MP recently caught up with Adrian and Senofer Mendoza, entrepreneurs-turned-VCs focused on providing entrepreneurs with hands-on guidance in addition to the capital necessary to grow their businesses through Mendoza Ventures.
Mendoza Ventures is a woman and LatinX owned early-stage venture fund focusing on investments in FinTech, AI, and cybersecurity. The firm prides itself on its hands-on investment approach, the diversity of its portfolio – close to 75% of its portfolio companies are led by immigrants, people of color and/or women – and its core values of “be a family, be profitable, and be inclusive.”
Adrian Mendoza is an internationally recognized thought leader in the technology space, as a former startup entrepreneur with two venture backed companies. He led the design and build of multiple products for the financial service industry including mobile brokerage trading, chatbot, and robo advisor for TIAA and products desktop for TRowe Price, State Street, and Fidelity and also served as the Entrepreneur in residence at John Hancock’s innovation lab. He started Mendoza Ventures with the mission of expanding access to generational wealth through startups.
Senofer Mendoza is the enterprise sales and marketing expert for Mendoza Ventures, and an advocate for diversity and inclusion across both her professional and her personal life. As a former enterprise sales executive selling into large brands including Marriott, Fairmont and Starwood, she was consistently responsible for landing large brand interventions on budget and on time. She started Mendoza Ventures with the mission of increasing access to the workplace and wealth through startups and the funding landscape.
MP: There are many venture funds out there. What makes Mendoza Ventures unique?
MV: What makes us unique is our domain expertise, active hands-on approach to portfolio company management, and our purposefully small, targeted portfolio. Traditionally, funds our size invest in up to 40 deals. We limit our portfolio to 12-15 companies. We do this because we believe in being fully engaged investors. With our focused and active investor approach, we become significant resources to our portfolio companies, provide them access to our direct domain and industry knowledge, and ultimately empower their success.
Why is it important to find a VC who is hands-on and not someone who will just provide needed capital?
When we were technology entrepreneurs, we benefited tremendously from the involvement of a hands-on investor; that is one of the reasons we wanted to become VCs ourselves. In our opinion, a hands-on investor can provide invaluable guidance and mentorship, industry contacts, and sometimes spot potential issue areas entrepreneurs might be unaware of. In particular, an active investor can play a pivotal role in advising seed stage companies. Leading a successful company is a complicated undertaking, and raising capital is just one factor in that success.
You were founders before starting Mendoza Ventures. What was your previous company and why did you start it?
We left our jobs in an edtech startup and started our first company in 2009. This was when the stock market was losing 300 points a day. One of my co-founders liked to say that “in the absence of any opportunity – we made our own.” Our first company was a tech company selling mobile infrastructure to retailers. Senofer was our COO as it started in our living room, and we were the company’s first investor. Later in 2014, we started a second company focused on mobile ad tech. We raised VC money for both companies and got to know the east coast investors, technology landscape, and Boston tech ecosystem. This was the starting point for us to build Mendoza Ventures in 2016.
What are your greatest fears as entrepreneurs, and how do you manage them?
Starting a VC firm is very much like having a startup. You have to be part entrepreneur, part fund manager, and part salesperson. Our biggest fear, as with most early-stage entrepreneurs, is not making things that are perfect. One of the things we learned early on as startup founders is that nothing will ever be perfect; and the fear of perfection can limit you from getting out there and telling everyone about what you’re working on. As VCs we have to push both ourselves and the entrepreneurs we invest in to get out there, talk about their wins and losses, as well as get feedback from customers. Only then can you conquer that fear and grow.
Do you believe there’s a formula to becoming a successful entrepreneur? If so, what is it?
Being a successful entrepreneur is a mix of hard work, good timing, and luck. While there isn’t a perfect formula you have to be aware of market timing, finding a solution to a problem that exists, and finding someone to pay you for that solution. You also have to know when it’s time to start that company or great idea, when it’s time to leave your day job to take that risk, and also when it’s time for you to call it quits. This is why with Mendoza Ventures we believe that money is important, but our hands-on approach to advice and mentoring these entrepreneurs is just as important.
What questions should would-be entrepreneurs ask themselves before starting a new venture and why?
First question. Am I comfortable with risk? Starting a company will require risking capital, life cycle and reputation; but with great risk can come great reward. The entrepreneur’s journey can be a long windy road with starts and stops and you have to make sure you are ready for that risk in that journey.
Second question. What are my blind sides? No one is perfect and has all the answers. The best thing to do as an entrepreneur is to figure out what you do best and what you don’t do best. By knowing what your blind spots are early you can then build a team of advisors, mentors and co-founders that can help fill in the gaps of experience that you may be missing.
What advice do you have for entrepreneurs who think they need outside funding?
We always give the advice to entrepreneurs that they need to go as far as they can before they get outside funding. The more customers, market share, and revenue you can get for your company, the better terms you can get when raising that first dollar from VC’s or angel investors.
The other piece of advice is to surround themselves with a great group of advisors and investors that provide the most amount of value and much needed mentoring and advice. Make sure that those people are there to fill in the gaps and knowledge that you need along your journey.
What advice would you give entrepreneurs preparing to pitch a potential investor?
In VC we have a saying “Ask for money, you get advice; Ask for advice, you get money.” Having been entrepreneurs who raised VC money, and who are now sitting on the other side of the table, that saying is true. The best advice is to be strategic about your fundraise. The more homework you do on who the right investor is and what they are investing in will pay off. Most entrepreneurs think that it’s a numbers game and they have to pitch everyone. In reality it’s about finding the right partner who can give advice as well as capital and that is a right fit for you and your company.
Is there anything else you’d like to share?
We are very proud of the organic diversity of our portfolio. As a woman and LatinX owned firm, entrepreneurs have approached us because they are looking for something beyond the traditional venture capital.