William Leonard

Hey everyone! Welcome back to the Atlanta Startup Podcast. Shila Burney is our guest for today. Shila, who is a well-known investor in Atlanta and really throughout the southeast is the founding and managing partner of Zane Venture Fund. And I’m really excited because, today Shila is going to dive deep into the thesis of Zane, why she started the fund and the impact she’s looking to make as she deploys capital throughout the region. We’ll also talk about Shila’s role currently as a solo general partner, Zane Access which is the not-for-profit arm of the Zane Venture Fund. And I’ll get Shila’s boots on the ground thoughts about what she’s seeing from Atlanta’s thriving startup scene, given her consistent presence and unparalleled perspectives. This is a conversation that you truly don’t want to miss. Shila, thank you for joining in.

Shila Nieves Burney

Hey, Leonard, thanks for having me. I’m excited about the conversation.

William Leonard

Likewise, likewise. I know you are very familiar. I’m sure a lot of our listeners are familiar with you. But we’d love for you to just introduce who you are, your background, and your segue into venture capital.

Shila Nieves Burney

Sure. I’ve spent about 20+ years, investing in human capital through programs and services for large institutions and nonprofits, and pivoted to full-time entrepreneurship in 2018. I started a company and I was really excited about it, and then an entrepreneur asked me to help him source investors. I thought, “Well, that’s interesting. Let me see what this is.” I didn’t spend any time in finance or investment banking or anything like that. This was a new space for me. It was because of an entrepreneur and seeing firsthand how hard it was to access capital, access the networks, and the resources to be able to scale. And after doing that for seven months, and getting him to a $5 million letter of intent, I decided that this problem is so much bigger than just one entrepreneur because I’ve met several entrepreneurs along the way. I decided to let myself just spend a year learning about venture capital first and then getting myself plugged in into the ecosystem. I started out having events first, founder forums, and just really bringing resources to the entrepreneurs. And then I said, “Okay, so I’ve met enough entrepreneurs to know that there’s no pipeline issue, there are tons of entrepreneurs, and that I would want to fund.” I did that in late 2019. And fast forward, we have a fully functioning fund, we’ve had a couple of closes, we’ve made five investments. That was pretty much my entree, just an entrepreneur, and wanting to help him out. We saw that the big problem was so much larger.

William Leonard

You’re right. The problem is large and it’s not a pipeline problem like it is. You said you started the fund back in 2019. You’ve had a few closes, five investments, congrats. What is the thesis of Zane? What types of companies and founders are you investing in?

Shila Nieves Burney

We are investing in bold entrepreneurs who are building innovative business models. And for us, that means diverse entrepreneurs, who were primarily here in the southeast will look opportunistic across the US. We’ve gone back and forth about sectors. Should we focus on certain sectors, mainly because of the region we’re not known for? We’re known for sects, right? But outside of that, what are the kind of opportunities here? We’ve gone back and forth and just settled on, we’re going to be sector agnostic. We see incredible deals coming our way and we don’t want to limit ourselves. No particular sectors, we’re looking for diverse founders, teams, and innovative business models. Primarily in the southeast, that’s basically what our thesis is.

William Leonard

Got it. Do they have to be a revenue-generating company when you all find them?

Shila Nieves Burney

No, not really, because we know we’re looking at some early stages. And so we’re saying exchanging some type of exchange with the customer whether it’s data or dollars. If you’re working and if it’s in beta, but you have some customers, you’ve been serving those customers, your customer feedback, and there’s some market validation of that, then we want to take a look at you. We understand some of these companies won’t have revenue or significant revenue for a while. It’s the early stage, right? Revenue is not one of the indicators that we look for when we’re investing in companies.

William Leonard

Got it. That’s interesting. You mentioned the internal discussion that you all had about being sector agnostic versus being maybe a specialist fund and looking at a few verticals. What do you all think about that? How did you all come to that decision? Is that something you may explore being a more focused fund when it comes to sector and other future funds?

