OneFund recently sat down with Rachel Aboodi and Ben Poolvaraluck, two VCs and current Columbia MBA students, to chat through their careers, views on the market, and what excites them most about early-stage investing.
Rachel is an MBA student entering her second year at Columbia Business School, currently working as an Investment Associate at Outsiders Fund. Prior to Outsiders Fund, Rachel spent time investing at Overton VC and Antler. She started her career in healthcare consulting and brings that knowledge base to the investing world when evaluating health tech startups. Outside of school and investing, Rachel loves to run (Peloton groupie!), travel & watch professional tennis.
Ben, also an MBA student entering his second year at Columbia Business School, is currently an investor at The Fintech Fund. Ben is also the CFO for Microlumbia Impact Fund, a non-profit organization bringing financial inclusion to underserved communities around the world by providing debt investments to enterprises. Prior to business school, Ben spent time investing at Bualuang Ventures. Outside of school and investing, Ben enjoys exploring new restaurants and art exhibitions in New York City.
Check out our discussion below.
OneFund: Can you give us a quick overview of your fund and what you’ve been working on this summer?
Rachel: Outsiders Fund focuses on investing in technology that is disrupting antiquated industries at the seed/series A stage. We’re bullish on startups/founders who are building in spaces that haven’t seen much innovation recently or ones that solve well-known problems in a novel way. Since we’re a small investment team, I’ve had the opportunity to wear many VC hats including sourcing, due diligence, portfolio support, and thesis building. I’ve spent a lot of time this summer digging into restaurant tech, which is always interesting given its notoriously challenging landscape driven by miniscule margins, labor shortages and complicated logistics.
Ben: The FinTech Fund is a pre-seed to seed venture fund focused on emerging fintech and defi products. Portfolio companies include Goldfinch, Ponto, Stitch, Walnut, and Simpl. The FinTech Fund was founded by Nik Milanović and really began through his community building efforts. Nik started the This Week in Fintech newsletter which has 27,000 subscribers globally and hosts fintech community events around the world to bring investors and operators in the space together. The FinTech Fund was born out of a natural progression of this community building as Nik wanted to take his support for the fintech community to the next level.
This summer I have been managing a pipeline of pre-seed and seed stage fintech companies across the full investment lifecycle: sourcing, due diligence, deal overview, and post-investment. Additionally, our syndicate includes over 300 investors and part of my role is managing that.
OneFund: How has your MBA experience contributed to your journey in VC?
Rachel: It has tremendously influenced my VC journey. First, it’s given me the opportunity to explore a variety of roles in a short-term or part-time capacity. In the past year, I’ve worked at 3 funds (all focused on different stages, industry areas, and management styles) and a proptech startup. I feel fortunate to have had these experiences and I wouldn’t have had the chance to explore this way in a traditional full-time role.
Second, the Columbia Business School and larger MBA community bolstered my network. The VC ecosystem is very relationship-driven and having so many mentors to advise me on how to successfully break into the space was invaluable.
Lastly, the professors and courses definitely inform my investing approach. Whether it’s an industry-specific class, hearing from a guest speaker (always an expert in his/her field) or a more general investing course, I’ll be leaning on this foundation for years to come.
Ben: Columbia’s strong core curriculum allowed me to evaluate companies holistically whether that’s from a strategy, financial, or execution standpoint. I also had the opportunity to take a VC class with Angela Lee (Founder of 37 Angels) which gave me exposure to early stage investing in the US and how it can be different than in Asia, where my previous experience was. Not to mention the passionate and supportive classmates that push and support each other in our careers.
OneFund: Which sectors most excite you? Has the current economic situation influenced your thinking here?
Rachel: Given my healthcare background, I’m always looking for innovative health tech startups. On a personal level, I enjoy learning about new consumer health & wellness platforms, although it’s becoming increasingly challenging for them to differentiate themselves given the abundance of options out there today. Over the past couple of years health tech solutions for hospitals and payers are also experiencing a similar obstacle. However, I’m bullish on companies that demonstrate ROI early on (since a major consideration for hospitals/payers is exorbitant costs), make physicians’ lives easier, not harder, and integrate seamlessly with current workflows.
