was actually reinvestments in existing fund managers but new vehicles, new future funds of theirs.

So almost allowing us to double down on people that we're seeing make or making progress on, not just DEI, but on financial returns right. But also on commitments to showing up to continue doing this work.

So it's almost like being able to use our fund to as a reinvestment strategy as an incentive structure. Our core thesis around reducing racial and gender bias, potentially driving increased financial performance, did not change.

It was still grounded in that 2019 Stanford SPARQ study that we talked about earlier. But obviously we're bigger. We also wanted to make sure that we had an LPAC seat on all the funds that we invested in in fund two.

And so I think that spoke to us being at a place where we felt like we could have more influence if we were invited into the LPAC, into the room. I sit on all of our kind of outcomes committees or impact advisory committees, which not all of our funds have, but we're seeing as more popular kind of structure to make sure that people are always improving on impact measurement as well.

And so I think for us, we were able to make sure we're getting in the room or the first investor that you call when you also need help. And I think to what you just shared, like you're working with real people, right?

Sometimes it's just emotionally really difficult. You need an investor you can trust. And I think there's crazy power dynamics in this industry where it's always about kind of like, who's that bigger fish that's like above you in the system.

And there's a lot of fear of like, we don't want to report the wrong thing. But then also when you need help, it's like a lot of venture firms are, half their firm, is focused on portfolio ops and portfolio stewardship. So they're there to help you, but then you're scared to ask for help.

For us, we want to be framing ourselves as like, we are here. And in future vehicles, like we want to be able to continue to help you by continuing to invest and maybe be more of an anchor, or have even more influence and get other people who share the same values as us to come into your fund, and really build like a strong base of LPs that are values aligned with one another and with that fund manager.

So for our Catalyst Fund, a big part of the thinking is that we are catalytic capital. We feel like we have a strong brand in terms of showing up front that we're committed to diversity and inclusion.

And so our hope is that if we can be one of the earlier investors in emerging manager fund that can help them attract other capital, but then we can also introduce them to other potential LPs, who might come in or GPs that are further along on a fund five and could actually help them set themselves up for success.

So it's kind of moving a little bit further upstream and helping build out that ecosystem, but in a way that's more successful than we're investing in emerging managers and after that “good luck”.

Sarah Chen-Spellings:

If you can go a little bit deeper in terms of strategy here, portfolio construction as a fund of funds, how has that thinking evolved?

Are you thinking about in ticket sizes? Are you doing seeds type of funds? Where are you seeing the winners and how are you thinking about your portfolio construction as a fund of funds?

Joanna Kuang:

So I will say fund one and fund two, the aim was to be kind of evenly distributed across venture capital, growth, equity, and private equity.

I would say the vast majority leans towards of the actual portfolio construction. Leans towards venture capital. And that's because we can see that you can close a smaller fund and then kind of start building a track record a lot faster.

And there's just a lot more diverse founders that can raise a seed round versus by the time you get to kind of a series E, there's not as much diversity because of bias for companies that have survived from raising their seed all the way to like Series E.

That being said, we have found a few really great growth equity and private equity funds. Some of them are located in bigger shops, and so it's like one fund within a much bigger institution. But it's been really great because we've been able to work with that fund, but also sometimes the entire institution.

And so that's for us really great because our strategy is helping coach you. And if we can coach GPs for funds that we're not even invested in, then we can really drive kind of more system change.

And then for the catalyst fund, it's a much smaller ticket size. I would say the vast majority are also like early-stage strategies. So venture, venture capital funds because they can then close like a $50 million or targeting like $50 to $75 million first fund, which is a really great first fundraise, kind of start having that proof of concept.

So I will say in general, we see a lot more focus on venture and a little growth equity in the space around diversity for who GPs look like and founders. But our goal is to make sure more companies are getting to a place where they could go public, right, and could raise private equity funding.

We have a few later stage funds that we're really excited about partnering with and are really thoughtful about thinking about incentives for executives, as a way that they can use their power as like a buyout fund, for example, to exercise a lot more influence on diversity.

Sarah Chen-Spellings:

Yeah. So by now, the team at Illumen would have crunched through quite a few of funds as you're evaluating. Those that have been through the diligence process with you, you probably learn a few things that you didn't expect and see room for improvement for certain funds as well.

What is your observation on where diverse fund managers perhaps or fund managers more broadly, don't do so well that they need to improve upon? What makes a winner from those that you've observed?

Joanna Kuang:

I think being really thesis driven and being really clear often we see like emerging managers programs just focused on what do the GPS look like and then it's completely disconnected from your thesis.

But instead, why you're going out and selling yourself as a diverse led fund or a fund that's focused on diversity, actually a part of your thesis and what you believe will be scalable and venture backable.

