Alexa Binns 00:13
Today’s guest is Illumen Capital’s Managing Partner Daryn Dotson, we had a really educational conversation.

Earnest Sweat 00:20
Yeah, I felt like it was a history lesson and one of the best ones where I you know, I was captivated. But this episode I will remember, we learned what people get wrong about diversity and venture. And why this applies to you. Yeah, you listening, GP and LP, and your friend who hasn’t heard the podcast yet. So with that, let’s dive in. Today

Alexa Binns 00:48
We are speaking with Daryn Dodson, the managing partner of Illumen Capital. Illumen Capital is an Impact Fund of Funds with over 250 million assets under management, addressing systemic inequality by reducing racial and gender bias in investing. They invest in venture growth and private equity funds, and then work with those fund managers to reduce bias in their investments, selection and operations. Baron is a leading advocate of social justice and a pioneer in impact investing. I am so grateful to hear from you today.

Daryn Dodson 01:20
Great to be here.

Alexa Binns 01:22
Thank you. Illumen Capital is based on the idea that a vast majority of investments are underperforming because of racial and gender bias. Everyone listening whether you are male or female, black, white, the idea is more diversity improves the bottom line. Could you, Daryn, explain how?

Daryn Dodson 01:43
Sure, Illumen Capital is a private equity, venture capital and growth fund of funds. And we partner with a wonderful research team at Stanford, called Stanford spark. And we apply strategies to address biases within the investment process. In fact, some of our early research basically outlines the thesis, which is published in peer reviewed in the Proceedings of the National Academy of Sciences. And that research shows that basically, the higher black managers perform, the more bias they face, which is a fundamental problem for those that want to achieve optimality in the asset management business, it’s also a fundamental problem for those of us that want to see the humanity of people in the investment process and the underlying economic value that people bring to the marketplace. This is probably also true by proxy of women, and other people of color with an asset management business, that those who want to go out and intentionally find the highest performing assets in the asset management business are somehow tripped up by their own biases when they’re evaluating women and people of color leading them to not find the most optimal investment. So that’s why we exist, that’s what we do is we help managers identify invest in and steward investments in those areas. During

Earnest Sweat 03:21
you speak of just this, this bias and these findings, are there any particular experiences, or people, managers that have significantly shaped your approach at Illumen? Capital?

Daryn Dodson 03:36
Sure, there are people in the early 1920s, when Charles Hamilton Houston, left being on the Harvard Law Review, and became dean of Howard University, he would lay down the foundation of a really important idea at Howard Law School, which is the idea that education is separate and unequal. And, of course, as he worked on board for Brown versus Board of Education, because he died in 1950, he never saw the 1954 decision, but his student that was at the front of his class was Thurgood Marshall. And he built a law school basically to take on one of the unjust challenges within the marketplace of education, namely that black children were not getting the same per pupil allocation as white children. And bringing them together in a unified way would help build the future of the country in a more integrated and optimal way. And ideas would foster that would lead to prosperity and growth over time. So one of the things that we often think about is the power of the systemic change that Charles Hamilton Houston’s vision led to in building a cohort of managers that are taking on a system that’s not only suboptimal from an investment perspective, but also So suboptimal because of the way it treats human beings is something that we’re also inspired by it Illumen Capital.

Earnest Sweat 05:08
wow, that’s I love taking that kind of historical approach to our asset class. And were there any from your previous experience said, maybe Calvert funds or the idea village that also have helped kind of like put that in practice of how you can take that within the sphere of like the legal industry to now in education to now the venture and private equity markets?

