Since this is our first newsletter, i want to share with you how Ad-In Ventures came about.
First a bit about myself. I was born in India in 1976, one of the 15m or so born that year joining the 638m already living in India. Back then, the only way for an ordinary Indian to get ahead without breaking the law was through education. So it was for me and I was lucky to have the opportunity and was able to make good use of it. I spent the first 15 odd years of my professional career running the proverbial rat race across the world and moving into the so called “middle class”.
When i look back, i am amazed at the randomness of the whole thing. What if i was born in a family that could not afford to send me to school. Or if i did not have someone in my family to guarantee my business school loan. These questions started to come to me during my tenure in Singapore around 2015, which had brought me back closer to India.
It was also a great time to be in Asia, when the fintech eco-system was starting to develop. The potential of technology to drive innovation amazed me. So i decided to dabble a bit in the financial inclusion space and started to mentor and invest in start-ups. At the same time, i was sort of getting disillusioned by the financial system, which was either helping the rich get richer or serve the large corporates. Soon, the side hustle became a passion and i left banking to transition to fintech. In mid 2018, i returned to New York with the aim to raise a venture fund to invest in fintech startups in Asia. As i spent more time in the US, i was taken aback by the inequalities there and just how wide the income and wealth gap had become.
As i dug more, i realized that while there were a number of systemic and deep rooted issues, there was another dynamic at play which was the increasingly unequal access to financial services for many Americans despite the US having the largest and most sophisticated financial system. In essence, the financial system had stopped working for ordinary Americans and not just that, it was actually pulling many of the vulnerable into a downward spiral of debt and defaults. The lessons of the financial crisis had been forgotten already.
As i hustled about the venture eco-system in New York, i met a number of founders, many of whom were minorities and women who were finding it very challenging to get funding. Some of them had faced the hardships and challenges of inequality while they were growing up or when applying for a college or home loan and wanted to address those problems. They had as one can call it “lived experiences”.
This again puzzled me as the venture space was awash with liquidity and almost every VC investor was complaining about the lack of investment ideas. Then again, i thought that i cannot generalize since fund raising is hard in itself and each founder will have a different story. But again, the top down data was hard to ignore in that only 1 in 4 founders were diverse and women were only about 8%. This is despite ample research suggesting that diverse teams perform better.
I am not a development economist or a psychologist but i wondered that may be there is a market failure here and hence an opportunity. What if the way to solve the financial access and diversity problem is to deliberately harness more diversity in fintech and invest exclusively in diverse founders with “lived experiences”. These founders bring unique insights and have deep roots in the communities they aim to serve and are therefore likely to be more successful. They are also very talented with business and technical experience to rival the best.
This seeded the idea of Ad-In Ventures fund which stands for “Advancing with Inclusion”. In the next newsletter, i will write more about why i believe diversity in fintech is not only rewarding socially but also financially and that majority of the growth in financial services over the next decade will come from the bottom 90% and not the top 10%. I will also write about how we aim to create a community where diverse founders thrive thus creating a self selection bias in our favor.