William Leonard
Hawks Ventures is one of the newest venture capital funds establishing its presence in Atlanta. With its first fund of $50 million, Hawks Ventures was launched on a thesis of supporting minority and women-led startups, innovating the customer experience. I sit down today with Hawks Ventures’ VP, Felipe Arias to better understand the inner workings of the fund’s strategy and its value add for their portfolio companies. We even get a little bit of insight into the details of their first investment that they’ve made. And lastly, we’ll hear how the Hawks make direct investments in sometimes formed strategic joint commercial ventures as an additional layer of support for their portfolio companies. Coming up this week in Atlanta, on Tuesday evening, I’ll be speaking with student founders at the launch pad at Morehouse on fundraising preparation and investor readiness. Then on Wednesday, May 3rd, you can join Valor Managing Partner, Lisa Calhoun and Sarah Morgenstern, who is the venture partner at Flourish Ventures for office hours. This is catered towards female FinTech founders, looking for a Series Seed or Series A lead, and come learn from these experienced early-stage investors. If you’re interested in attending, go to valor.vc., and go to the events tab where you can register. Then on Thursday join us at the Russell Center for the 20th showcase of Startup Runway. Here you’ll see 10 amazing underrepresented founders pitch their startups. Three winners will walk away with grants for their companies. If you’re interested in attending, go to startuprunway.org. And lastly, keep an eye out for the events tab on Valor’s website, because our team was putting the final touches on an amazing AI event coming up in mid-May. Stay tuned for more details. Now let’s get into today’s episode. Felipe, thank you for joining me today.
Felipe Arias
Thanks for having me, William. We’re excited to be part of the Atlanta community and excited to be here on the show.
William Leonard
I’m excited that you’re on here because we’ve all read the press releases online, but I think this is the perfect opportunity for our listeners and founders in the broader Atlanta ecosystem to really get to know you and the team and the people behind the fund at Hawks Ventures. So let’s maybe kick it off with a brief overview of what Hawks Ventures is and then I would love to dive into your background, prior experiences, and perspectives.
Felipe Arias
Happy to share the story. A little bit of a unique story. My partner, David Garcia, has been at the Hawks for a while, and actually left the Hawks to found his own startup. Tony Ressler, the Principal Owner called him and said, great idea, I really like what you’re doing. I have an idea to invest in companies like yours and I think that Hawks can help support that as well. So that was the idea between David and Tony and Steve Koonin, the CEO of the Hawks, and they ironed it out over several months and brought it forward. We are now live, we’re no longer in stealth mode and shadow mode. The press release was great for highlighting some of the things we’re focusing on and hopefully be writing our first check really this week. So we’re excited to be actively investing on that front as well. The overview and the thought are that there’s an opportunity for Hawks Ventures to expand on the values of the Atlanta Hawks in terms of innovation in inclusivity. So I think anyone who saw the press release saw our focus on underrepresented founders, we think it’s just a great business opportunity with a good percentage of dollars that are heading in that direction. We think there’s a pipeline of businesses that really aren’t getting the spotlight that they deserve. I think our opportunity with sports is to spotlight some of those with our fan base with our sponsorship network with the arena. I’m sure we’ll get into that later but I’m excited about that piece, too.
William Leonard
I love it. You talked about David, you talked about Tony, and how they have sort of worked together in the past. Tell us more about your background, your experiences, and how you came to join the Hawks and also become part of the fund now.
Felipe Arias
I have a varied background. Started off my career but didn’t know what I wanted to be when I grew up so I became a consultant. Did a lot of different things, I ran $100 million of P&Ls, I worked with private equity at their portfolio companies and transformation offices. Most recently was actually at Delta Airlines and really enjoyed my time there in Corporate Strategy in helping to build out personalization, some of the really cool things that Delta has been doing at the forefront of the industry. I was not looking to leave Delta, but I really liked it. I love my team there. Got a call from David, I’d known him for a long time. So I think we got a really interesting, cool opportunity, the more I learned about it, my first response was that doesn’t sound like a real job, investing in startups, working in the venture for a sports organization where we don’t have to go raise money, because the owners already invested in the idea and in the opportunities but something that sounded a little bit too good to be true. I spent some time with the owners and really appreciated them for talking with me about the opportunity where they saw the opportunity. We all felt like it was a good fit. I’ve been excited to be a part of the team. I joined about halfway through last year and we spent a lot of time trying to build up our networks get everything behind us to get everything in place so we can get hit the ground running this year as we open the doors to the inbound investment flow as well.
William Leonard
I love it. A $50 million fund one is where you all launched today. What types of deals are you all looking for if somebody goes to Hawks Ventures on LinkedIn, they’ll come across your profile, and it says supporting customer-obsessed, diverse entrepreneurs. Dive into that, unpack it for us, and tell us what types of deals you’re looking for, sectors, stage maturity, those types of things.
Felipe Arias
Beyond the underrepresented founders piece of it which we just think is good business. We’re focusing on customer experience and that comes from a lot of different reasons. One, my and David’s background is really in building customer ecosystems and building out best-in-class customer experiences from different angles. We think we will have an opportunity to help early-stage companies do that. The other piece is we think we have the opportunity to highlight a lot of companies in front of our fan base in the arena, really build out the fan experience for the Atlanta Hawks fans in a new way, and be a part of kind of the next generation of what a fan experience looks like. That is a good bridge for companies to go grow from the sports world that showcases that spotlight into bigger markets as well. That’s sort of where we’re looking. In terms of stage, we’re early stage, but really more post revenue, post products, because that’s where we think we can accelerate the most as opposed to the idea stage. And then we like to write kind of plus or minus a million dollar check into those. We also really like to follow on rounds, with just the two of us and both of us being new to the investor space, we like to spend time with the companies as opposed to with the lawyers in the term sheets. That’s what we’re looking for there as well. In general, I think part of what we’re trying to focus on is, obviously venture bankable businesses and that’s what we’re looking for and that’s where we’re helping on the education side as well. We’re working with some of our partners to understand what does that look like and when is venture right for your company? And at what stage? How do we help with that? I think there’s a lot that we can look at, a lot that can make sense. I think the shortest answer is if you think it makes sense for a basketball team to be on your cap table, we’re certainly willing to listen.
William Leonard
I love it. Early stage, post revenue, post product, typically looking to follow on million dollars or so checks, hyper-focused on customer experience, and companies that could potentially be intertwined with the in-stadium fan experiences, as well. Are you all focused on any particular geographies or geography agnostic? What do you all think about that as a team?
Felipe Arias
Relatively geography agnostic. Obviously, we love the hometown fans so we would love to invest in Atlanta businesses when it can make sense. A US focus, we think that’s where we have the biggest impact, for sure. And then you mentioned sports, that’s a key part of it, that’s an opportunity. But really, we think the opportunity to grow from sports to other industries is really important. Professional sports are exciting. It’s big business in some ways but it’s also small business and others. When you look at the opportunity to have venture back into more business, if all your targeting is to have your customer list be large professional sports organizations, that’s a tough road. We’re pretty good at negotiating. But two, it’s a relatively small market. There’s only a handful of teams that fit that and so we are looking in that space, we love to do joint commercial and investment deals alongside the team, but we also recognize the opportunity to advance things that are tangential to sports, tangential to basketball, or really had nothing to do with sports, but really are a good fit with our fan base or our sponsorship base. That’s other places we’re looking at.
William Leonard
That makes a lot of sense, right? You look at sports as sort of the basis, but then you can tie in a lot of adjacent avenues like media and the creator economy. I mean, how many points of sale points do you all have in the State Farm arena, probably thousands. FinTech sounds like a pretty big opportunity, as well. So it sounds like you all are really trying to cover the gamut from as soon as you get to the stadium, to interacting in the stadium to maybe even when you leave the stadium, as well. I love the thesis there and I think the fund launched fairly recently, it sounds like you all are actively seeking and looking to start deploying capital. Tell us more about as you continue to grow the portfolio and make that first five or so investments as a venture capital firm that is associated with the sports team, how do you all plan to leverage the resources and the network of the Hawks to support the startups within the portfolio.
Felipe Arias
Number one, things where it makes sense for the Hawks to be a customer, for the Hawks to be a part to help evaluate companies, we have some great partners and internal advisors and experts that are really jumping in early on deals like even before we start thinking about how big this check looks like, what should this look like? We get in parts of the team from marketing, technology, and our revenue teams to really take a look at this. Is this something that is interesting? Is this something that solves a need for you? Is this something that was sort of a need for our fan base? That’s really helpful. Some of those results are in, like a deal we’re looking at now, where we are looking to do a joint commercial and investment deal with a company. At the same time as making the investment, we’re signing up to help that company develop a solution that is unique to the sports world, that we can showcase, that we can bring to the trade shows, that we can bring to other sports teams, and help build out that market for them. In other cases, it might be that the team ends up loving it, but it’s not the right fit on the investment side. And so they take that too. We have a really symbiotic relationship there, where they bring us some ideas, we bring them some ideas, and we look at it. There are other spaces, I’ll say like Next-Gen Loyalty, where we believe there’s a big opportunity there. We think that that’s something that we can be looking at something we are actively looking for solutions in that space. From an investment standpoint, we know about how big that market they look like and where others are going. At the same time, our internal team has spent a lot of time developing what a membership base looks like. How do you interact with those members and what does that look like? We’re trying to merge those paths and understand where do they want to go? How can we help solve some of those problems, but at the same time, make sure that we’re making sort of the right investments to be able to grow from there, too.
William Leonard
It sounds like when you all are looking to invest in a company, this sort of joint venture avenue is always possible. I think that’s strong because you show just the absolute, most resolute conviction in the company, you’re giving them capital and taking them to market commercially within your own environment. If you can, Felipe, from a very high level, sort of walk us through how these commercial joint ventures work, as you all partner with startups.
Felipe Arias
So far we’ve been a little blessed. I’ll say it, I’m probably the only one who would say this, the market pulling down a little bit because it allows the deals that take a little bit more time, which allows us the time to connect with the teammates here. We have the right people to be able to be talking to discuss what it could look like from that standpoint. How could the team use this product or service? How does it fit in? And a lot of cases, how can we even pilot something, before we even get to the stage of, okay, now, what should the investment piece look like? And then we can kind of bring it all together? There are other times where it’s like, okay, we’re moving quickly on this investment. It’s something we’re really excited about, we would love your initial thumbs up/thumbs down, but we recognize that you’re not signing up for a commercial deal yet, so that is something else we look at. Our first investment is in the connected fitness space, something that sort of makes sense for a basketball team to be tied to. Our internal strength teams looked at it and said it’s interesting. They think it’s a great product but like during the season, when we were making the investment, was it going to make that switch and put the players on it immediately? It kind of goes both ways where we have the opportunity to leverage that expertise and understand what it looks like, but we aren’t kind of required to make sure it fits. We’re not required to use it. But as you said, it is always a great vote of confidence that not only are we putting money behind this, but we’re signing up to the customer, we want to help you develop it, and we want to make sure you get the product from where we are now in the early stage to be ready to expand from here.
William Leonard
It makes a lot of sense. And as you said, it is a great indication for the founders of the startup and also other investors that are looking to come into the deal as well to say, hey, Hawks Ventures putting money and they’re using the product, and maybe potentially sharing it with other stakeholders and partners within their network as well. I want to transition the conversation here a bit, Felipe, and let’s dive into the focus on minority and underrepresented founders. We know the statistics for this group of builders are very abysmal, just to say the least, and to be frank, VC dollars for black founders fell 50% year over year in 2022. I think less than 1.3% of venture dollars went to underrepresented founders last year. Tell us more about how Hawks Ventures plans to reshape this unfortunate status quo for underrepresented founders.
Felipe Arias
Some of those stats were actually what David used to recruit me to get behind this. It’s abysmal. I mean, I don’t think there’s any other way to say it. I think we have really two opportunities there. One is obviously the dollar if we put in, the support we put on, we put behind trying to make companies we’re associated with successful. We’re excited to do that. I think the other piece is we have the opportunity to spotlight some of what’s going on to bring that forward, to be kind of that magnet of information in exchange from both sides. Our ability to get out a press release to show what that looks like, and have people come to us and say, hey, I’m looking for investment, here’s what my situation is, here’s what my business is. If sometimes those aren’t venture-backed little businesses, that’s not something we invest in, but we now have the opportunity to help funnel that in a direction and give warm leads, give warm introductions, give resources to those companies in ways that it’s kind of hard to find that otherwise. There’s not like a big shining beacon of like, come here, I’ve got all your answers. We won’t be able to do that either by just having one more contact point, one more entry in the press of here’s a company that’s trying to do this, trying to be this connection point, I think it’s something that we’re excited to do. Beyond the investment dollars, I and David, spend a lot of time in the underrepresented community, working with founders and working with entrepreneurs that we may never invest in that might have businesses that are more mainstream than a tech startup that’s venture bankable. We still think that is important to do because building an entrepreneurial community, building that up being in Atlanta, and making sure those companies, those founders have a path to success, whatever success looks like. It’s something important. I think that also helps build that flywheel and get those investments out the door. And then another piece we do, I mentioned earlier, we like to follow on deals. I think we get a lot of inbound and there’s oftentimes that’s too big of a deal that needs too much funding for us to be able to lead ourselves. We can now be the conduit to other venture capital firms that that door might not have been open to before. We’re excited to do that as well. I know Valor Ventures has been doing that for years so we’re excited to learn from the best in business, too.
William Leonard
Hopefully, we can partner. I think being local here just gives us such a strong advantage in finding talent. You look at Atlanta as a whole in the region, one of the most diverse regions in the world, where you’ve got people of all backgrounds, all ethnicities, all talents, and skill levels here, coming together in a city like Atlanta. I think it’s only going to be a mature event for all of us to sort of take place and come together and collaborate. Really excited about that, Felipe. As you sort of think about Hawks Ventures right now in the spring of 2023 and where you all want to evolve over the next year or so, what’s top of mind and what’s most exciting for you all? How many deals are you all looking to do on an annual basis?
Felipe Arias
We said we’re looking to deploy 50 million in the next five years. We think roughly half of that will be first checks. We like talking about plus or minus a million dollar checks, call it a couple of dozen companies to invest in. We think kind of in three to five businesses a year is sort of the best for us, especially because we want to spend a lot of time after the check goes out making sure that we get the full value of having to work with us and getting to work with us, the networks we can deploy and the support we can provide. We want to save time, we will do that as well. On the flip side, our leadership team has been very straightforward that we’re excited to do this but we want to make sure we are picking and choosing and there’s no pressure on us to go and deploy that 50 million tomorrow. We are looking for the best companies out there that we can make an impact on and we can make an impact in the community together. A lot of those targets are coming kind of from me and David, and things that we are looking to do. We recognize that the faster we grow that pipeline, whether again, it’s something we invest in or someone we help connect with somewhere else. That’s part of our goals as well.
William Leonard
I can only imagine the type of inbound deal flow that you are getting after the multiple amazing press releases that were put out to the public. I don’t want to put too much on your plate, but I know we get some of the best founders and builders listening to this podcast on a weekly basis. For somebody who’s building and innovating the customer experience, what is the best way for them to get in touch with your team to pitch and get in front of you all?
Felipe Arias
We have an inbound email, hawksvc@hawks.com. We accept a lot of things there. I mean, really helpful, if you have a pitch deck attached to it, helps us to make sure we can take a look at it quickly and get back to you. I appreciate you saying you can only imagine the inbound, I also appreciate the patience of people who have sent into that. David and I are trying to get to all those and trying to answer now, even if it’s not the right fit to sit back, here are some resources, here are some thoughts, and here’s when the timing might be right to reach back out to us. We’re getting to those as well. But I think really helps to highlight in that email and in the pitch deck, here’s the problem we’re trying to solve, here’s how big that problem is, and here’s why we are uniquely talented and qualified to solve that problem. The quicker we can understand that, the better we can understand if we’re the right company at the right time to help you guys accelerate what you’re doing. That’s what we’re looking for when we’re going through this.
William Leonard
Perfect. Felipe, this was such an insightful conversation to learn more about your background, David, Tony, and his vision for Hawks Ventures and how it can really reshape the status quo for underrepresented founders throughout the country. It sounds like the team is off to a great start, you’ve got an investment that hopefully will be announced here pretty soon. I really appreciate your time, Felipe, and hopefully we can cross paths and continue to see Hawks Ventures elevate within the Atlanta ecosystem.
Felipe Arias
Very much appreciate you having me on. Certainly been a warm welcome to the Atlanta ecosystem in this investment space more broadly to Hawks Venture. We’re excited to be a part of and start doing and help pull our own weight, I guess, if you will, in the ecosystem, too. Looking forward to continuing to stay in touch and appreciate any of the listeners out there who reached out to us and thank you for your interest. Hopefully, we can help you guys out, too.
William Leonard
Perfect. Thanks, Felipe.
Felipe Arias
Thanks. Have a good one.
Lisa Calhoun
We’re thrilled to have you as an Atlanta Startup Podcast listener to help you get the most out of the experience. Let me invite you to three insider opportunities from our host Valor Ventures. First, want to be a guest on this amazing show. Reach out to our booking team at atlantastartuppodcast.com. Click on booking, It’s a no-brainer from there. Are you raising a seed round? Valor definitely wants to hear from you. Share your startup story at valor.vc/pitch. Are you a woman or minority-led startup valor sister program? The Startup Runway Foundation gives away grants to promising startups led by underrepresented founders. The mission of the Startup Runway Foundation is connecting underrepresented founders to their first investors. Startup runway finalists have raised over $40 million. See if you qualify for one of these amazing grants at startuprunway.org. You can also sign up for our next showcase for free there. Let me let you go today with a shout-out to Startup Runway presenting sponsor Cox Enterprises and to our founding partners, American Family Institute, Truist, Georgia Power, Avanta Ventures, and Innovators Legal. These great organizations make Startup Runway possible. Thanks for listening today and see you back next week.