Daryn Dodson 05:39
Sure, I’ll go back a little further to my experience at the self help Credit Union, and the Center for Responsible Lending. So our job there was to look at, through rigorous and evidence based ways to overcharge black and Latino homeowners, many of the listeners may know that the number one way in which black people in Latin X people and all people reach the middle class is through homeownership. So what we found is that Latin X and black homeowners were being overcharged relative to risk in comparison to their white counterparts. So some of the things that make that really important is once we crunched the data that we shared with state legislatures, they passed 18 laws across the country to stop the legal stealing of home equity from these homeowners. And I think that’s a really important thing for the country, the overall prosperity and growth. So that’s one experience I borrow from because Illumen Capital is based in an evidence based way, we’re looking at the way that financial markets underestimate and overlook women and people of color. And we’re trying to enable well meaning people in this case to examine their biases and look at the opportunities that they might be missing within financial markets.

Alexa Binns 07:03
That leads to your strategy, which is both investing capital as well as the training program. Can you describe for us how that works, and why both are included in your strategy? Sure.

Daryn Dodson 07:19
So when we partner with funds, we work with them to understand and benchmark where they are in terms of their diversity, equity and inclusion efforts. And we measure the year over year improvement in the funds in terms of their ability to address biases within the hiring, promotion, retention of talent processes, within the board construction of their boards that they often own and control. And then also within their investment selection processes. One of the funds that we work with, in fact, looked at their pipeline. And when they re-examine their pipeline through some of the work that we’ve done in partnership, one of the things that they found is that they were labeling black companies, often too early. And when they went back and examined the differences between black LED companies and white LED companies, they found that even though they had the same revenue, it was actually the person reviewing the pipeline that was, you know, basically interpreting the data in the wrong way. So what they were able to do is rethink their pipeline, adjust the CRM criteria, and have a double check in the process to ensure that there wasn’t bias. And we know this is an important practice, because oftentimes, I was kind of joking with some friends. And I said, you know, do you know what Friendster is? And for a lot of the listeners that are probably older than 40, or 45, they probably know what Friendster is. And because many people younger than that don’t know, that’s kind of the point. You don’t win and venture by being number two. Oftentimes, you win by being number one. So by finding the best companies, and not just the companies that look a lot like Silicon Valley, we call that a familiarity bias. We’re able to really unlock the vision of managers in partnership with them to see latent value and economic markets. You

Earnest Sweat 09:31
to that point, you Illumen Capital just published a survey of fund managers and over half respondents saying they didn’t know what to do, what to do, and what was the top barrier to making progress on diversity and investment firms? You mentioned the understanding where your bias is coming from and incorporating that into the diligence process. But what other actions or changes do you recommend? Man Eight years incorporated to improve the representation of underrepresented people of color and investing.

Daryn Dodson 10:07
Yeah, great question. So yes, the survey said that many people in organizations don’t know what to do. And that’s for two reasons. One is that many of the managers are just starting the program. And just like the 12 step program, the first step is to realize that there’s a problem. Right. And, and that is a powerful realization, because many people in venture capital, even though it’s like the rest of the financial services industry, 1.4% of $82 trillion in capital, managed by women and people of color combined, they don’t think there’s a problem. So the importance of realizing that there is a problem is the first step to the agency to transform and change that problem. So that is the beginning point of our process with our managers, we also make available the training at all levels of the firm, which is really important, because many diversity and inclusion training start with just the people in the lower ranks of the firm. And all partners in this case, in our case, are partnering with us as well as the rest of the firm. So that there’s an entire organizational effort to move things forward. Not only that, we have a cohort of managers, which also helps to shift the field. So by having managers that are working together across private equity, venture and growth, that’s enabling a group of people with a particular way of seeing the world to advance across multiple phases in the economic system, this idea of seeing the world without bias and looking at evidence based ways to address biases in their processes. So as we know that many venture funds will seek higher later rounds from other venture funds, and in some cases, private equity funds or growth funds. And in that case, they need partners that can also see the same vision in the world. And that’s something that we’re really proud of advancing across our capital deployment. Strategy.

