Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.
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Two years ago, Kelli Jones started Sixty8 Capital, an Indianapolis-based venture fund focused on supporting seed-stage startups founded by Black, Latinx, women and LGBTQ+ entrepreneurs.
Jones, managing director, is the first-ever Black female venture capitalist in the state of Indiana. She gathered inspiration for the firm’s name from the generational, class and political events of 1968, a watershed year in the civil rights movement.
In May, the firm announced the first close of its $20 million venture fund with backers including the Next Level Indiana Fund, 50 South Capital, Bank of America, Eli Lilly and Co., First Internet Bank and the Central Indiana Community Foundation.
Sixty8 Capital is powered by Allos Ventures, with Allos’ Paul Ehlinger serving as venture partner. The firm is industry agnostic and intends to invest in 25 to 30 pre-seed and seed-stage companies, with an emphasis on the Midwest and initial equity checks of $250,000 to $500,000 per company, with additional funds reserved for follow-on rounds.
Jones believes there is a $4 trillion missed opportunity when there is not a focus on diverse founders. The answer, she believes, is leveling the playing field by infusing venture capital into businesses so they can utilize technology to build products and services that can scale.
She spoke to me about that investment strategy, how she likes to work with founders, and her experience seeking funding during a pandemic.
What led you into venture capital?
Jones: I was born and raised in Indianapolis and was always working at the intersection of technology, entrepreneurship, entertainment and media. I started a company in 2009 that focused on experiential marketing, where most of my clients were technology startups. I began working at festivals and ended up leaning into the entertainment world and working with Young Guru, who is passionate about research and science.
He became interested in diversity, capital and entrepreneurship around the time when diversity reports were coming out. I realized that in technology, there had never been people who look like me in the room. Owning a company was an opportunity to build generational wealth within a community. Most minority founders stick to small business, but we thought about how we could build high-growth, high-scale businesses if we understood the options and how we can access them.
I knew that this is my life’s work, and I took a role in Los Angeles as director of sales and marketing for two venture-backed media companies HipHopDX and then Blavity. Six months later, I wanted to start something on my own, and by then wanted to return to Indianapolis. There, I founded the Be Nimble Foundation and Black Hatch Fund, which support tech and tech-enabled startups founded by Black and Brown founders in Indiana. We provided technology training and job placement, and later started an entrepreneur side with accelerators.
Sixty8 Capital is connected to work we do with Be Nimble. The opportunity to invest $10,000 or $15,000 is great, but we are ready to invest $100,000 in companies.
My entire background is consumer and culture, and there is an opportunity to utilize technology and VC in this model for those businesses, too. That is what Sixty8 Capital is doing to demystify what VC is in our community — bring capital product to the community, both locally and in the greater Midwest, to lift an entire ecosystem and educate them on how to get funding.
What was your experience going after funding over the past year?
Jones: I left my job at Techstars in February of 2020, and then three weeks later, the pandemic hit. I thought the shutdown was going to be temporary. I began my partnership with Allos Ventures, which is huge in the Midwest.
As a first-time fund manager and coming out of accelerators, I didn’t have a track record, so my mentor suggested, as I was transitioning firms, to see if someone would want to hire me and be an adviser, and that is what Allos is doing for me. Allos invested in the fund and helped with LPs and how to talk to them.
I feel like I went to Fund School or VC School — I learned everything from setting up a fund to operating agreements. I feel like I have been in a super bootcamp for the past year. I would have not raised the money without that partnership. Allos opened doors, and its goal was never to say that a fund focused on diversity would not stand the test of time. Allos provided resources, patience and lifted me to get there. The most incredible thing to do is to make change. I knew I had trusted people behind me. It is not easy to raise funds, but it was a more pleasant experience because I knew I had people I could ask questions.
Tell me about your investment strategy.
Jones: We are looking at early-stage; pre-seed and seed stage. We will be investing $150,000 to $500,000 initially and reserve some for follow-on funding, as well as be able to invest a few times up to a small Series A.
We are targeting Black, Latinx, LGTBQ+ and all diverse people. Our focus is intentional because there are diverse founders who are affected in getting investment. Our sweet spots are B2B SaaS and consumer, as well as direct-to-consumer beauty, health and wellness.
Finding the next Black or Latinx Warby Parker would be a dream for me. Media, food and beverage would also be good. I’m also excited about the future of work and HR tech tools, as well as fintech and anything solving equity issues in communities. I am also looking at supplier diversity and mental and physical health, which are huge.
How do you like to work with founders?
Jones: I like to believe I am a founder first. I spent most of the past four to five years running accelerators, so naturally I do as much as I can. I am making introductions, and helping with hires and sales is my sweet spot — go-to-market is my favorite part.
We have built amazing networks and investors that are extreme value adds. Our first investment is Qualifi, a product of our accelerators. The company initially pitched and didn’t win, but ended up pitching again, won and we are now cutting a check for $200,000 into their start. We want to continue to share those stories.
We never have to say a direct “No,” more of a “Not right now, but circle back when you create the ecosystem we want.” We also have career training, so we can have the talent to put into the businesses. We really are going to bring into the ecosystem everything we have so far.
Your firm focuses on the Midwest. What attracts you to investing in this part of the country?
Jones: As a whole, the Midwest is underfunded. A lot more firms are popping up, but not with diverse funders. There are a ton of diverse funds on the coasts, and they tend to invest on the coasts. There was a unique opportunity to start a fund in Indiana.
There are some big exits, but again, not much diversity of venture capital here. Now I am the first Black woman to lead a venture capital fund in the state. That is a massive undertaking, but I am willing to take it. I want to expose our community to other communities.
The main reason is timing — there are not a lot of places where you can get early access to capital, and the No. 1 issue for businesses is capital access in the first two years. You try your best, pray it works out, or try for VC and fail or not get it. There is so much uncertainty, so it is a great opportunity to be in Indiana. I have amazing networks on both coasts. In addition, there is a lot of deal flow, which is making it harder and harder to say no to because I want to fund everything.
Illustration: Dom Guzman
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