At our PreMoney conference which we recently held in Miami, Mac Conwell joined us on a panel of emerging VCs. He founded Baltimore-based RareBreed Ventures a little more than a year ago to invest in pre-seed and seed founders outside of the major tech hubs. 

On our podcast Rise of the Next, Mac tells us how he raised his fund the most unconventional way–by using Twitter. The social media platform enabled him to build a network in the VC community and learn about the world of venture capital. 

His advice to underrepresented founders: don’t get mad, get even. Listen to his journey and more. 

Subscribe here to tune into future episodes of Rise of the Next on major streaming platforms.

 

TRANSCRIPT

MAC’S PANEL DISCUSSION AT THE PREMONEY CONFERENCE

Shereen Abdulla 

Welcome on the show, Mac. You’ve just come from a panel discussion here at PreMoney in Miami. What were you and the panelists discussing?

Mac Conwell 

We talked about the new faces of venture and a lot of people said to get into venture you should have an operating background. I actually think having a business development background is better.

Shereen Abdulla 

Why not both? 

Mac Conwell 

Ya, that’s great! But, I mean, having a business development background — well, this is a network industry. Specifically for me, as a solo capitalist today, my secret weapon is Twitter. I built my Twitter community in a way that people know I care about helping folks and I actually help folks a lot. So then when I have a company that needs help, I can go to my Twitter community like, “Hey, Twitter, can anybody help my founder XYZ?” And they almost always come through. Twitter is the reason why I raised my fund, I wouldn’t have — I don’t think I’d have a fund today, if not for Twitter.

Shereen Abdulla 

In what way?

MAC’S BACKGROUND

Mac Conwell 

In the way of — so, for context, in June of last year, I had 2,500 followers on Twitter. Today, I have 55,000. So, in about a little more than a year, I’ve gained over 50,000 followers. And really what happened was, I wanted to raise a fund, I didn’t have a network of LPs, so I wanted to learn more. And I’d recently started tweeting consistently, but I noticed that as I tweeted more VCs were following me. It wasn’t just founders, it was other VCs. So I just started setting up meetings with these folks because I wanted to talk to them about — one, I wanted to get better at what I do, and two, I wanted to learn how to raise. And as I was having conversations, several of them started committing money to my fund. So I recognized that like, “Oh, if I talk to these other GPs, GPs can invest in funds, too.” And that just essentially became a strategy.

Shereen Abdulla 

Why were they following you to begin with?

Mac Conwell 

I think what it is — so the way my Twitter works is I give a lot of content just around venture, how venture works, how VCs evaluate.

Shereen Abdulla

So, educational content?

Mac Conwell.

A lot of educational content. Because, for me, when I got started, I didn’t know anything about this stuff. 

Shereen Abdulla 

So, if you did not come from an experienced VC background, how did you have the know-how to be putting information out there?

Mac Conwell 

So, I was a startup founder. When I started my first company in 2010, I didn’t know what a VC was, I didn’t know what a startup was, I didn’t know what networking was. I was just an engineer with my two co-founders and then we got exposed to networking and the value of networking, the value of having a network, and I was the only person in the team that didn’t mind talking to people all day, every day. So that became a thing and I got really good at — networking. And, as I’m networking — then you start going to events and you start picking up knowledge, you start picking up: oh, that’s the blog I should read; oh, those are the top-tier investors; oh, TechCrunch is a website I should check every day. I didn’t know what TechCrunch was.

But then you have these moments where — when you first start off, for a lot of entrepreneurs first time through they have NDAs. And you want to get people NDAs and they’re like, “No, we don’t sign NDAs.” But almost no investor ever explains to you why not. Because, every time you have a meeting, you walk away with a thought — something that happened, something bad that happened, something that’s annoying. I just tweet that stuff, and it gives people some basic knowledge and I think other investors recognize, “Oh yeah, I agree with Mac Conwell.” “Oh yeah, that’s right.” “Oh yeah, that’s smart.”

Shereen Abdulla 

And then they’ll DM you and reach out, and you go out for coffee?

Mac Conwell 

Well, I would DM them, and I would tell them a little bit about myself and give them a link to my Calendly. And I would say 70-80% of folks would just put time on my calendar, which is interesting, because I started doing this all through Covid-19, like June of 2020. And from June to September of 2020, I had over 1,100 meetings. At the height of it, I was doing 25 to 28 meetings a day, just back-to-back. 

Shereen Abdulla 

That’s pure business development.

Mac Conwell 

That’s exactly what it is, and that’s how I saw the first 2 million for the fund. And that’s what gave me the confidence like I could do this. 

Shereen Abdulla 

So you were a founder, I believe that you successfully exited one and then you were not successful with another one. And then did you intentionally want to be an investor, or did the opportunity come about after you began putting content out there and being followed by VCs?

Mac Conwell 

So all the Twitter stuff happened four years after I started investing. So what happened was, like every entrepreneur who’s gone through the fundraising process, at some point has this arrogant thought of, “I can be a VC, I know companies. I can evaluate companies, I could be a VC.” I was no different. So the ideas in my mind like I want to do this one day. But I had no clue how you become an investor.