Alexa Binns 12:09
No, this this is interesting, because it’s in contrast to some folks that we have had on the show before that are specifically focused on less represented managers, but you’re having these conversations with all managers were, you know, I think it’s helpful for our audience to recognize this is this is sort of a, you, you have to opt in to the program to receive Daryn capital. And this is speaking of a history lawsuit that reminds me of my high school advisor, college advisor, excuse me, who was basically responsible for Medicare being launched across the United States. And if you wanted your state to receive any of this money earmarked for kids and elderly, you had to desegregate your schools. And it feels like we are in control as allocators of where our money goes, and I really love this strategy. And I’m still directing it to the people who manage a lot of money. But making ourselves smarter about

Daryn Dodson 13:25
Yeah, I think that that’s a really good point. It reminds me, you know, one of the motivating factors for what I do is that my grandmother was a principal of a school in Washington, DC, and helped integrate that school. And the thesis there, like the thesis for Thurgood Marshall in Brown versus Board of Education was that it was important for the country to build integrated schools in order to lift the prosperity of all people in the country. So that’s one, one idea. As I reflect on that, I also realized that her pension was managed, likely like the rest of the financial services industry, by 99% white men, which I think that she would have an issue with for at least two reasons. One is that she wasn’t represented in the largest investment in her entire life that was stewarded by her retirement by people that look like her and that were the same gender as her, but also because it most likely underperformed because the vision of the buying power of black communities would grow exponentially as LatinX communities over the next 3040 years until the present in which it still is explosively growing. In the country, so many of those ideas that led to that transformative growth may have been missed within the investment strategies by having, you know, lack of diversity within the deployment cycle. So again, I mean, I think she would look today at the economic system and look at the service that so many principals, teachers, and administrators put forth to build a more unified school system and increase prosperity that way and say, wow, there’s something missing in the global financial markets. And it’s people like me, Daryn, that.

Earnest Sweat 15:40
I definitely resonate with that because both my parents are state and city. Employees are right retirees, mother taught in public school, father worked for the Workforce Development Agency, in the state of Arkansas. And so one thing that always inspires me on what I do, and making sure other people get into this industry is that having more of us underrepresented minorities, in the spots where we are helping our the biggest investment for our parents, our grandparents, our uncles, aunts, people we go to church with and so that definitely resonates with me. And so you recently raised a second Fund of Funds of $168 million. Congrats on that. What are you looking for in new managers, net new managers criteria, there’s a little bit capital half?

Daryn Dodson 16:36
Well, simply what we’re looking for is managers that resonate with our research. And those managers right now are probably pretty upset. Because what our research shows is that they’re outperforming their peers, and that they’re facing additional bias because they’re outperforming their peers. So having published the study in the Proceedings of the National Academy of Sciences, that shows not only the 1.4% of $82 trillion in capital managed by women and people of color, but it helps us to understand at least part of the hypothesis of why that is. And if we systematically the asset management business systematically overlooks and underestimates high performing black LED funds, then that’s something that I think that the managers that are outperforming are reading our paper and reaching out to us through our website and filling out the form to essentially share with us their experience and the details of their opportunity so that we can better make decisions about who to invest into. So that’s a you know, I think that’s really important, of course, this spans not only black managers, but underrepresented managers of color. Also, white managers that may have diverse teams, or may be interested in building diverse teams over time. So that’s a place for people that are experiencing this bias. Or they’re looking for hiring the best people in the world. And they think that as they look around the current rooms, if they’re in, it’s probably impossible that all of the best people in the world look like one gender and one race. So they reach out to try to figure out the puzzle of how to attract talent. That is the best talent in the world, which to eliminate capital includes women and people of color. But to many firms within Silicon Valley, that’s just simply not true that they have that belief that that could include women and people of color. So how do we expand networks to expand opportunities to recruit not only companies, board members, but talent that can help our firms to outperform? And how can we do that in a systematic way, and one of the big overlooked opportunities of talent within the financial markets and sectors mean we also look for managers that have tremendous backgrounds and experience in investing, whether they’re spinning out firms and some strategies or building their third or fourth firm and facing increasing bias because of the research that we’ve outlined. We look for managers that will commit to not training for a day but 10 years of going through workshops and addressing biases within the work that they do, and that they’re committed to continuous improvement. You know, our our, our programs and strategies, toolkits that we work with managers on I’m always surprised is one of the very few forms of professional development at all within the venture capital industry. I think Professional Development has done really poorly overall. And they’re so excited to participate in a program that helps them develop not only as leaders within their firm, but give them a unique competitive advantage to find latent value and economic markets, which is the heart of all investing

