#22 Mac Conwell
Founder & Managing Partner at RareBreed (new pre seed VC, LPs like Insight), Scout at Lightspeed (VC w/ $10.5B AUM, 18 $1B+ exits). Ex 2 times founder (1 exit), software engineer & US Dept of Defense
McKeever “Mac” Conwell II is a former software engineer and U.S Department of Defense contractor turned founder (2 companies, 1 exit) and more recently emerging fund manager.
Mac is currently the Founder and Managing Partner of RareBreed Ventures, a pre-seed fund investing in exceptional founders outside of large tech ecosystems committed to diversity and inclusion, accounting for $10M AUM, 17+ investments, 72% underrepresented founders in their portfolio, and tier 1 LPs such as Insight Partners, US based top global venture capital firm with $30B+ AUM, 50+ IPOs and portfolio companies like Shopify (NYSE IPO, $185.4B) and Twitter (NYSE IPO, $48.8B market cap).
He is also member of Lightspeed Scout Program, program based on empowering top entrepreneurs, investors and operators with education, mentoring and capital to build a state of the art network of early stage investments while increasing support to founders, created by Lightspeed Venture Partners, US based global tier 1 venture capital firm with $10.5B AUM, 400 investments, 18 $1B+ exits and portfolio companies such as Mulesfot (acquired by Salesforce for $6.5B), and Snap (NYSE IPO, $118.2B market cap).
Mac originally worked as Software Engineer contractor of the U.S Department of Defense (any individual, firm, corporation, partnership, association, or other legal non-Federal entity that enters into a contract directly with the Department of Defense to furnish services, supplies, or construction) through entities such as Northrop Grumman (public listed American multinational aerospace and defense tech company with 90k employees, annual revenue in excess of $30B and $56B market cap), before leaving to co-found two tech startups, selling one of them to a Fortune 500 corporation.
👤 Story: software engineer, US Dept of Defense, founder, investor
🥇 Win: getting the 1st job as investor
🚫 Fail and lesson: failing 2nd company but losing is okay, get up and try
🚀 Ideal founder: unique market view + great customer acquisition
💸 Ideal investor: biggest check, connections, support in tough times
📈 Markets: crypto, new financial wave, healthcare, make up and skin care
What is your story?
I am a software engineer from Baltimore (Maryland).
During my sophomore year studying Computer Science in college, I got an internship with the U.S Department of Defense, I was given great clearance and I could work in cool technical stuff, so I ended up dropping out of school and went on to be a government contractor.
I eventually left that space and in 2010 I founded with a couple of friends a wish list website to crowdfund money for gifts. We were pure engineers and didn’t knew anything about building a business from scratch but we learned by doing. After some time I became the CEO, started going to events and learning about networking and all that things which do not tend to be the typical developer type of activity but are really important for a founder too.
We decided to get into an accelerator first in Baltimore and then in San Francisco, at the who is who of Silicon Valley. There we realised that what we were building was in a very crowded space so we pivoted and build an API to automate the process of buying and distributing items (app, song, movie, etc) in the iTune store easily via a link that could be shared through whatsapp, twitter, etc. We realized there was real value there to a Fortune 500 company and we sold the IP to them.
Right after this, I started a new company, raised a small angel round and got into another accelerator in Philadelphia. During the time of my first company I lived in a small bedroom apartment with 8 people and 1 bedroom, flat broke. Fast forward to the second company, me and my 2 cofounders ended up living in a 1 bedroom apartment on top of a Chinese food store. Quite an advancement!
We ultimately failed because one day our CTO simply disappeared, we came back to the apartment and he was gone. We were never able to get the product going since then.
Failing with a company sucks and I needed to recover, so I got home and started in a marketing job for 1 year. Then the firm I was working with had a client with whom I didn’t agree ethically so I quitted. I did so on a Friday and the next Monday I received an email saying that the investment arm of the state of Maryland was hiring. 4 months later they hired me and put me in the investment team. I didn’t have a college degree nor a finance background, but I was confident enough to go after it. That is how I broke into venture.
Now, 4 years later, I left the job and I am now starting my own VC fund, RareBreed Ventures.
What is the biggest win in your life?
I’d probably highlight getting the job with the state of Maryland. I didn’t think I was qualified to get a job at a venture fund and I probably wasn’t. In fact they literally told me I wasn’t qualified but also created a junior position for me.