We have 4 impact themes that we primarily focus on. So we focus on sustainability, education, health and financial inclusion. And I think all of those are areas where if you really think about outcome disparities and why they exist, like why health outcomes differ for people of color versus not, or men or women.

You naturally are embedding diversity and inclusion into that thesis. And so I think that's really where we see strong winners and funds that we're also really excited about working with.

Sarah Chen-Spellings:

Because impact is core to Illumen capital, in the work that you do. Do you find that impact washing is still problematic today?

Joanna Kuang:

Definitely. I think that there's a fundamental misunderstanding of what impact truly is.

So we see a lot of proxies for impact when we're seeing impact reporting, a lot of like hours spent on a SaaS product or an app, and that's not the same as those hours spent having led to somebody better understanding math or better increasing their reading level, for example.

And so I think we definitely see a lot of impact washing, finding impact metrics that could look good rather than the reason the company existing being fundamentally tied to trying to make somebody's life better off in a certain way. And obviously then making profits as well from having those users lives also be better off.

Sarah Chen-Spellings:

Yeah. And now, as we're looking into the future here, 2024, what does that look like for the private markets?

I mean, you're heavily weighted in venture capital. Aileen Lee has just published the 10-year review of the unicorn and ZIRP-acorns are going to be no longer in existence.

What's your view on where we're going in 2024, is this going to be another year of a downturn or are we looking up with more exits and better markets?

Joanna Kuang:

Yeah, we have a lot of optimism going into this year. It will be an interesting year because we also just as a fund of funds, are seeing everybody come back out to market.

So people have kind of deployed their capital and most people didn't fundraise last year. And so we're seeing a lot more fundraising efforts this year. And so I think that's where push really comes to shove of seeing kind of where these efforts are also going to be sustained or not is like how the dollars actually go out the door. And that's at all levels. Right?

Like, what did you actually decide during a time of stress last year in terms of how you deployed the last bit of your dollars? That's going to come up in diligence processes. And then for fundraising, which LPs are actually continuing to be committed to this work versus retreating back to how they did things in before 2020.

Sarah Chen-Spellings:

So what's your advice for fund managers that are out in the market right now? Some of them are still licking their wounds from last year, right? Hearing crickets from LPs holding onto their capital.

What's your advice for fund managers to succeed in 2024 and beyond?

Joanna Kuang:

Yeah, I actually met with a fund manager yesterday, just more friendly, and was kind of asking them questions about some of their stats. So in the stats that they had in their standard pitch deck, it was really focused on percent of women in terms of founders and percent of people of color.

And I kind of asked, what about percent women of color? And they kind of shared, oh, you know, actually most of the women we've invested in, like 98 percent of the women we've invested in are women of color.

And so I was like, that would be a really interesting stat to have in your back pocket. You don't have to put it in your pitch deck, but you should make sure you share it for the right audience. And I think it's all about knowing the right audience, right?

Because some people really shy away from that once they see that they really worry it's concessionary returns. And they had just come from meeting from a very big institutional LP. So I completely understood that.

But I was like, from my perspective and other fund to funds with a diversity thesis that I knew they were meeting with, that's a stat that I think would be really impressive and really show like that commitment to the intersectionality.

And so I think my advice is really making sure that you're catering your pitch and having those stats in your back pocket, so you know when to share them and when that can highlight your ultimate commitment to DEI.

Sarah Chen-Spellings:

 Okay. Quick fire round now. Billion dollar questions is where we're at.

First question, Joanna, your guilty pleasure.

Joanna Kuang:

My guilty pleasure is I love Chick-fil-a. And I recognize that they're not values aligned with me.

Sarah Chen-Spellings:

Uh, it's not values aligned with many people, don't worry about that.

What would you tell your younger self?

Joanna Kuang:

I would tell my younger self to have confidence in my worldview.

What I wanted to be doing impact investing wasn't really a thing when I graduated college, and I thought I wanted to do it. And now it's a much bigger thing.

Sarah Chen-Spellings:

An opinion you have that most people don't agree with still.

Joanna Kuang:

Okay, I hope not too many people hear this I don't like dogs like I obviously respect it points. But I just don't love being around them.

Sarah Chen-Spellings:

We're here for the contrarian view. Alright, and your biggest insecurities still.

Joanna Kuang:

I think being in a male dominated industry, and being in a kind of more nontraditional path, I worry sometimes about people not taking me seriously. And I think that's well founded ‘cause I've often been confused for like the executive assistant or something. Or yeah, not been responded to without having a man on the email chain.

Sarah Chen-Spellings:

All right, Joanna Kuang, thank you so much for your time and for sharing so much of yourself including Chick-fil-a.

And I look forward to the billion dollar moves that you will continue to make undoubtedly.

Joanna Kuang:

Thanks so much for having me. This was great.