Also, I don’t have a college degree, I don’t have a finance background, none of that. If I’m ever going to become an investor I have no clue how I was going to be, but I would tell people I think I’m going to do this one day. But they’d be like, “How are you going to do this?” and I’d say, “I don’t know, but it’s going to happen.”

So what happened was, my second company failed, I got a job at his marketing firm, I ended up doing work that I didn’t want to do. They paid me well, but it was a sucky job. And then this marketing firm got a client I didn’t agree with ethically. So, on principle, I quit the job. And when I quit, I had no plans, I didn’t know what I was going to do, I had a bunch of people in my ear, “Yo, get a plan. Wait till you get a job. Don’t quit.” And I’m like, “No, I can’t do this.” So I quit on a Friday, and the very next Monday I get this email from the investment vehicle for the State of Maryland, and then I used my business development skills to get all the major people in the Baltimore tech ecosystem to write me letters of recommendation. And I even got two of the board members of this organization to write me letters of recommendation. So, if nothing else, they had to interview me. And after four and a half months of interviews, they told me I wasn’t qualified for the job I applied for, but that they were creating a new junior position and asked me if I would want that. 

Shereen Abdulla 

And you said yes?

Mac Conwell 

And I said, “Hell yeah!” So I took a job, making less money than I ever made in my professional career as a way to break into venture. So that’s how I did it.

HOW MAC BROKE INTO VC

Shereen Abdulla 

So given that you had that job, why did you then leave being employed at a fund to start your own fund? 

Mac Conwell 

Well, first of, the goal was never to stay there because I was a State employee, I didn’t make any money as an investor. So my goal was always to leave there and go to a bigger fund, make real money, and become a professional, and become a real investor. Working in a State-run fund, I was doing investments, real investments, but you don’t get the same level of respect. 

Shereen Abdulla 

Why not? And by whom?

Mac Conwell 

Because even within my own organization, we wouldn’t call ourselves VCs. Even though we’re writing convertible notes, and we’re doing price rounds, and we’re negotiating deals, and all that, we were technically economic development for the State. It just so happens that the way we did economic impact was through direct investing.

Shereen Abdulla 

So you wanted hotter tickets, hotter deals? 

Mac Conwell 

Not so much hotter tickets, I just wanted — I wanted more respect.

Shereen Abdulla 

By who?

Mac Conwell 

When I talk to other investors about the firm, I worry a little. “Oh yeah, you work for a state. That’s not really VC, though.” And I’m like, “But it is.” And they be like, “But you only invest in Maryland, that’s not the same.”

Shereen Abdulla 

But then if you really wanted to break into VC, why not go to New York or SF?

Mac Conwell 

Well, this gave me a chance to break in to say I’ve done deals and gained some track record, and then I was going to go to SF, probably, or go to New York and start trying to get into circles and recruiting and all that. 

Shereen Abdulla 

What was your track record? 

Mac Conwell 

My track record is still early, but I could show that I made investments, I could show that I sourced deals, I could show that I had deal flow, that I knew how to gain deal flow. I could show that.

Shereen Abdulla 

So is the ambition to then, one day, move to a larger VC ecosystem?

Mac Conwell

Yes! At the time it was, but then — for some context, I started working for the State of Maryland at the Maryland Technology Development Corporation. This was called, or TEDCO, and I was on the Seed investment team. So we do Seed investments into companies all across the state of Maryland.

And so I got there, and when I got there, it was late 2016, they had been struggling to invest in black-led companies. And one of the issues that came up with these companies was they were having lacked access to friends and family capital to compete for our Seed fund. Our Seed fund made 100 to 200 thousand dollar investments, which was really competitive because every company in the State of Maryland came to us.

And so they were trying to figure out how to help that, and so I put together a proposal to start a Pre-seed fund to invest in these founders earlier than anybody else, 40 and 50 thousand dollars each. And I believe we had a black-owned bank in Baltimore to put up half the money for the first year. And so less than six months on the job, I started a new fund within this firm, originally for black founders and later for all under-represented founders, and I managed that for three years. And so, I’m doing good work, I’m learning how to really source deals, and find deals and places other people aren’t looking. I met this woman, this black woman in Baltimore, had a really ambitious idea of — she wanted to create a tumble dryer that could dry a wig or hair extension in 15 minutes with no heat, and it was a really unique idea.

Shereen Abdulla 

And did you give her the Seed funding or the Pre-seed funding?

Mac Conwell 

Couldn’t give it to her.

Shereen Abdulla 

Why not?

Mac Conwell 

Because she didn’t have a prototype or anything, it was really an idea at the time. And so everybody on my team was saying because we have so much, I was sourcing so much deal flow that we were getting real quality deals that people weren’t expecting. So we were finding these founders that had traction, had products, and had really strong teams, and I was trying to explain to my firm that, “Hey, I know we have all these great companies, but instead of doing the next B2B SaaS company, here’s a company doing something really unique that nobody’s thinking about. That’s worth taking a bet on.” And I couldn’t get her through, and I watched her struggle for three years to try just to get help, to get direction. So, I’m coaching her, and I’m helping her make an introduction. Nobody cared.