With 24 I was running technical teams, after that with a marketing company leading one department and with 30 I am in a job with a junior level making less money than ever …
But I said yes, and it was a great choice.
What is biggest failure and lesson?
Having my second company fail was it. Failing sucks and it sucked a lot.
When I came back home I was expecting the worst of the receptions. I burnt through all my money, I was depressed, I didn’t know what to do next and I thought everybody was going to hate me because when everything is going good everyone is saying how great you are, but if it goes bad who is really there to support? I was really scared of the bad answer.
But I learned that the people who loves you are not determined by success. The pressure was given by myself and once I was able to release that pressure, the people that matters still loved me and were still there. Losing is okay, it happens, get back and try again. That was my lesson.
What is your ideal founder profile?
A founder whose got a really unique perspective in markets that people aren’t paying enough attention to, looking into opportunities that have been truly overlooked. Also, someone who is very keen about acquiring customers. A unique interest in markets and customer acquisition are the 2 things I find very important.
About the opportunity, If you are going to create a billion dollar company there needs to be a unique problem that many people have.
And on the customer side, it is important to keep in mind that the best product, the best innovation, is not necessarily what wins. It is about combining it with top customer acquisition. I’ve seen many great products that are better than competition fail because they did not realize how to get customers.
Show me a founder who figures out how to solve a unique problem and who can speed up customer growth with money - that is what I’d find really interesting!
What is your ideal investor profile?
The one that is going to give me the biggest check.
Outside of the money, and talking as a VC, I want an LP that is going to be what I am to the founder. Investors who introduce me to other investors, who are going to help and with whom I can talk when I’m struggling and things get harder.
What markets are you most interested in?
I am really interested in crypto. Everybody was talking about but it is now when we are starting to see some real concrete applications. Also the idea of alternative assets and democratizing access, it is fascinating - everything is an asset now. Really interesting stuff.
Also healthcare. I’m always interested on it and I fundamentally think there is a real white space in physical tools. We have the same tools than a bunch of years ago and I’d like to see how that could change the way we live our lives.
Make up and skin care routine is interesting too.
But as mentioned at the beginning, the new financial wave and new alternative assets is one of the most interesting things. And it makes me think about how does the future of VC looks like. It is like something as simple as a rolling fund, they just packaged it in a way that made it easier to manage and already made a significant impact to the game, so what can come next?
Last, I am increasingly into deep tech, specially robotic mass manufacturing of space tech is captivating and there are going to be some real big winners that will change the course of human history.
3 startups you like and why?
ScholarMe. Helps kids pay for college and it is one of my first investments. I met the founder when she was 16 years old and still in high school, now she is 21 and one of the people I respect the most. She is doing an incredible job building the company, really good at customer acquisition and growing rapidly as a CEO. Also quite interesting hacks such as making everyone in the company have to speak to 5 customers per week (including the engineers!). Always on the forefront for what customers are looking for. Gen Z founders are amazing.
Juno Medical. Next gen medical centers. Medical attention around family so you get to do all your family health issues at one. Amazing founders based on Harlem (New York), including a former Physician turned McKinsey consultant specialised in medical payments. It is a seed stage company but it is run almost like a public company, clear vision of where this is going, building product of the highest quality and creating a top community. First one of this type I see in Harlem, New York.
Rebundle. Based in St Louis, they do plant base biodegradable synthetic hair. It is exciting to see women creating a product for an industry most people do not even think about. The synthetic hair market is a $10B one but if you are not a woman that wears it, it is tough to find out. Good to see such a concrete effect of diversity while also tackling a relevant environmental problem in a unique way for a market that truly speaks to the team.
3 investors you like and why?
Elizabeth Yin from Hustle Fund. I don’t know if she knows but she was one of the 1st people that without knowing her personally committed to be an LP in my fund. Since then we built a friendship I truly appreciate. She is ahead of me in her career but I can always count on her to talk about a company. Amazing person.
Jonathan Kroll, my Venture Partner. When I started RareBreed I did it by myself but it grew organically. Today I am thankful to have a team and Johnathan was my first teammate. He is one of the many random people I met on twitter, talked one week, the next, the other … Then he brought me a company, we worked in a deal together, after that another deal, and eventually we realized we were working as a partnership and he ended up becoming one of my closest friends. We talk a lot and we truly appreciate and respect each other. That is the culture we want to build at RareBreed.
