Spotlight On: Shijiro Ochirbat, Principal, Reinventure Capital
October 2024 — In an interview with Invest:, Shijiro Ochirbat, principal at Reinventure Capital, discussed key milestones and achievements over the past year, including new investments, team expansion, and the launch of its second fund.
What have been the key milestones and achievements for Reinventure Capital over the past year?
Over the past 12 months, we’ve achieved several key milestones at Reinventure Capital. We’ve made multiple investments including new and follow-on investments in our portfolio companies. Despite the challenging environment in the VC sector, our performance has remained top-tier, which I am very proud of. We also expanded our team by adding a new associate.
In terms of my role, I manage portfolios and lead financial services alongside our managing partner, broadly speaking. Additionally, we started raising our second fund this year, which is another significant milestone for us.
What trends and investment opportunities are you observing, and how is Reinventure Capital adapting to them?
At Reinventure Capital, we prefer to invest diversely across geography, sectors, and founder profiles. Rather than focusing on a single trend, we look at broader patterns in the investment sector.
One major trend we’ve observed is the increased difficulty closing fundraising rounds. Many investors have become more conservative, making it challenging to syndicate and raise the targeted amounts for our investments. This conservative approach has also pressured valuations.
Despite these challenges, we haven’t faced a shortage of good deals, particularly with resilient founders, including women and minority founders. These founders have shown remarkable resilience in the face of market uncertainties and fears of recession. However, building syndications for investments and negotiating with other investors has been more challenging.
Our impact thesis focuses on ensuring fair valuations for our founders, which supports equitable wealth creation as their companies grow. Although the overall VC sector had a pessimistic outlook last year, we had one of our best years, demonstrating the strength of our investment thesis focused on underrepresented founders.
As generalists, we don’t pinpoint specific trends across sectors or geographies, but our diverse investment strategy has continued to serve us well in navigating the evolving market.
How does Reinventure’s investment strategy differ from conventional VC practices, and what advantages does this offer in terms of both financial and social returns?
Our investment strategy at Reinventure Capital is built around several key components. One of the most important aspects is what we call “creating majority success.” We aim to achieve at least an 80% success rate across our portfolio, striving for all our founders to succeed. We promote profitable growth, which minimizes the need for frequent fundraising and ensures sustainable growth. This approach helps hedge against risks that come with growth.
From an impact perspective, our strategy focuses on maximizing the wealth that our founders and their employees can acquire by the time of exit. By minimizing the need for fundraising, we protect the founders’ equity. We also maintain close relationships with our founders, providing strategic advice to navigate different financing rounds and ensure fair valuations.
This approach contrasts with the conventional VC model, which often focuses on maximizing returns from a few high-performing investments while accepting that most will fail. Our model, on the other hand, emphasizes majority success across the portfolio. This was particularly beneficial last year during capital shortages. Many of our portfolio companies were either at or near break-even and committed to profitable growth, so our primary focus was on supporting their growth rather than constantly seeking new capital.
Additionally, we promote diverse hiring practices among our portfolio companies. This aligns well with our founders, who are often already committed to diversity in their teams and supply chains. Our strategy’s unique edge lies in securing majority success, which offers both financial and social returns by fostering equitable wealth creation and diverse, resilient businesses.