Shila Nieves Burney

Sure. I’ll tell you the sectors that we did decide and we have the experience for. We had cybersecurity as one of our sectors and we were really excited about that. But limited partners didn’t take us seriously, they thought we wouldn’t be able to get into any cybersecurity deals. We’ve had a few cybersecurity deals come our way. And then the other thing when we said we would focus on, I’ll give you the sectors that we thought about played extremely well here in the southeast. EdTech, FinTech, Digital Health, Digital Media now the Creator Economy was the unknown, we had supply chain logistics, which is huge right now. We got feedback that we were being too limiting in some of our sectors, and so we decided, “Okay, so the idea must be to go broad and then see what we can find.” What we’re thinking now is Fund 2. We will definitely have gotten some companies on our building to feel really comfortable about certain industries, and probably will have more of a targeted focus on Fund 2. But right now, because of our team, I’m still a solo GP. I’m looking at great deals, the attraction for this, can we get great founders who can create great business models and who already have created great business models? That’s how we sort of landed on that.

William Leonard

Yeah, that’s interesting. It’s always a debate between investors as to whether you should be a generalist or a more sector-focused fund, but that’s interesting. You are a solo GP at Zane Venture Fund, is that correct? That’s interesting. It’s not too common, especially here in the southeast. Curious as to one, why be a solo GP? And then two, would love to hear a little bit about your experience thus far? Because I’m sure we have some listeners who are maybe founders or entrepreneurs, or anyone in the ecosystem, who is thinking about raising a fund and may want to be a solo GP? What are the pros and cons as well?

Shila Nieves Burney

Sure. Doing a solo GP, Lisa was a solo GP, which she originally started out with. And of course, in Fund 2 there were some changes. Folks could start out as a solo GP. And of course, as you build more funds, you would want more people on board. So for me, I didn’t set out to be a solo GP, like I would have loved to have had a partner who was committed to this just as I was. When it is required to raise a fund, not everybody has the liquidity to be able to set up a fund. I’ve tried to see how can I bring people in and they will have the same level of enthusiasm, dedication, and all of that to the fund. That’s incredibly hard. When this isn’t your vision, this is my vision. I’m putting forth the fund that I say, I think we should do here in the southeast. Getting people to buy into your vision, and then be able to double down on it, that’s incredibly hard. People who start funds together have usually worked in something together before. They have that working knowledge of each other. The disadvantage is that you have to do all this by yourself, there’s no savior coming to help me look at these deals or reach out to LPs. That’s on me. Part of the advantage of that is that, first of all, I’ve always been what is called an independent contributor. I’ve leaned into that through all of my careers, I was never a team of 10, it was usually just a team of one meeting me. I know how to work, I know what I need to get done, how fast I needed to get done. The advantage of being a solo GP is how quickly you can move, there are no layers, there is no bureaucracy there, there are no approvals except for my relationship with Sig, and I talk about everything. I lean on his experience as a 30+ year successful investor. I think for those who are considering it, research, research, research, research. When I thought about a solo GP, I looked up Charles Hudson and I still admire Charles to this day. I’ve talked to Charles a few times about why the solo GP role, why hasn’t he gotten a partner? The thing is he’s capable enough of managing this by himself. He has that talent on his team, right? He has analysts and other partners or principals and that sort of thing so it’s not just him. But in terms of the primary decision-maker, it’s him. For this fund, I’m leading into that sort of role. I know, it’s all on me. In that way, I don’t bring someone in with the expectations that like, “We’re not going to get paid for about five years.” I don’t want you to think because you see 25 million that that’s what’s in the bank. We don’t have that yet. We have fundraising to that. Not everyone who’s wanting to become an emerging manager understands that. So I say, research what it takes to build a fund if you can’t do it by yourself, but you have a partner who has the same sort of ideals that you have partnered with him. Solo GPs, I mean, it’s not always the best way to go. I think people should find out what works best for them.

William Leonard

I think that’s right, finding what works best for you. The model that’s worked for Charles and the team for some time, so it makes sense as to why you would stick with it, right? In that anecdote, you mentioned Sig. Sig Mosley. For some of our listeners who aren’t familiar with Sig, would love for you to give a brief synopsis of who’s Sig is and the relationship with Zane as well.

