Two years after they launched the Aspire Fund, Cisco and Cisco Investments hosted the inaugural Magnetic Aspire Summit to mark the occasion.
The Aspire Fund is an initial $50 million fund focused on financing and scaling diverse-led startups and VC funds. Since its launch, the fund has driven some amazing innovation from the visionary leaders who have participated in it.
Magnetic Aspire showcased the incredible innovation the fund has propelled through the visionary leaders who have participated in it. One of those leaders is Lo Toney, founding managing partner at Plexo Capital, in which Cisco Investments originally invested in 2018. During a fireside chat with Kay Min, Senior Director of Corporate Development and Cisco Investments, Toney shared his journey in both funding and empowering BIPOC technology founders.
Here are some key takeaways from the conversation with Lo Toney.
When Lo Toney went to graduate school at Berkeley, his goal was to get into investment banking in the tech epicenter that is Silicon Valley.
To his surprise, he found he was more interested in the front end of the process—forming companies and VC startups—than in the back end—investment bankers taking companies public or getting them acquired by larger companies.
And so began Toney’s journey into the VC investment fund universe—a journey in which his innovations would open doors to women and people of color that have been historically underrepresented in the field.
An untapped opportunity
Fast forward nearly 20 years, and Toney found himself on the investing team at GV (formerly Google Ventures)—the Corporate Venture Capital arm of Google’s parent company, Alphabet. During Lo's time at Comcast Ventures (before joining GV), he also led their diversity fund.
In that role he learned of a virtually untapped opportunity: investing as a limited partner (LP) in early-stage venture capital funds led by Black general partners.
A lightbulb went off: What if he built a firm based on this model? Toney went on to launch Plexo Capital, which invests in emerging seed-stage VCs led by diverse teams. Cisco Investments is among the firm’s investors.
As the firm’s founding GP, Toney faced a steep learning curve. At GV, there had been a steady stream of capital from Alphabet, allowing the investing team to focus on finding the best entrepreneurs to support.
But now Toney had to learn to raise capital, build a go-to-market strategy, manage the fund, and more.
“There's all these back-office things,” he says. “And it made me realize, ‘Wow, you know, it’s one thing to be a great investor, but when one goes to hang their own shingle, they have to learn how to be a great fund manager.’”
Open source learning
Toney’s contributions toward empowering BIPOC founders didn’t end with Plexo Capital. As he learned the ins and outs of starting his own fund, he began putting links to useful resources in emails and sending them to GPs he met with.
It was clear from the feedback he received that there was a hunger for this kind of information. Deciding to formalize the learning process, he went on to launch an open source education platform named GPx.
Inspired by the tech startup accelerator Y Combinator, GPx is designed to help emerging fund managers 1) how to form a fund, 2) how to raise a fund, and 3) how to manage a fund. The content is free to anyone who signs up for it.
“That was really important for me, because I feel like the ability to have access to that information is yet another barrier for women and people of color,” Toney said.
Advice in challenging times
As to the current macroeconomic challenges and how they might impact diverse founders and fund managers, Toney says he’s concerned that raising funds might become even harder for women and people of color.
As terms for investors get better, Toney expects fewer companies will get funded, there will be fewer outsized valuations, and talent will consolidate to the winners.
“The last thing I want to see is the inability for those Black, people of color, and female fund managers to go raise their second, third, and fourth funds,” he says.
Toney’s advice?
Be resilient, work your networks, and build long-term relationships—just because someone didn’t invest in one round you’re raising, doesn't mean they won’t invest in a later round.
And finally, Toney says it’s important to recognize that there are multiple paths to becoming a VC.
“One does not always necessarily need to start their own fund,” he says. “There’s a lot of great funds that are looking to hire amazing people. And so look to those opportunities as well.”