Blog

Many founders talk about their desire for a more diverse investor base. Richie Serna took that desire and made it a reality.

Serna, who founded payments infrastructure startup Finix in 2016, had raised more than $95 million in venture funding from the likes of Lightspeed Venture Partners, American Express Ventures, Homebrew, Precursor Ventures, Insight Partners, Bain Capital Ventures, Visa and Activant Capital.

The San Francisco-based fintech last raised $30 million in an extension of its Series B round last August. At the time, Finix — which says its mission is to make every company a payments company — said it had seen its transaction volume more than quadruple from Q2 2019 to Q2 2020.

But Serna, a first-generation Mexican-American who was the first in his family to go to college (Harvard), wanted to broaden his company’s cap table even further. So he created a special purpose vehicle (SPV) that ultimately raised an additional $3 million and brought more than 80 “traditionally marginalized” investors onto Finix’s cap table. 

“This is very personal for me as a founder of color — making sure we have a diverse representation of people in our investor base,” Serna said.

Finix CEO and founder Richie Serna – Image courtesy of Finix

The effort, Serna added, was more than just diversifying his company’s cap table. It was also an initiative aimed at giving Black and Latinx investors access to an opportunity they may not have otherwise had. Indeed, the numbers are dismal. A recent NVCA-Deloitte Human Capital Survey found that 80% of investment partners at VC firms are white, and just 3% are Black and 3% are Hispanic/Latinx.

“This is about helping historically underrepresented groups build track records and get attribution for the work to help them start their careers and hopefully one day start their own fund,” Serna told TC. “So this is just one way that we at Finix can construct a rewrite of the story about the lack of diversity in Silicon Valley.”

It’s also not a one-time thing. Moving forward, in all subsequent rounds, Finix will be allocating 10% of each round to Black and Latinx investors.

Jewel Burks Solomon, managing partner of Collab Capital and head of Google for Startups, U.S. said the opportunity to invest in “a high growth company like Finix at a time that is typically reserved for a very select group of highly connected (usually white) investors is a big deal.”

“Access is the primary determinant of wealth creation,” Atlanta, Ga.-based Solomon added. “So creating an opportunity for access to folks who might not otherwise have it is game-changing.”

For Tiffani Ashley Bell, founder and executive director of The Human Utility (and now Finix investor), the SPV gives “talented, knowledgeable investors and operators from diverse backgrounds — especially Black and Latinx people — who have traditionally been excluded from investing early in rocket ship startups” a chance to be able to do so. 

While fundraising, Finix was also looking to fill senior executive positions. Through the process, the company was able to find a few who came with a breadth of experience to help the company advance on its long-term goals — including the possibility of going public one day.

Fiona Taylor, who helped steer Solar City’s IPO and acquisition by Tesla and most recently served as Marqeta’s SVP of operations, is COO. CTO Ramana Satyavarapu was a founding member of Microsoft Office 365, the head of engineering for Google Play Search, led software infrastructure engineering at Uber, and was most recently the head of data platforms & products at Two Sigma, a quantitative hedge fund. 

Today, Finix has about 100 employees, 50% of whom Serna says he’s never met in person due to the pandemic and remote work. The company plans to double its headcount over the next year.

On whether the new hires mean that an IPO is in Finix’s future, Serna replied: “We always like to think that we’re not just building for the next year, we’re building for the future. And I think if you look at the group that we’ve brought together, it’s pretty clear in terms of the direction that we’re trying to head as an organization.”

In looking ahead, Serna said he’s also excited about the potential of the SPV to add diversity to his company’s cap table.

“Black investors and other Latinx entrepreneurs were the first people to believe in me and back Finix,” he added. “I’m honored to pay it forward by creating the SPV, and I hope other founders are inspired to do the same.”