[fusion_images order_by=”desc” picture_size=”auto” hover_type=”none” autoplay=”yes” autoplay_speed=”3000″ flex_align_items=”center” columns=”1″ column_spacing=”0″ scroll_items=”” show_nav=”yes” mouse_scroll=”no” border=”no” lightbox=”no” margin_top=”” margin_right=”” margin_bottom=”” margin_left=”” hide_on_mobile=”small-visibility,medium-visibility,large-visibility” class=”” id=”” caption_style=”off” caption_title_tag=”2″ fusion_font_family_caption_title_font=”” fusion_font_variant_caption_title_font=”” caption_title_size=”” caption_title_line_height=”” caption_title_letter_spacing=”” caption_title_transform=”” caption_title_color=”” hue=”” saturation=”” lightness=”” alpha=”” caption_background_color=”” fusion_font_family_caption_text_font=”” fusion_font_variant_caption_text_font=”” caption_text_size=”” caption_text_line_height=”” caption_text_letter_spacing=”” caption_text_transform=”” caption_text_color=”” caption_border_color=”” caption_overlay_color=”” caption_align_medium=”none” caption_align_small=”none” caption_align=”none” caption_margin_top=”” caption_margin_right=”” caption_margin_bottom=”” caption_margin_left=”” parent_dynamic_content=””] [fusion_image image=”https://capitalanalyticsassociates.com/wp-content/uploads/2024/07/CAA24_Invest-Insights-S6-Web-Banners-7.jpg” image_id=”64377″ image_title=”” image_caption=”” link=”” linktarget=”_self” alt=”” /] [fusion_image image=”https://capitalanalyticsassociates.com/wp-content/uploads/2024/07/CAA24_Invest-Insights-S6-Web-Banners-10.jpg” image_id=”64380″ image_title=”” image_caption=”” link=”” linktarget=”_self” alt=”” /] [fusion_image image=”https://capitalanalyticsassociates.com/wp-content/uploads/2024/07/CAA24_Invest-Insights-S6-Web-Banners-9.jpg” image_id=”64379″ image_title=”” image_caption=”” link=”” linktarget=”_self” alt=”” /] [fusion_image image=”https://capitalanalyticsassociates.com/wp-content/uploads/2024/07/CAA24_Invest-Insights-S6-Web-Banners-8.jpg” image_id=”64378″ image_title=”” image_caption=”” link=”” linktarget=”_self” alt=”” /] [/fusion_images]
How do you perceive the state of access to capital for underrepresented founders, and what trends are you seeing in this area?
It’s well known that underrepresented founders face significant challenges in accessing capital. My experience confirms that it can take a year or more for these founders to raise the necessary funds. This is one of the reasons why many of them focus on growing profitably and are aware of the fundraising challenges they will encounter.
One critical role we play at Reinventure is leading investment rounds. Often, underrepresented founders struggle to secure a lead investor. By stepping into this role, we help push the envelope, making it easier for these founders to secure the capital they need. Many of our founders came to us without a lead investor, spending months trying to raise funds. Once we decided to invest and lead the round, the situation improved significantly.
There are very few funds dedicated exclusively or even partially to investing in BIPOC and women founders. While there are more funds focusing on women founders, those specifically for BIPOC founders are rare. Recently, there has been an emergence of funds focused on Black founders, which is a positive development. However, these are still just drops in the ocean. Other founders of color, such as Latinx, Asian, Arab and other minority founders, often face similar challenges in accessing capital but are frequently left out of these discussions.
In the United States, it’s crucial to recognize and support all groups of minority founders who are equally in need of capital access.
What advice would you give to other investors looking to adopt an inclusive investment strategy and invest in underrepresented BIPOC and women founders?
The first piece of advice is to approach your sourcing with a clear purpose of being inclusive. There are countless deals available, and it’s easy to get lost in the sheer volume. Recognize that it’s often harder for founders of color to access the traditional networks where most venture capitalists source their deals. You need to actively build and expand your networks to include these underrepresented groups.
One unique perspective I can provide is based on my experience in sourcing almost all of our companies and leading the majority of our deals. I’ve found that BIPOC and women founders tend to present their businesses very conservatively. They are cautious and often understate their potential. This conservative representation can be so drastic that it might be misunderstood by investors who review multiple deals.
Investors need to be mindful of this tendency and take the time to deeply understand these founders and their businesses. Engaging deeply and thoroughly understanding their conservative nature has been crucial for us in identifying and supporting high-potential investments. So, my advice to investors is to pay close attention to the conservative presentations of these founders and see beyond them to their true potential.
What are the top priorities and goals for Reinventure Capital over the next few years?
We are nearing the end of our Fund One investment phase, meaning we’ll soon complete our initial round of investments. Consequently, our primary focus will shift to supporting and managing our portfolio companies and their growth, ensuring they have the capital and resources they need to succeed.
Our next significant goal is raising Fund Two. We have already started this process, and our excellent performance to date has been instrumental in kick-starting this fundraising effort. Bridging the operations between Fund One and Fund Two will be our main focus.
Additionally, with Fund Two, we aim to expand our overall team and operations, enhancing our ability to support our portfolio companies and continue our mission of fostering inclusive growth and success.
For more information, please visit:
