Q2 2021 Quarterly VC Update: Frederik Groce on the State of Venture Capital Investing

In conjunction with our Q2 Venture Financing Report, I sat down with Frederik Groce of Storm Ventures and BLCK VC to get his take on the state of venture capital investing.

Key insights from Frederik Groce

On the pace of the market: “The use of technology has been paramount for companies, organizations and institutions to operate through an unparalleled period. This has led to increased purchasing, growing company revenues, and further capital allocation and investment at record levels.”

On founding BLCK VC: “[A]s current Black venture capitalists, we could see the reliance on personal networks for access to roles at firms, but also the reliance of these networks to drive deal flow, were creating structural barriers for the Black community.”

On upside and impact: “The current system, as it is, is leaving huge economic upside on the table largely because networks haven’t evolved. The reality is that companies that prove successful are global – and to be global, you need to be diverse.”

Based on Cooley data for Q2 2021, how does your experience in the market compare? Are you seeing the same record activity?

Absolutely – the pace this year has been the fastest I’ve experienced. COVID has acted as an accelerant to the digital transformation to the enterprise. The use of technology has been paramount for companies, organizations and institutions to operate through an unparalleled period. This has led to increased purchasing, growing company revenues, and further capital allocation and investment at record levels. It also doesn’t hurt that we’ve seen some liquidity events that have increased broader enthusiasm for the asset class. 

What prompted you and your co-founder, Sydney Sykes, to realize the need for a community like BLCK VC that’s built to equip Black investors?

Sydney and I were looking for a community of mentors and peers that could come together and share best practices, and how they were navigating and building their careers – how individuals had been successful.

As the community started to form, there was this collective rethinking around the influence technology companies were having on society and the wealth creation opportunities they were creating. And the recognition that as venture capitalists, we have a unique role in the company formation process of so many of these companies. And as current Black venture capitalists, we could see the reliance on personal networks for access to roles at firms, but also the reliance of these networks to drive deal flow, were creating structural barriers for the Black community – barriers many in the community had struggled against to break into the industry themselves. 

Therefore, the question quickly became: “What can we do about it?” The answer was BLCK VC. BLCK VC was created to build that community, empower aspiring and existing investors to succeed, and advocate to change how the venture community operates.

Since BLCK VC’s founding, where do you think progress has been most prevalent in the venture industry as far as inclusivity? In what areas is it lagging?

We’ve seen progress made in the junior ranks of investors (5% in 2018 to 7% in 2020 on the NVCA Human Capital Survey), which is a meaningful step forward. However, progress is stagnant at the senior roles, which have remained at 3% over the same time period. We’ve also generally seen a broader effort by the industry to engage and better understand what the problem is,and start to think about how to work together to drive change. 

How do you plan to evolve BLCK VC’s progress in increasing representation of Black investors and transforming venture capital into an inclusive engine for change? How important is expanding these efforts beyond VC hubs on the coasts?

BLCK VC is currently active across six US metros – San Francisco, Los Angeles, Chicago, NYC, DC, Atlanta – and we continue to see growing expansion of the asset class and, more importantly, great companies to invest, outside of just the traditional ecosystems. As such, we’ll continue to cater the community through our different regions and virtual programming. We’ll also continue to build and iterate on our core programs: Breaking into Venture, NYC Path, Scout Network and Black Venture Institute. Each of these targets core barriers of entry into venture capital.

How do you incorporate the mission of BLCK VC into the work you do with Storm Ventures? 

They are one in the same. My work as an investor is 100% aligned with my work with BLCK VC. Ultimately, this is about not leaving opportunity and upside on the table while simultaneously creating positive impact. The current system, as it is, is leaving huge economic upside on the table largely because networks haven’t evolved. The reality is that companies that prove successful are global – and to be global, you need to be diverse.

About Frederik Groce

Frederik is a partner at Storm Ventures and a co-founder of BLCK VC. After graduating from Stanford University, he spent two years as CEO of Stanford Student Enterprises (SSE) – with more than 100 employees and total assets exceeding $18 million – and oversaw Stanford’s accelerator program. Frederik is also a mentor with the East Bay College Fund, which works with minority college students from underprivileged communities throughout the East Bay region of the San Francisco Bay Area.

About Storm Ventures

Storm Ventures is an early-stage B2B-focused venture capital firm that’s been investing in enterprise leaders for more than two decades. The firm is focused on investing post-product-market fit and helping companies find their go-to-market fit. 

About BLCK VC

BLCK VC is transforming the venture capital industry to mirror the diverse demographics of the US. Venture capital is a crucial component of achieving economic equality; it is a vehicle to build wealth, develop future leaders and strengthen communities.

BLCK VC is a 501(c)(3)-pending nonprofit organization that equips Black investors with the access, education and community they need to accelerate their careers in venture capital.