Alexa Binns 20:17
Is that a shift or any any learning from fun one to fun to how you’re spending your time or or where your focus? Sure,

Daryn Dodson 20:27
I think that the learning from fun one, as we progress to fund two has been that there’s progress across the portfolio. So as we look at the numbers of companies that are being selected that sort of match up with optimal student selection processes, we find that those result in increased portfolio companies that sort of match our thesis, when we look at the leadership of the firm’s, we find similar outputs and outcomes within that process. And it’s a journey. So we’re continuing to build and refine each of these different steps. One of the things that we found also is one of the most powerful ways that we’ve learned from our social psychological partners over at Stanford Spark is that you can change behavior. As human beings, we’re all creatures of the environment that we’re in. So if you change the environment from a firm that is based in Silicon Valley, for example, to invite the firm. And indeed, this is part of our kind of program in terms of our mandatory program to Montgomery, Alabama. And you work with them to understand a deep dive on slavery, lynching, mass incarceration, and the periods of history that led to the imbalance in the global financial markets. That’s a different experience and a different level of understanding systems, and the tools necessary to transform and change a number like 1.4% to 50%. So it creates the capacity for the group to work together to take on challenges that can yes lead to optimal performance within financial markets, but also is really important within the culture of the firm itself. So we’re really excited about that. That’s a two day deep dive in the Illumen Capital impact experience. And we partner with impact experience to a wonderful organization in order to achieve that outcome. That’s powerful.

Earnest Sweat 22:53
And I know that has waves of impact, not only in those firms, but as they started, do it be an examples and outperform others who will start as well, oh, I

Daryn Dodson 23:05
was just gonna say that the audience is probably familiar with the recent increase in interest rates that have been moving through the financial system. What some may not know is that at least one of the people responsible for increasing interest rates is the only black woman in the 108 year history of the Federal Reserve Bank. And that’s Lisa Cook, Dr. Lisa Cook, who is a professor, and has done a much bunch of amazing research, which really, I’ve been reading a lot of lately, but I thought the listeners would be interested in knowing that her research from 1880 to 1968 really dives into the period of racial lynching terror within the United States. And one of the reasons that’s so important is that as an economist, she also details essentially, the size of a small or mid sized European country in terms of GDP has been lost in the United States, because of the lack of patents filed by black entrepreneurs during that period from 1880 to 1968. So if we want to think about how to transform and change that history, to catalyze latent opportunities within the US markets, even as periods of you know, with George Floyd and others that have been targeted and killed, there’s still arguably racial terror in the culture that prevents the innovation that that leads to the lack of overall global competitiveness for the for the country. So I think there’s some really important elements to look into Lisa cooks research that match up with our thesis at Illumen Capital. It’s another important person in leadership that is, you know, exciting to follow and look at. So other listeners might be interested in learning more about Dr. Lisa copes work to

Earnest Sweat 25:16
to that point. A common thing we hear from allocators is we don’t invest in someone because they are women, or just because they’re a person of color. And they use the kind of 1980s 1990s term of work, we are colorblind. But it sounds like you see gender and race as a positive differentiator? What would you say to those allocators that are thinking about, you know, what changes we should make or maybe that aren’t thinking about it at all?