3 books you feel everyone should read and why?
“The Alchemist” by Paolo Coelho. It is a book that teaches you how to stay in the course of your goals and dreams, as well as how all things can work together to get you where you want to be.
“The New Jim Crow: Mass Incarceration in the Age of Colorblindness” by Michelle Alexandre. About mass incarceration in the US. It helps you understand the laws and prejudice set up in a way where black people can be disproportionally put in jail to feed an unfair system.
“Mindset: The New Psychology of Success” by Carol S. Dweck. Book around creating and nurturing a growth mindset where you are always pushing to grow. It is interesting to see how you can change the way you think and consequently the way you approach things, whatever it is problems, markets, etc.
Founding a new VC is an increasingly hot topic yet still opaque. Could you share with us your insider view on how the process works for a new diverse emerging fund manager (e.g. building a brand, finding a compelling competitive advantage, LP fundraising process, etc)?
I’ll be honest and say: I am still figuring out.
Somebody said to me that is never the right time to raise a fund and it is never the wrong time to raise a fund neither.
It is always hard but when you feel you have to do it you should do it.
About the process, yes, it is opaque. Structuring a fund, figuring out the investment thesis you can find out, etc are some of the key steps. But the thing is going out, fundraising from LPs door to door. That is the real struggle for me. I had a network but not that type of network and I didn’t know stuff like the fact that GPS of other VCs could be your LPs like a family office can.
However in the middle of that struggle, 2 things happened that allowed me to raise a fund: the pandemic and George Floyd.
The pandemic because finding 12-24 months of space to travel everywhere was difficult for me, being able to sustain a living and travel so much was not an easy option. But thanks to the pandemic, everything was on zoom so I could have meetings with everybody everywhere and it was easier.
Then George Floyd happened. In the past I already experienced this type of injustice and took some about it. When this new thing came, I started being more outspoken about it, putting out some medium posts and tweeting more I didn’t had the network but I started to get more recognition and VCs started following me. I kept on it and made a policy, if you follow me on twitter, I will send you a dm and ask for a meeting. In June I had 100+ meetings and soft circled my first $2M in commitments by doing that, which gave me confidence. It was not super effective, not the smartest whatsoever, but worked for me. Spray and pray. Everybody has to find their own style but in this case, I didn’t had a network and that allowed me to do it.
Then I figured out a way to structure the fund. I did not have enough money, so I had to get my management fees done to go live but how do I get access to capital and start deploying without raising at least 1/3 of the fund? That’s when Angel List comes out with the rolling funds. I liked it, it is a cool tool and makes it easier to raise a fund as a first time / emerging fund manager. Angel List helps you with everything required to set up a fund easily and LPs can quickly go and submit to invest without even meeting you, subscribing to a specific period of time and then as a manager you can get access to capital as soon as it is committed.
But for a moment we took a step back and found some concerns, being the major one the lack of excitement for the structure of LP returns. In a rolling fund LPs only get returns from companies invested in the specific time period chosen so if an LP subscribes for 8 quarters and the fund invest in a unicorn in quarter 9, they get nothing. from that. The idea though is that it could create FOMO and lead LPs to keep investing but that did not feel right for us. Our earliest LPs are personal mentors and friends and we wanted a better relationship. So we did a traditional fund but with some new hacks.
We rolled and closed every 3 weeks, doing badges of LPs and accessing capital as I go. As an entrepreneur you have to find solutions to problems. Sometimes people says “this is how it works” and you have to ask with conviction “why?” and some times you will have to do it different.
I want other emerging fund managers to know they can come with their own solutions. “This is what is is?” No, bullshit, you can build your own fund the way that you want and you can be really creative around it.
And if you are a diverse fund manager with a limited network, how can you grow the network?
You need to keep in mind that VC is a very network heavy industry, so make sure you focus on building relationships with other investors. For example GPs will bring you LPs but they also can help you with the process. Find people you can talk to, find groups of other emerging fund managers. I have them and we share everything, it is not common but it should.
Finally, never forget that whatever you do to distress should be taken care of. Never stop that. This shit is hard and stressful, take care of yourself, don’t stop doing it and don’t forget about it.
Big thanks Mac for sharing your views with us !
Big thanks to you, reader, for your time and interest !
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