Shila Nieves Burney

Sig has been coined the godfather of angel investing here in the southeast, right? He’s spent an incredible amount of years building up that reputation of credibility around investing in great companies and then having significant returns. Right now, Sig is still the record holder of acquisitions here in the city. That was the acquisition of trade expiry was a $6 billion deal. To be able to have someone with that caliber on my team, I mean, it is incredible. Every room you go and you say Sig, everybody knows who he is. The thing about Sig is that Sig was known for saying no a lot. He still has a fund and that fund is winding down now. When I asked Sig for coffee, he said yes. When I asked Sig if he can mentor me and advise me, he said, yes. When I said I want to start a fund, he said, “It’ll be hard, but it’s not impossible.” And then when I asked him to come on as a venture partner, but sig had to see something within me, right? I had to go out and do the work. I expected to do the work. Plus he wants to make a difference as well, right? He has invested, he did a sort of synopsis of his portfolio to find out if he has really been effective in diversity. And he had without even trying. I think he said, 60% of his portfolio was diverse. For a white man here in Atlanta, and seeing tons of deals, he still was able to make some investments to diverse entrepreneurs. Sig is just an incredible ally and great for the city of Atlanta. Yeah,

William Leonard

He certainly is. On the topic of emerging managers a bit, you asked him to mentor you, he often says no, but he said yes, in this case. For other emerging managers who were going out to raise their first fund, how important is that aspect of mentorship to helping you get in front of potential other GPS and LPs, of course, as well?

Shila Nieves Burney

I know there are a couple of thoughts about mentorship, some folks say especially Black entrepreneurs or even Black GPS were over mentored and underfunded. How do we get you to get past the mystery part Check, right? I didn’t know this fact, if I’m gonna do this and do it well, I want to bring in the person who’s done it already. I think it’s incredibly important that folks find mentors early. As soon as you think you want to go down this road, find someone who does it, who’s done it, done it before, and done it well. What Sig did when he became a mentor and advisor, as he began to give me the credibility of learning under him and so that helped open other doors for folks who were interested in the fund. And I think, not that we thought of mentorship is like, “You got to help me out, Sig. You got to raise the fund for me.” That sort of stuff. But it was like having an ally or an advocate who can go in rooms and talk about the fund in rooms I’m not in, right? And then be able to get people bought into the fund. And so Sig has been that. If people want to really do this, I say align yourself early with someone that can help you walk you through the process. Sig is one of the more visible mentors and advisors, but I have so many people I call on who’s done this before, right? Still to this day, I had a call with two people yesterday. I have a coach that I talked to, all of those people are important and helping me as I navigate this space that wasn’t built for me, right? I’m really appreciative of Sig and the others. 

William Leonard

I wouldn’t be where I am today without mentorship. I think a lot of the people in this space can say the same. And especially with his experience of working with LPs and helping you navigate those conversations. There’s been a tremendous benefit from that relationship. Have you been in Atlanta your entire life, or did you move here at some stage in your life?

Shila Nieves Burney

I came here in 2002. 20 years, I came from Orlando, Florida, where I was born and raised. Love Florida, but we were looking for something different. There was always a pull to Atlanta, mainly because “The Black Mecca” is sort of the moniker that’s out there. But we didn’t come here thinking that the streets were going to be paved with coal, right? We came here thinking we got to work our behinds off and we’re gonna make a great opportunity from living here and we did it. I worked for the American Cancer Society. I worked at the Atlanta Journal-Constitution and I immediately got plugged into so many aspects of the city. And now, here 20 years later, I’m finally being able to have the ability to sit down with the Chamber, having the ability to partner with and invest in Atlanta, having all this because of the time that I’ve been here in Atlanta and the network that I’ve sort of built up.l I feel like this is the best city to live in, in my opinion, it’s still low cost. Hopefully, those prices don’t continue to rise, but it’s still an affordable city still, good quality of living here. And look at what we’re doing now, in terms of our entrepreneurship ecosystem, it has grown tremendously. I don’t know if I’m a native yet but definitely been here for a long time.

