Base10 Partners closes fund three with $460M to invest globally: ‘The cat is out of the bag’

Base10, a venture firm founded only four years ago, just closed its third fund with $460 million in capital commitments. Because co-founder Ade Ajao — originally from Spain — is half Nigerian, the new fund makes Base10 — which now has $1.3 billion in assets under management — the world’s largest Black-led venture capital fund, it says.

While that’s notable, far more interesting to us is how Ajao and firm co-founder TJ Nahigian are using that distinction to their advantage without making diversity an express part of their own investing mandate. Indeed, the firm says it is — and has always been — solely concerned with backing startups that help automate “real economy” sectors, like food, retail, logistics and fintech. More, it says by simply focusing on good companies and not approaching teams with a kind of “ideal” founder profile in mind, it naturally finds its way into strong startups with very diverse teams.

Maybe so. Something about its approach appears to be working. Some of the bets Base10 has made include the Brazilian fintech company Nubank, which went public late last year. (Ajao wrote it an early personal check but says Base10 was formed too late to invest in the outfit until it was already a growth-stage business.) Base10 is also an investor in such buzzy startups as Notion (now valued at $10 billion), Figma (valued at $10 billion), FTX (valued at $32 billion) and Handshake (valued at $3.5 billion) to name just a handful of its 79 portfolio companies to date.

We talked yesterday with Ajao, who helped co-found the Madrid-based rideshare company Cabify before jumping into VC via Workday Ventures. We wanted to better understand how he and Nahigian — also an investor and former entrepreneur — built what they have in such a short period, and how market turmoil right now is impacting their outlook.

TC: You’ve long emphasized that while you’re minority-led, you’re not minority focused. This remains true?

AA: That remains true. One thing that is quite important for us is showing that if you just try to invest in the best businesses out there, and you try to do it with an open mind — meaning you try to remove biases about backgrounds, demographics and geography — you will end up with better financial performance and a portfolio that will likely be more diverse. Other minority-led funds with the same approach are seeing the same. To me, that says more about the industry’s blind spots than anything else.

How diverse are the founders in your portfolio, and when you use ‘diverse,’ what are you describing? Geography? Gender?

We mean demographics and geography, and that is gender, ethnicity and where you’re from. At a more high level, more than half of the portfolio has a founder or co-founder that would be considered “underrepresented” in venture. The majority of the portfolio is outside of Silicon Valley or San Francisco.

How interrelated do you think these two pieces are? You’re casting a wide net geographically. Is that why you think your founder composition is more diverse or is there more intention involved?

We are investing in Africa, we’re investing in Latin America, we are investing in the Midwest. But the single geography with the most investments is the Bay Area, where we all live, and even within the Bay Area, we have a higher percentage of companies that are founded by people with non-traditional backgrounds. I don’t know why — I don’t have all the data — but one thing we began noticing more as we had to substitute in-person meetings [with Zoom calls] was that when we had a founder pitch the entire group, they often said, “Oh, wow, you guys look different.” I think it has an impact.

Regarding Latin America, SoftBank has done so much to support the region, including, in some cases, marking up its own investments in companies there. Is there any concern about money drying up a bit as SoftBank slows its roll, or have enough other investors descended that it shouldn’t make a difference?

I started Cabify in Latin America in 2011. And then my next three investments were [the Brazilian] e-hailing app 99Taxis, [the Colombia-based on-demand delivery company] Rappi and Nubank, and I passed those deals to several VCs in Silicon Valley who would not touch them. Back then, partnerships did not want to invest in businesses outside the Bay Area — it was seen as a disadvantage. It was, ‘We’ll write a term sheet if you agree to move to the Bay Area.’ Now, in the last 18 months, I’ve gotten emails and calls from a number of those partnerships that are like, ‘Hey, we’re going to Mexico,’ ‘We’re going to Colombia — who should we meet there?’

I never thought the story was only about SoftBank. I think what [former SoftBank exec] Marcelo [Claure] and his team did was quite commendable. They really put a spotlight in the ecosystem and on what other people were missing. But I do think enough people are seeing the light. [In the meantime] what I like is that you actually don’t see a lot of general partners at venture capital firms in the Valley who have had experience in Latin America, and the reason I like that is because it gives us an advantage. [Laughs.]

Doug Leone of Sequoia suggested recently that startups should be prepared that some of the money that has been sloshing around is going to dry up as market turmoil knocks the confidence of investors. In the meantime, we’re already starting to see layoffs, down rounds, implosions. How are you thinking about this moment in time?

If you look at the amount of money raised by venture capital and recorded in the last eight quarters — I think it hit a record amount every quarter — that money has to go somewhere. The other thing I will say is that for the last two years, basically every LP has seen record amounts of cash distributions from venture capital funds.

I’m no macro economist. I don’t know if we’re about to enter into a recession. I just think back 10 or 11 years ago when I was fundraising [for Cabify] on Sand Hill Road, and it is day and night [compared with today]. I mean, like 10 years ago, if you were doing a company in Spain or doing a company in Colombia, like, good luck. And Nigeria? I mean, that was crazy talk. Now, I think that cat is out of the bag.