Shereen Abdulla 

Did she not build a prototype in those three years or does she need the funding to build a prototype?

Mac Conwell 

It’s a physical product, she needed the funding. What she did was, she bought a small dryer off of Amazon, took out the heating components, and reconfigured it to prove out the concept. But for the prototype, she didn’t have the money for it. And so after three years of getting nothing but no’s, she calls me one day and she’s excited, “Mac Conwell, I figured out how to pay for my prototype!” And I’m like, “Cool!” Then she tells me she did it by becoming a surrogate mother. She gave birth to twins to raise the money so she can start building her prototype. And I got so frustrated. I literally helped start a fund to back people like her, and I still couldn’t do it. And so I realized, in that moment, the only way I was ever going to back a founder like her and take a real bet, is I would have to do it on my own terms. I could never be at a place where somebody could tell me no to an investment I truly believed in.

Shereen Abdulla 

Where is she now?

Mac Conwell 

We gave her her first $250,000.  She launched a website meetspundle.com and she’s got a waiting list from several stylists who are ready to preorder the product. And the first version of the prototype should be done early 2022.

Shereen Abdulla 

Nice, very nice. 

Mac Conwell 

Yes. 

MAC’S CURRENT VENTURE FUND AND INVESTMENT THESIS

Shereen Abdulla 

So now that you have your own fund, what is your investment thesis?

Mac Conwell 

My investment thesis is we invest in companies primarily outside the major tech hubs, so outside of Silicon Valley, New York, and Massachusetts, Pre-seed to Seed. People say that, but we quantify it by saying anything sub 15 million post-money valuation is our sweet spot. We’ll go higher for the right company, but sub 15 is where we like to be. And we’re industry agnostic, the only thing we don’t do is we don’t do life sciences. But what we really care about is if it’s a software company, we’d like to see a clearly repeatable or unique customer acquisition strategy. You don’t have to have a lot of customers, but you need to have a clear thought about how you get your customers. And then we like physical products, typically in consumer markets that have lacked innovation for 10 or more years. 

Shereen Abdulla 

So aside from the spundle, how else do you go about finding entrepreneurs worth investing in?

Mac Conwell 

They come to me cold through DMs, or LinkedIn, or email. I have a network of well-over 5,000 VCs that send me deals all the time. And I spend a lot of time speaking at accelerators and incubators, and specifically off-the-beaten-path ones. If you look at an organization — now, 500 is amazing not to talk about one of the competitors — but an organization like Generator, they’re an accelerator specifically in the Midwest. And so I talk to those founders on a regular basis. I’m at all their different demo days and things.

Shereen Abdulla

Do you invest in founders or products?

Mac Conwell 

Every deal is its own thing. Typically founders, right? Every now and then you’ll find an amazing product where you’re like, “That’s amazing.” In those moments, I start off with, “The product’s amazing,” and then the founder’s got to match the energy.

Shereen Abdulla

Got that. And do you specifically look out for founders who come from an under-represented background?

Mac Conwell 

No. So, this is funny, when people ask me what makes our fund different, I tell them I invest in everybody. I don’t just invest in white guys, I don’t just invest in the underrepresented, I invest in everybody.

ADVICE FROM MAC

Shereen Abdulla 

What advice would you give to founders from under-represented backgrounds looking to get funding?

Mac Conwell 

I would tell them, don’t get caught up in trying to compare yourself to other founders out there. Don’t get mad about the white guy from Stanford who got $2 million for an idea on the back of a napkin, because the reason they got money had nothing to do with their business nine times out of ten, it has everything to do with their network. And that’s something we talk about.

When you see a company raise money pre-product, pre-revenue all that, there’s a backstory to it. You don’t know the backstory, and it isn’t just because they’re white, it isn’t just because they’re a guy, and it isn’t just because they went to Stanford, there’s a lot more to it. What you need to focus on is building the best company that you can. That’s why traction comes up, because, really, if I’m going to see 1,000 companies every three months, and out of that I’m going to invest in somewhere between zero to 10. When I see a bunch of companies at one time, the easiest thing for me to separate them out is who’s showing the ability to execute. Traction is just a way for you to show your ability to execute the plan that you’re pitching me. Well, if you’re always worried about executing and just working your plan, I understand that fundraising, just like raising money, is a tool for you to continually execute on that plan in a faster, larger way, well then that just means fundamentally you’re always thinking about how to build your company. 

Shereen Abdulla 

That’s advice for any founder, really. 

Mac Conwell 

Exactly. 

Shereen Abdulla 

Yeah. What about people who want to be investors? And let’s say I happen to come from under-represented backgrounds?

Mac Conwell 

I’m just going to be saying this advice I give to everybody. 

Shereen Abdulla 

To build a network? 

Mac Conwell 

Yeah, network! It’s a network-driven industry.

Shereen Abdulla

Amazing. Mac, thank you very much for your time. I’ve had a wonderful conversation.

Mac Conwell 

That was fun.

 

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