William Leonard

I think all the other contributions that you have made thus far certainly would put you in a native category. That’s interesting. I guess what changes and evolution have you seen since being in Atlanta for over 20 years now? What are some of the biggest changes that you’ve seen from the business and maybe tech ecosystem standpoint?

Shila Nieves Burney

One of the biggest things and I wasn’t in tech so I don’t really know like 20 years ago what the tech scene was looking like, I know that entrepreneurship has always been huge here, right? People come here, really, because they feel like they can build something from nothing, and that the city will respond in terms of customers and that sort of stuff. I mean, in terms of entrepreneurship,  just to see what’s coming, right? What’s already been here and how those companies are growing, you think about Goodr. It’s their five-year anniversary, right? Five years ago, I’m sure she was out there struggling and whatever. Now, she’s a premier founder for our city building. This awesome company is called Goodr. They’ve been distinct within the last two years, right? From Topes’ $3 billion valuations and all of these other entrepreneurs, Tristan Walker is now here, I think Jewel and Collab and what they’re doing over there, Fearless Fund. This is so different than it was when I first started, right? None of these folks existed in any sort of way. Like they were young entrepreneurs or whatever. But now they’re business owners, limited partners, and other funds. I don’t think we’re anywhere near the precipice yet. There’s so much more gonna happen. I can’t remember what the Business Journal put out, like with Apple moving here then Microsoft setting up, Airbnb, people know there’s something here. I think that we just never had an opportunity for them to trust that we were an ecosystem worth investing in. But I think we’re proving them wrong by now.

William Leonard

Yeah, I agree. I think a lot of the local university talent as well is underpinning a lot of that success. Doesn’t get talked about a lot but I think investors and entrepreneurs on the ground level like you and I certainly see the impacts that those institutions are having. And you mentioned, Apple’s investing here in the Propel Center which is what we were talking about the other day, and that’s a really exciting opportunity that’s gonna change the city.

Shila Nieves Burney

I think so. I think it provides an opportunity, you’re talking about the students coming, we’re talking about the HBCUs and students on PWIs, primarily white institutions for those who don’t know. There is a wealth of talent here. We’ve doubled down on that talent by coming up with our own sort of how do we get engaged with universities in the city to find some of that early talent and then be able to keep that talent here?  What do we have in place as a city that keeps them here? Hearing things like the Propel Center, and then Morehouse has their own innovation center, entrepreneurship center, all of these centers, I believe, they’re just going to spin out talent because folks will now have a place to go to, right? A lot of students don’t want to go to a job. They want to start a company when they finish school, whether it’s finished high school, some of them finished college. I want us to be the MIT and Stanford where you go to those schools. You’re coming out with a business model and I’m hoping centers like the Propel Center and Morehouse are going to be doing something like that. But there is so much talent, I’ve met them. I’ve gone over to UGA. I mentor over at Georgia Tech. I’m always talking to the folks at Morehouse. I want all the talent you all are now working with to have a place to go once they leave those particular programs. Those things are really going to make the city special. Yeah, I agree.

William Leonard

It’s important for the startups and venture funds here to build relationships with those institutions as well. I think there’s a need for more opportunity, and just more bridging that gap there. Zane is going to work on that, Valor is going to work on that, equally a lot of the funds here as well. As you think about 2022 Atlanta, here we are in February, what are some of the things that most excites you about the ecosystem, whether it’s founders, startups, more capital in the region? Are there three things that people should really be aware of happening in this ecosystem this year and maybe this decade?

