Lolita Taub is a general partner at The Community Fund, where she invests in community-driven companies. With 15 years working within the Silicon Valley ecosystem, she has made 70+ investments as an angel investor and VC at Backstage Capital and The Community Fund. She is also a co-founder of the Startup-Investor Matching Tool, a scout at Lightspeed Venture Partners, and an LP at Operators Collective. Forbes and Inc. Magazine have featured her as a woman in VC promoting investment in underestimated founders.

We spoke to Taub about what drives her to invest in community-driven startups and in underestimated founders, as well as her go-to resources to know more about the VC industry and breaking into it.

In our conversation, Taub emphasized the role of community in shaping her, having grown up in South Central Los Angeles.

"Without [community], we wouldn’t survive amid gangs and sometimes lack of food. My community made me grow up fast and watch how exceptional people are underestimated, not because of their abilities, but because of their intersectionality (e.g., gender, ethnicity, social class)."

Inside: What made you realize that there is a need for community-driven startups?

LT: The world today. Now is the time to invest in community-driven companies because 1) people are seeking community more than ever, 2) platforms to unite/create communities are abundantly available (e.g., Slack, Facebook Groups), and 3) traditional ways of attracting customers are expensive.

Taub noted that a community-driven company should have a community that sets off its marketing and sales flywheel and informs the company’s product development. She said that it shouldn’t have a high customer acquisition cost. “If it does, it means that the community is a feature rather than a core aspect of the business,” she said.

Inside: What’s your investment thesis? What do you look for while investing in a startup?

LT: At The Community Fund, we invest in U.S. early-stage community-driven companies. I’m particularly interested in investing at the cross-section of community and underestimated founders and underserved markets. So, when I’m assessing a company, I’m looking for: 1) a community-driven competitive moat, 2) a founding team that has unique insight/expertise, and 3) is in a market with a TAM that’s in the billions.

Inside: You mentioned in one of your articles that The Community Fund’s goal is “to recruit a team of investors to write checks to underestimated founders because of the opportunity to make outsized returns given underestimated founders are a blind spot for many VC firms.” How will the industry overcome this chronic undervaluation? Are there already some examples of companies making it big despite being given little support by traditional VCs?

LT: Underestimation of founders will stop with: 1) an increase of investors that come from underestimated backgrounds (and see opportunities where traditional VCs don’t), and 2) an ecosystem that starts to value underestimated founders based on success stories in our community, like Tope Awotona [Founder and CEO of Calendly]. Tope Awotona bootstrapped Calendly because VCs wouldn’t back him at the start. Calendly generated $70M in annual recurring revenue in 2020 and then VCs came knocking on his door. Last month, Calendly raised $350M at a +$3B valuation.

Inside: There is a fair amount of debate around the question as to whether POC investors should set off on their own or try to operate within larger, established VC firms. What made you opt for the former? Do you ever wonder what it would be like if you were a partner at, say, a16z?

LT: Last year, Flybridge Capital became the single LP to The Community Fund, and made me one of the very few Latinx GPs (for reference, only 1% of VC is composed of Latinx). I don’t know why funds aren’t taking the Flybridge route. It makes no sense because the industry keeps saying they care about increasing diversity, investing in differentiated deal flow, and generating outsized returns. Stats show that underestimated talent produces better outcomes, after all. Companies with diverse founders ultimately outperform others by 30% when they go public or are acquired. PE and VC funds led by people from underrepresented ethnic and racial backgrounds have performed as well as their industry peers, with some studies showing they have better-than-average returns. So, no, I don’t wonder what it’d be like if I were to become a partner at a16z. I’m thrilled to have Flybridge as an LP and excited to continue leading The Community Fund with the support of VCs who get it — and are changing the way VC is done!

Inside: You created this startup matching tool that's being used by a lot of investors and startups. What are the important factors for the matching?

LT: The Startup-Investor Matching Tool, for those who haven’t heard of it, is a tool that matches underestimated founders to investors based on VC thesis alignment (e.g., stage, sectors, check-size, geography). My husband, Josh Taub, wrote the program to match investors with startups and send out thesis-aligned deal flow to investors via email. Investors can then request intros. So far, we’ve seen 20 checks written totaling over $2.8M as a result of introductions made through the tool.

Taub's top three resources to know more about Venture Capital:

She also recommended signing-up for The Community Fund’s newsletter, as they will be opening up applications to bring in investment partners later this year.

Taub noted that if someone from outside a VC community wants to become an investor, they can start by reviewing all the resources in this thread for aspiring VCs and this thread for aspiring angels.

Here are a couple of resources she mentioned in another blog post to find job opportunities in VC: John Gannon, NextGen Partners.