Eradicating Inequality: The New Face of Venture Capitalism
In the fall of 2017, Sergio Marrero had a light bulb moment.
The Harvard Business School graduate and serial entrepreneur conjured up the idea of an early-stage venture fund – with a difference.
He envisioned a global network of investors “striving to achieve zero inequality” by democratizing access to investing.
Two years later, Rebel One (RBL1) Ventures was born in New York.
In 2020, Sergio was invited to participate in the Nasdaq Entrepreneurial Center's Mentorship Circle program as a mentor. He sat on the VC panel for the four-minute pitch event at the end of the program.
In our interview (which has been edited and condensed for clarity), he discusses:
● Two research-based factors that impede the progress of Black entrepreneurs in the U.S.;
● Supporting Black businesses by purchasing their products and using their services; and
● The importance of entrepreneurs being able to toggle between learning and execution phrases.
Do you have (or have you had) a mentor(s) and, if so, what impact has this relationship(s) had on the trajectory of your professional life?
SM: I’ve had several mentors in my career.
They pushed me to think beyond my initial thoughts and encouraged me to engage in work where the vision is in service to others.
Why did you decide to mentor at this time?
SM: I thoroughly enjoy working with early-stage founders.
I was previously a founder and launched a number of startups, several of which failed. By mentoring founders, I hope they won’t make the same mistakes I did.
As founders go through their entrepreneurial journey, it’s important that they have guidance and a sense of community. I aim to provide that for entrepreneurs trying to start a company from scratch.
What attracted you to the Mentorship Circle program?
SM: I went to San Francisco to visit the Nasdaq Entrepreneurial Center.
I saw the space and the community they were building there. They seemed genuine in their intent to accelerate entrepreneurship and advocate for underrepresented groups, such as women and people of color.
These values aligned with mine and resonated with the work we do at RBL1 in terms of training founders and investors. It seemed like a natural fit, so I was more than happy to be a mentor.
What are your expectations of a mentee?
SM: To think of me as a sounding board.
A mentee should be coachable, which can be a difficult skill to develop. Sometimes, being a mentee involves receiving tough feedback and taking time and space to determine if the advice really relates to them because, ultimately, they’re in the driver’s seat. A mentee should think of their mentor as an asset that is helping them along the way.
What are the biggest obstacles facing Black founders?
SM: I’ve done research and talked to over 100 entrepreneurs across ten U.S. cities. Most, if not all, were women and other underrepresented founders.
The research found that these founders initially don’t believe they can be successful and don’t aim high enough. They’re not aware of many models of success because of the low representation among entrepreneurs.
The research found that these founders initially don’t believe they can be successful and don’t aim high enough.
Another research finding, which I thought was interesting, is that the audacity it takes early-stage founders to launch a venture is the same trait that holds them back in the second phase of their entrepreneurial journey.
For instance, when an entrepreneur starts a venture, they tend to ignore the advice of the people who love them most, such as their parents, who often prefer them to have a more traditional job such as a doctor, lawyer or accountant.
But when an entrepreneur’s business makes it to the next round, which proves that their business model is working, they get a series of professionals around them advising them what to do. At this point, the entrepreneur has to switch from not following the advice of those they trust most to actively listening to advice – recognizing that it’s from a different set of people with the experience and exposure to help them get to the next level.
How can we better support Black founders?
SM: Investing in Black businesses is good, especially with the proliferation of crowdfunding, which was enacted in 2016.
But beyond investing, we can patronize Black businesses. The best ‘investor’ is a customer who buys a company’s goods or uses its services. We should go beyond big box brands and consider local Black businesses and founders of color as potential sources of trade. That’s the most powerful mechanism.
Beyond investing, we can patronize Black businesses. The best ‘investor’ is a customer who buys a company’s goods or uses its services.
In addition to mentorship, what else is critical to an entrepreneur’s success?
SM: The ability to switch from ‘learning’ mode to ‘execution’ mode.
At the start of their journey, a founder is really trying to find out what people will pay for and how they can deliver it sustainably. Once they have paying customers or active users, it’s about doubling down on their efforts to grow the business.
Switching between the two modes of operation almost always involves tough decisions.
What was your favorite moment of the program?
SM: I was on a call with a group of entrepreneurs and we were doing a deep dive into their pitch decks. I noticed that all the founders were fully engaged and invested in the successful performance of their peers.
It’s powerful when an entrepreneur is creating a community and trying to figure out how to monetize it, then other entrepreneurs jump in and offer their ideas.
What did you learn from your mentees?
SM: I learned that coaching different generations of entrepreneurs inherently calls for different styles and approaches.
The shift in communication style – as per the entrepreneur – is a continuous challenge that I’m still working on.
Did you reap any unexpected benefits or face any unexpected challenges and, if so, what were they?
SM: The founders are a passionate, dedicated group.
A challenge presented itself when my intuition told me that one particular startup was potentially going down the wrong road, but the founder wasn’t willing to adapt their strategy in light of my advice.
For me, it was about showing humility and accepting that, at the end of the day, a founder may be able to see something in their product, service or market that I can’t and vice versa.
As a mentor, you’re only there to motivate the founders, guide them through their journey and help them see the forest for the trees as they’re doing the hard work. Ultimately, founders are the real heroes and champions.
How did the experience differ from any previous mentorship programs you may have been involved in?
SM: The program brought together such a wide range of investors.
At RBL1, we have continuously focused on supporting women and underrepresented founders and investors. It’s at the core of RBL1. The average investor has failed to recognize diversity as an asset. It was nice to see them openly and honestly acknowledge the importance of the issue.
What advice (if any) did you give your mentees on the last day of the program?
SM: The advice I gave them was, ‘It doesn’t matter what I say – what matters is what people do.’
As an entrepreneur, you serve who pays you. So, regardless of what an investor says, paying customers or active users will always carry the day.
What excites you most about this new class of founders?
SM: First and foremost, I consider myself a founder. It’s always interesting to see what the next generation of founders is building.
Because entrepreneurs work in a certain field day in and day out, they’re the experts, so you have an invaluable opportunity to learn from them. One of the privileges of working in the investment community is that entrepreneurs take the time to share their expertise with you, which is always an enriching experience.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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