Shila Nieves Burney

Sure. So for me, it’s the people and the companies, right? I say that because they go hand in hand when you’re looking at entrepreneurship, right? So yes, the company is over here. For us, we do look at the founder. When we were talking the other day, there was a guy who just moved to Atlanta. He came here to start his company called Real-Time Data Mining. He’s going to start with Morehouse and some of the HBCUs with this product. He moved from San Francisco to Atlanta. I think we’re gonna see more of that happening. I wish I had the opportunity. I talked to Sig about like, “How can I go to other cities and recruit them to come to Atlanta?” and he’s like, “You have to have a big enough phone to do that. You need at least 100 million.” I would love the day when those Black primarily founders who are in such incredibly underfunded regions be able to have somewhere that they feel is a home for them. I’ll give you an example. I went to Oakland, did a founders’ dinner there. I was so surprised that, first of all, what it was was considered downtown looked like blight. I didn’t know that there had been some protests there. I didn’t have that sort of information. But when I met with those entrepreneurs, there is no real source of capital for them. They’re building companies, the sorts of capitals across the bridge in San Francisco. They’re not Silicon Valley Entrepreneurs, where do they have to go?  We get this continuation of folks that come here to Atlanta and find their place here in the city, that comfort level, and that support that they’re looking for. That’s what I’m excited about, being able to support these entrepreneurs with a 360 approach, right? Meaning, we have mentors for you, we have advisors for you, I have a couple of funds who are in the city who can help us close this round. That will be awesome that our founders don’t have to go to the west coast or go to the northeast, we will keep that talent here. That is what my hope is. I’m really excited about the people who are here, those who are coming here, and all of the opportunities we have to have an incredible and robust entrepreneurial ecosystem.

William Leonard

Thinking about what we talked about the other day and how Atlanta is the city where you move here, and you get plugged in, right? You get to where the founders hang out, to where the investors are, to where the accelerators are to put a patriot company too. The note about San Francisco and Oakland, how those cities are literally like 10-15 minutes apart from each other but there’s such division, right? In the sense of Oakland is so different from San Francisco, but the proximity there. I’m sure there’s a huge divide in the capital as well that probably doesn’t really escape and go to the other side of the bridge.

Shila Nieves Burney

Speaking of the other day, that was a great example of diversity in our city. It could have been an all-Black dinner we had the other night, but it was such diversity in the room from the entrepreneurial community, and that is Atlanta. I also think we’re gonna see more of those individuals come to Atlanta because they want to build community here. I think that’s what we’re gonna see as well. There is something special here and other folks know it. They want to have a place in the city that they can come and call as part of their community, too.

William Leonard

I agree. That’s a good point. And then transitioning, here again, you’re an investor. You’re evaluating probably hundreds of companies. I’m curious as to what 2021 looked like in terms of valuation at the early stage, and then a month in now to the new year, have you seen those same valuations carry over? Because oftentimes we hear that people are wanting to raise lots of capital at inflated valuations. Wondering if you think that’s going to continue throughout this year?

Shila Nieves Burney

Well, if I’m paying attention to the markets, I don’t think so, right? The markets have not been great of late and that’s been one of the things that is what they call inflated valuations. Where are we going to see that? And for me, I’ve talked to a few companies, and I’m like, “Your valuation is what?” And I’m priced out because you’re above the range that I said I would invest in. Because what happens in the market, affects me, too. I’m hoping things change. But if the market continues the way it is, we’re gonna have a reckoning around valuations, right? You will see some of these companies who have inflated, I don’t know what would have happened with them. But I don’t know if they’ll continue to get the type of funding. I mean, VC was incredibly busy right at the end of 2021 and came in 2022, blazing, not for everyone. But for those who did, there’s been a lot of capital invested in the sort of inflated valuations. I just want to see what happens. I don’t want to see it, I’m hoping that we still have a great ride in the market but I just don’t know if that’s gonna be sustainable or not.

William Leonard

Yeah, I agree. You have to track what the public markets are doing. I think interest rates are going up in March, obviously, they were lower to encourage spending and really pumped stimulus into the market. And now, it’d be interesting to see what really 2022 shapes up to be in valuation and things like that. It’s interesting. What’s on tap for Zane Venture Fund this year? What are some of the things that you’re most excited about, relative to maybe fundraising, or investments, or just anything relative to Zane, that you are excited about, and looking forward to?