Similarly, the real estate world can significantly benefit from more efficient solutions. We’re seeing lots of movement here both on the property management side and the development side so I’m excited to see what the future holds here.
Ben: Supply chain finance is a very exciting space considering the lingering supply chain issues, economic downturn, and inflation we’re experiencing right now. At the end of 2021, total outstanding receivables was valued at $3.1 trillion in the U.S. alone, and innovative supply chain finance options unlock that capital for the supplier. At the same time, it will also be interesting to see when the Financial Accounting Standards Board (FASB) sets new rules allowing greater transparency for investors on the “hidden debts” some companies may be holding via supply chain financing.
OneFund: I’m sure you get a massive amount of inbounds. How do you screen them and has this also been impacted by the current economy?
Rachel: This varies from fund to fund. Sometimes there are easy filters like geography (at Outsiders, we only invest in US/Canada businesses) or industry (at Outsiders, we don’t invest in crypto, blockchain or meta verse startups). Oftentimes, stage is a good filter. If I receive an inbound from a founder that’s too early or beyond our check size, I can determine pretty quickly that it’s not a fit.
Then there are more challenging aspects because you may see a lot of great decks and have to cut through the noise. I look for indicators that the team has found product market fit (or close to it), is securing key partnerships, and perhaps demonstrating healthy early growth. I often dig into competitive landscape before taking an intro call. Does their competitive landscape map match my research or were players left out? This shows whether the founder has a solid grasp on the market.
At Outsiders, screening hasn’t been impacted by the current economy and we haven’t slowed down on deals. However, this varies from firm to firm, especially depending on where each firm is in its fundraising cycle. Those nearing the end of their current fund cycles, who don’t have as much capital left to deploy may lean conservative and look for recession-proof businesses.
Ben: Our process has not been impacted by the current economy. We have a standard for our investments, and we only invest in companies that meet those standards. We take the time to go through each inbound and respond to every founder; and if we take a call, I always do my research beforehand. We look for companies that have strong moats in spaces that do not have a lot of players. Like Rachel, secured partnerships and traction are always positive indicators.
OneFund: What emerging technologies do you believe will have the biggest impacts when it comes to disrupting traditional industries?
Rachel: Ones that integrate with existing solutions and seamlessly eliminate manual processes. We’re not at the early stages of technological innovation anymore, there’s an abundance of tools (some that are more high-quality than others but an abundance nonetheless). Users want solutions that work with the existing platforms they love and use. They’re not looking for distinct systems that don’t talk to each other (think: the anxiety you get when you have 15-20 tabs open at once). In addition, humans are creatures of habit and are fundamentally lazy. We don’t want to be constantly learning and adapting to new systems so in order to truly move the needle, innovators need to demonstrate how their solutions are THAT much better than existing processes. Ask: are you saving consumers a significant amount of time? Money? And how do you convey that early-on?
Ben: Even though you might be bored of the word Blockchain already, I’m bullish on it having a big impact disrupting traditional industries. In financial services, for example, blockchain can help give processes enhanced security and transparency simultaneously. Additionally, blockchain can help save significant infrastructure costs through decentralization, up to 30% in some cases and potentially worth up to $12B per year. Not to mention faster payment and settlement... the list of benefits goes on and on. For example, at The FinTech Fund we invested in Paysail, a company offering instant invoicing and payment services through the blockchain.
OneFund: What is the most impactful career advice you have received?
Rachel: “Always be your own advocate, no one else is going to do it for you.”
Ben: “Act like the person you want to become.”
OneFund: What comes next for you?
Rachel: I graduate from business school in May 2023, which doesn’t seem far away but looking back on the past 12 months, I know a lot can happen between now and then. I’ll continue to explore exactly where in the early stage investing landscape I want to land & think through the type of funds where I can best leverage my strengths, challenge my weaknesses, and constantly learn/develop.
Ben: I’ll be spending some time in the bay area over the next few months. Would love to connect with investors, builders, and operators out there so reach out!