VentureForward Blog Series: Investing in Veterans

Note from NVCA: As part of NVCA’s VentureForward initiative, we launched this blog series in November 2017 for industry leaders to share their perspectives on why diversity and inclusion (D&I) are important for the future of VC, their firm’s activities and approach to D&I, and guidance for how we—as an industry—can drive meaningful change.

With this edition, we are shining a spotlight on a veteran entrepreneur and a VC firm that focuses on investing in veterans. Brandon Shelton of Task Force X Capital (TFX) and Brendon DiBella of StreetShares share their thoughts in the interview below:

Investing in Veterans

Task Force X: Investing in Veterans

Tell us a bit about Task Force X Capital and your inspiration to start the firm.

Brandon Shelton (BS): We are a Veteran-Led, founder-centric VC firm focused on growing seed to series B Veteran co-Founded software startups. We launched the firm in 2015 to tackle a number of unmet needs by working from the Founder backwards, which resulted in a VC model.

Brandon Shelton

We understand that the Veteran affinity model and tribe across the US is one of the most powerful, experienced-based alumni groups out there. As Veterans ourselves, we have access to this proprietary network. With less than 1% of our population volunteering to serve, we were surprised to learn that 10% or more of all small businesses are founded and owned by Veterans—that makes for a very powerful entrepreneurial talent pool! We thought a deliberate source of capital with supporting resources and connectivity to this affinity group was needed.

Can you briefly describe the TFX investment strategy? What do you think makes TFX different from other VC firms?

BS: Given our military backgrounds we are able to interrogate and confirm the leadership training, qualities and performance history of Veteran Founders. Most military personnel (officer and enlisted) undergo multiple levels of operational and leadership training between ages 18-25 and then move right into people and task management roles – something which is unprecedented in the private sector. How these individuals have learned, failed and grown is paramount to both their journey to start a business and to our vetting process. TFX utilizes its Task Force of experts, enablers, advisors and supporters to accelerate our Founders’ paths to success and de-risk the investment.

TFX Investors and Founders at Mission Day in June 2018

What is StreetShares?

Tell us a bit about StreetShares and how it works.

Brendon DiBella (BD): StreetShares is the veteran affinity financial services firm of the 21st century.  With nearly 60,000 members, StreetShares uses social lending technology to provide both small business owners and government contractors access to fast, fair, and affordable funding all across the US. To power its competitive lending, StreetShares employs Veteran Business Bonds where StreetShares members earn 5% interest over 12 months. Veteran Business Bonds are in fact open to anyone in the U.S. who can simply visit our website and begin with as little as $25.

Brendon DiBella

Why did you decide to work with Brandon and Kevin, and how has venture capital funding helped your company?

BD: I remember the very first time that I met Brandon. My immediate impression was that this was a fellow Veteran who I could trust and was a straight shooter. He did not let me off the hook in any regard with his initial round of questions in trying to get to know StreetShares and everyone involved. It was like rapid fire for at least the first hour. He was asking all the right (and tough) questions, which is what you want someone to do, and that you would do yourself. Veterans would never find that off-putting of each other. I can only imagine that was the same experience for the co-founders and the other Veterans he encountered at StreetShares. TFX has not only been a provider of funding but has also been a huge supporter of the firm. Brandon also serves on the StreetShares Foundation Board of Directors.

How do you see military experience as an asset for yourself and the business owners you work with?

BD: The entire financial services marketplace is based on trust. In fact, the vast majority of financial products are essentially someone giving someone else their money and then hoping to get it back (with some kind of return). For that system to work, people have to trust each other. Being a Veteran, I feel I can trust other Veterans more readily and believe that often works in reverse. There are numerous instances where the conversation I have with a StreetShares member is one where I can tell they do not fully understand the financial products we have. In most cases, that person is simply trying to decide if he or she can trust me and if he or she can trust StreetShares. That is where being a Veteran makes all the difference.

Unique Expertise and Investment Opportunity: Including Veterans

Why is it important for the venture capital industry to focus on supporting Veterans?

BS: The VC industry continues to set records for amounts of capital raised and deployed, but we continue to see underrepresentation of Veteran-funded startups. Unlike other diversity areas, the Veteran group is experienced-based; we aren’t born Veterans, rather, we chose to serve. Our uniqueness is derived from how we served, handled leadership roles, supported our teams, managed accountability in highly risky and often life-threatening conditions, and operated in technology-rich environments at scale. We see the pairing of the unique experience gained through military service with technology entrepreneurship as a differentiated and winning investment strategy. We see it as a source of investment alpha and look to prove it.

What recommendations do you have for investors or entrepreneurs looking to tap into the opportunity and expertise Veterans bring to the entrepreneurial ecosystem?

BS: The challenge for Veterans and non-Veterans is connecting the dots on what Veterans can bring to a startup or small business. The Veteran community is arguably one of the most diverse groups in the US; each individual performed differently while on active duty and each individual has grown differently since serving. And each individual has grown differently since serving so the non-Veteran community needs to resist the temptation to generalize what Veterans can or cannot do. Rather, get to know the individual, why they chose to serve, why they chose to leave the service, and why they are starting their business—what’s their purpose? That’s a great way to meet and find common ground.

Leadership Discussion with Matt Eversmann

BD: Never underestimate the entrepreneurial potential many Veterans have even though they may be fresh from military service. What they may lack in formal business training or experience, they quickly compensate for in drive, determination, and fearlessness. Although I was not a founder myself, I wanted to join StreetShares because I believe in the founders, the mission, and the team. That being said, it was a start-up and had risk. I remember my Dad (an Army Veteran) asking me if there was any point where the company could go away in the early days. I said, “sure.” I remember he was stunned by that and asked how I could join a start-up. I replied, “Dad, there were plenty of times you could have died in military service. Why should we fear business?” My main point is that Veterans are not afraid of the mission in business. If they are eager to start a new venture, they are up to the challenge because the military already tested for resolve in the face of danger.