Shila Nieves Burney

Sure. It’s interesting because CrunchBase confirmed it for me this morning. One of the things in their report was about upskilling and how VCs have poured billions into upskilling. Some of these companies are coming up and we just made our first investment out of our programming in a company that’s focused on upskilling. I’m really excited, we are right on target. I’m glad because that’s when we were focused on EdTech. I’m gonna go into the EdTech space and this fits that. I’m incredibly excited about that. I’ve talked to some incredible entrepreneurs, building all kinds of products. I can’t invest in all of y’all, right? The deal flow that I’m getting is awesome, and how to try to decide, especially with the five investments we’ve made, and those companies are now scaling, and they require to follow on funding. It’s a toy between, do I make this next investment or do I support my company? We have to support our portfolio. For me still fundraising and hoping I can get to my target because I’m missing so many opportunities, potential deals, deals I really like and they meet certain criteria. I’m excited about closing my fund at the target that I set out for, whether that’s gonna happen or not, the market will tell that LPs who are also backing away from new fund managers will tell that, but I will still go out looking for good deals. I’ll still support the ecosystem as much as I can. But I’m excited about a lot of these new companies that are coming up founded by diverse entrepreneurs who have found a problem that felt like they had the ability to solve it, you know?

William Leonard

Yeah, I agree. And you all solely are not focused on Atlanta, but rather to the southeast as a region. And so for us, we’ve seen a lot of interesting companies coming out of Raleigh and Nashville as well, whether they’re in the Health Tech, or Biotech space. I’m curious do you see any other cities here in the region that is really burgeoning and popping up and coming up with some cool companies emerging? 

Shila Nieves Burney

Everybody talks about Miami, right? There’s so much talent down there in Miami from both the Black and Latinx entrepreneurs. I don’t think the Black entrepreneurs get access to the capital at the same level, but that’s a whole other story. But definitely burgeoning, Tampa. I’m heading to Tampa next week, right? There’s been a lot of movement there. I even saw at Black Orlando Tech, and I’m originally from Orlando, I’m like, I got to go there and see what’s happening there. There are pockets of cities like Birmingham. One of my LPs is from Birmingham. I had never heard of him before. But they have a pretty burgeoning ecosystem there and so definitely want to see what’s happening there. Someone told me about Jackson, Mississippi. First of all, is there activity in Mississippi at all? And they were like, there’s so much happening in Jackson, Mississippi. I don’t know what types of companies are spinning out of those particular cities, I don’t think they have like a focus of SaaS or anything like that or health like Nashville but they’re having a lot of activity. Part of our work is I will be able to tap into all of these different ecosystems and see how we can be a play a part and let folks know, “Hey, we’re here to help support the entire region.” There’s so much happening here.

William Leonard

Interesting. Jackson, Mississippi. I’ll admit that one was not on my radar, but I think it may be now after this conversation.

Shila Nieves Burney

I think the woman who was Jewel Burks Solomon’s CTO, I can’t remember her name but she’s a Ph.D., I believe. She’s doing something there as well. I just was shocked. That’s a region I would love to help out to be able to spur entrepreneurship, right? I think Mississippi is one of our poorest states in the country. To be able to do something there to spur some innovation would be awesome.

William Leonard

Thinking about that lower Gulf region, New Orleans has a lot of stuff that’s popping up, as you said, Birmingham. I know I went to the Innovation Depot out there. They’ve got some great companies in the pre-seed and seed accelerators there. I think the ecosystem is just due for an amassing of talent and strong companies coming out. I’m excited, Shila. 

Shila Nieves Burney

But here’s our mismatch, William. We have all of that and the mismatch is the capital, right? That’s part of our thesis as well, how do we figure out this mismatch, right? With all this great talent, we’re the most underfunded region, how do we bring capital to match the amount of talent so we don’t lose the talent that’s in the region? 

William Leonard

We recently wrote a blog post on that. Just talking about while there is an increase in capital, the allocations and the percentage of total capital coming to this region has remained relatively flat. Shila, I think this was a very strong conversation. I think our listeners will, one, learn a lot about Zane. Two, about your passion, your thesis, and how you’re continuing to really pay it forward for this ecosystem here in the region. I’m excited and really appreciate you jumping on the podcast with me today.

Shila Nieves Burney

Super, I’m excited as well. I look forward to working when we make a deal together. Valor and Zane. I wish you guys all the best and it’s really good to talk to you, William.

William Leonard

Likewise. Take care.

Lisa

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.