Daryn Dodson 25:48
I think that finance is often respected generally, as a deep, lifelong learning opportunity. And certainly successful investors often cite compounding learning as one of the most important aspects that lead to compounding returns within finance. One of the things that I often am surprised by is the idea that there’s massive untapped value. And under mis estimated and overlooked asset managers, many of these asset managers are black and women lead funds. So it seems to me that those that are investors are basically dead if they stop learning. And one of the greatest opportunities to learn is to learn about the biases that prevent half of the world from allocating capital. And if we look at Daniel Kahneman research in which he won the Nobel Prize, we would see that biases are one of the really important things that prevent investors from achieving returns that are consistent with their goals, we see that when we apply that same methodology to one of the largest areas of bias women and people of color, with an asset management that there’s a huge investment opportunity. So what I would say is that I There are always gonna be investors that have stopped learning. And that’s a dangerous place to put capital. And so one of the tests that we look at when we are evaluating managers is whether they’re willing to continue to learn and one of the great areas I think of investing in our lifetime. So that’s a great criteria for allocating capital is figuring out which investors have stopped learning, and which are continuing to pursue the compounding nature of learning that so many like Charlie Munger and Warren Buffett have proposed, you know, over their life and career. Yeah,

Alexa Binns 28:07
This is the second order thinking that VCs pride themselves very much on being able to see sort of how one thing will end up benefiting their investments down the road as a great example.

Earnest Sweat 28:24
Now we’re going to take a quick break to speak with our sponsor. On the show today, we have an industry expert and sponsor Renu Kumar, the managing director of investor coverage at Silicon Valley Bank, a division of First Citizen Bank, thank you Renuka for partnering with the show. Glad to have you today.

Renuka Kumar 28:44
Thanks, Earnest, It’s so great to be here. And, you know, first off, I just wanted to say thank you for having us as a partner. Having this forum to hear directly and candidly from LPS who are funding the future of venture is incredibly insightful in any environment that, you know, especially in today’s environment. So thank you.

Earnest Sweat 29:05
So you’ve been with SVB for 18 years. What should VCs and LPS listening know about SVB today?

Renuka Kumar 29:15
Yeah, yeah, a long, long time at SVB. You know, the thing I would say about SVB today is that we are nearly eight months into the acquisition by First Citizens Bank. We’re operating as our own division, still known as SVB. First, citizens were benefiting from the strong and diversified balance sheet under their umbrella, while also maintaining the same commitment to the venture ecosystem that you’ve always known from SVB. And as their clients continue to tell us, they have not they have not seen any difference in our commitment to their companies and our offerings.

Earnest Sweat 29:53
Absolutely. You all have been a staple and will continue to be a staple in the future. Of this industry? And to that point, what does the future of venture look like, from where you all sit?

Renuka Kumar 30:08
Yeah, that’s a good question. Um, you know, the thing about venture and investing in innovative technologies is that there will never be a lack of good companies being formed. You know, it’s also important to note that 2021 was an anomaly. And today’s environment is actually closer to, you know, a normalized market going back to 2015 2016. So, you know, we are seeing healthy activity and sustained valuations in certain segments, particularly the seed stage, we’re seeing a lot of activity there. Robust valuations. And then also in certain segments, or certain sectors, such as climate securities, and of course, Gen AI, a lot of activity are in those places as well. So I think we’ll continue to see activity into the next couple of years for a few reasons. The first is that over 70% of companies will need to raise in 2024, you know, these companies are the ones that raised the seed the a couple years ago, they’ve done some extension rounds, some rips, perhaps, and, and, you know, now they’re really nearing the end of their runway from those initial rounds. And then see, you know, same goes for the growth stage, too, we’re also seeing signs of growth, investing, picking up now, not to the levels of 2021, of course, but you know, there have been a few IPOs. And, you know, some of the fundamentals are going to be strong for certain companies next year, they’re going to be more companies in good shape to go public. And, you know, it remains to be seen when the window truly opens. But I’ve heard talk of, you know, perhaps the latter half of 2024, we’ll start to see that IPO window open a little bit more. And then lastly, we’re also seeing some macro economic factors in our favor with inflation slowing, and with talk of potential rate cuts and the near to medium term from the Fed, which should provide a nice, you know, boost to this space.

Earnest Sweat 32:17
Yes, absolutely. Looking forward to all those things going in the industry is a favor. Lastly, is there anything given where SAP sits, and you’re involved with all the different stakeholders within the ecosystem, whether it be LPs, venture capitalists, or even the founders and companies themselves? Is there anything that you think those groups misunderstand about the asset class that you’re able to see from your kind of Nexus seat?

Renuka Kumar 32:50
Yeah. Well, I don’t think this is necessarily misunderstood. But it’s probably worth reiterating. Investing in a mentor is a long term game, as we all know, you know, it’s an inherently risky asset class, and we should be expecting volatility over the course of this long term investment cycle. And, you know, right now, there are really good companies being formed, we have a lot of visibility into these early stage companies, you know, even pre institutional rounds. And, you know, we see this company formation with exceptional talent, and they’re being funded at pretty attractive valuations from the investor standpoint in today’s market. So that should should mean you know, good vintage for 2023 2024 investments, going, looking at

Earnest Sweat 33:41
renew, aka, you’re such a great partner in the VC ecosystem. Thank you for partnering with us. For folks who are interested in getting in touch with her Renuka and SVB. Feel free to email her at our Kumar, K U. M. ar@spb.com. And now, back to our LP interview,

Alexa Binns 33:59
you’re meeting with so many emerging managers? Are there any trends as somebody who’s taking these pitches? GPS listening doesn’t necessarily know who they’re up against. And curious what you’re seeing out there in the market. Any, anything you’d love to see more of?

Daryn Dodson 34:19
Well, the verticals that we invest into are transformative, health, tech, Ed, tech, financial inclusion and environmental transformation. And what I would note about these sectors is that all of them are rife with bias. And one of the really important things about addressing biases within healthcare, you know, doctors are, are our bias and we know that because of the outcomes and disparities, they’re not intentionally trying to harm patients, but the results of these biases lead to these massive disparities and if we accelerate these biases through machine learning and AI before we check them, we have a really difficult challenge. We know in the education system, black and white teachers over expel discipline and suspend black kids at Forex at the rate as their white counterparts for the same infraction. And if we don’t think about that, before we build language models that treat kids desperately that also accelerate the AI machine learning algorithms within edtech, we have a really serious problem. Inversely, if we’re able to, in these two areas, and all the areas that we invest in to help address some of these biases, we create more competitive products for the end customer, in many cases, the Department of Education or the purchasing power of governments. And we create more of a competitive advantage for these companies. Similarly, within health tech, really important to make sure there’s equity is growing, purchasing power to demonstrate and deliver equity. As we look at the clinical trial space, it’s really important to have drugs that work for all people in terms of prescription drugs, and not just some people, there are also market implications for that within the country in the world. So I’m excited that a lot of our companies have positive impact in the world, that the bias reduction work that we do make some more competitive over time, and really delivers to this positive oriented impact investing space, sort of something that it’s been missing a long time, which is the dimension of economic value creation through the inclusion of overlooked and underestimated people.

Earnest Sweat 36:52
That’s awesome. We know a lot has been changing within the venture landscape. You mentioned the interest rates have increased. And that’s caused some contraction. curious on how you think this all plays out within the venture landscape. Will we have less funds? And specifically, how will these trends impact emerging managers?

Daryn Dodson 37:12
Sure, me, I’ll start with how it impacts us. So we know from our research partnership with Stanford spark, that in periods of increased interest rates and periods of increased inflation and periods of increased polarization leading up to the US election, for example, and also in periods where there’s war, causing uncertainty to move through markets, that one of the one of the outcomes of that is that bias increases. So people are trying to make knee jerk decisions very quickly. They’re under lots of pressure, they’re sleeping less, lots of these other implications that lead to heuristics and bias. So what that means to us is that the five years of training that we’ve already done with managers is coming into a phase where it’s even more important to apply these frameworks of deliberate analytical decision making rather than rash, emotional decision making to slow down and look at the rubrics when hiring people. And rather than relying on that gut feeling in terms of deploying capital. So as valuations readjust, there’s a lot of a tendency to want to move to the other side of the brain and make rash decisions. And we find that our managers are more competitive in these markets, because they’ve been practicing addressing biases over the last several years, beginning to bring that into each of their different practices and processes within the firm. So that’s something that I think is really important to us. Likewise, you know, other allocators across the system, that weren’t investing in women and black people that were outperforming in previous years, are really going back to their event further away to what they’re familiar in, either from a brand perspective or from a familiarity of race perspective. So what I would expect on the broader pools is that they may retreat from even the light programs that they have, at the very time that they should be looking more intentionally at these dimensions about performance in order to achieve their growth of their portfolios over the next 1015 years. So it’s a exciting opportunity for us to focus in our strategy and continue to invest in and partner with firms that see the opportunity of one of the multiple of the largest buying power demographics within the country, namely Latin X and black buying power growth, and align that with the portfolio growth for those managers that can see a massive opportunity.

Alexa Binns 40:14
Yeah. If you’re deploying capital slower this is actually the time you can go enroll in one of aluminum capitals programs you have, you have time to put toward growth and, and, and sort of self improvement. Curious if there’s anything else that fellow allocators or GPS tend to get wrong, but you just know, you say, you know, this is just not how it is,

Daryn Dodson 40:47
You know, the fundamental idea that drives finance, and the idea of achieving optimal returns, relies on modern portfolio theory and looking at all available investment opportunities. The thing that most people get wrong is that maybe in the AI or machine learning, if they wanted to get on the cusp of these really important trends, what they would do is hire a bunch of people that really knew and understood these trends, to build, you know, a trillion dollar company, and to be on the cusp of understanding where those opportunities were with Illumen Capital. I think that we’re, I think that the global financial markets are imbalanced to the tune of about $40 trillion in capital, because half of the world is not included in investment decision making. So the question is, why are people relying on firms like Illumen Capital, that have spent time building the analytics to see and understand proximity to these incredible investment opportunities that are overlooked and underestimated with the magnitude of the potential opportunity? So that’s what I’m so in a way the water we swim in, is imbalanced? It’s not one allocator, some allocators, it’s all allocators, almost, by definition, are missing the massive opportunity. You know, when I learned venture capital, one of the professors that I had that taught venture capital, who founded one of the great firms of you know, our time in terms of return orientation, said what many listeners have heard the two conditions to be successful in venture capital are one, that the idea is non consensus. So that means if you went around and you talked to lots of people, they’d say, you told them that women and people of color are a great place to look for investment opportunities, they’d say, Well, you know, I’m, I’m not so sure that that’s the case. And it’s only 1.4% of $82 trillion, where maybe there’s something about the people that are already in the system, that are just doing wonderfully well, and we don’t need to change it, which is exactly the conversation around the country. The other condition is that you’re right. So I think that the research suggests, in collaboration with Stanford spark, that there is a real opportunity here. And that is what we would be looking for if we were applying the scientific method to this problem, as we’d be looking for many allocators that go against their entire training over 20 or 30 years that run the largest endowments in the country in the world that learn sovereign wealth funds and pension funds. And we, like we did, tested them with high performing black LED funds with the exact same criteria as high performing white LED funds. And what we found is systematically they chose only the white LED funds. So at a level of significance, it’s really important to continue to look at and meditate on for those that want to make optimal investments in the asset management business. So I think there’s a place there. And it’s worth the hard work of the 10 years that we work with our managers and we’re very excited that they think it’s worth the work and that there’s a big reward if we get it right. It’s a reward for the human condition. And the the stop to the unfairly penalizing people for being successful in financial markets because of their race or gender and it’s a win for financial for creating economic value within the financial system, which is, you know, supposedly one of the important points of investing

Earnest Sweat 44:58
Daryn Thanks so much for all the knowledge nuggets, inspiration. Thanks for swimming with allocators.

Daryn Dodson 45:08
Really wonderful to be here with both of you and what a pleasure Alex and Earnest look forward to continuing the conversation again soon.

Earnest Sweat 45:16
See you later, allocator. After portfolio tile, investing with a smile