Human Ventures' Heather Hartnett on studio models, developing their business creation platform to add value to founders, and their fundraising learnings from raising their first significant fund

Follow me @samirkaji for my thoughts on the venture market, with a focus on the continued evolution of the VC landscape.

My guest today is Heather Hartnett, CEO and founder of Human Ventures, an NYC-based venture firm founded in 2015 that leverages a very unique model that combines traditional fund investing with business creation and startup studio model in order to back and assist exceptional founders. Human Ventures has over $50M AUM, and has four exits including Reserve, Girlboss, and Clark.

Prior to founding Human Ventures, Heather’s career spanned across roles at firms including CityLight Capital, and Claremont Creek Venture, and the David Lynch Foundation, where she worked with some of the country's largest family offices and investment institutions. Heather is a member of the Kauffman Fellows program and a frequent contributor to Forbes on the topic of venture capital. 

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In this episode we discuss:

01:31 The hypothesis behind Human Ventures

04:20 Why it was so important for Heather to build a larger platform to provide value to founders

06:35 The challenge of raising capital with an unconventional fund

09:22 How did they narrate the vision to LPs to be able to close a $50M fund in 2019?

12:42 The power of conviction when fundraising

14:33 How Human Venture uses a venture studio model in unique ways to fund and create companies

18:21 The process of co-creating companies in their incubator and why it’s been successful

24:25 How their three pillars—the venture studio, “humans in the wild”, and the fund franchise—work together

26:46 The KPIs Human Ventures uses to measure success

28:22 How the pandemic validated their human needs economy investment thesis

31:26 The advice she would give to emerging managers

33:51 How Heather views the Seed Market currently

38:02 Heather’s most counterintuitive lesson as an investor

39:08 The lesson she took from her biggest investment miss

41:05 The Investors that inspire her

Mentioned in this episode:Human VenturesGive and Take by Adam Grant

I’d love to know what you took away from this conversation with Heather. Follow me @SamirKaji and give me your insights and questions with the hashtag #ventureunlocked. If you’d like to be considered as a guest or have someone you’d like to hear from (GP or LP), drop me a direct message on Twitter.

Transcript:

Samir Kaji:

Hi, I'm Samir Kaji and welcome back to another episode of Venture Unlocked, the podcast that takes behind the scenes of the business of venture capital. On this week's show I'm excited to bring you my conversation with Heather Hartnett, CEO and Founder of Human Ventures, a New York based venture firm that leverages a really unique startup model that combines traditional fund investing, any business creation platform in order to back exceptional founders. Before starting Human Ventures in 2015 Heather's career spanned across roles and firms including City Light Capital, Claremont Creek Ventures and time at the David Lynch Foundation where she worked with some of the country's largest family offices and institutions. Heather was also a member of the prestigious Kauffman Fellows program in class of 21 and is a frequent writer about VC on Forbes.

Samir Kaji:

We had a really fun conversation covering topics like creating a successful studio model, navigating in today's early stage of market where capital is a commodity and her experience in raising for a firm that has so many non-conventional parts. Now, let's get into the episode to hear all of that in more. Heather, it's so great to have you on the show. Thanks for joining us.

Heather Hartnett:

Thanks for having me.

Samir Kaji:

Usually, when I start these conversations, it's going back into history of what catalyzed somebody's journey into investing, but your model is so unique. I actually want to jump ahead to 2015 when you started Human Ventures, what was the hypothesis that you had and what exactly does Human Ventures do?

Heather Hartnett:

Human Ventures is an early stage venture firm, and we are focusing on pre-seed to Series A investing in primarily consumer tech and product in areas that we call the human needs economy. And we can unpack that a little bit too, but largely in the areas of health and wellness, future of work and innovating technology that supports those human needs. Large part of what makes a successful startup ecosystem is the concentration of founders building together and helping one another and I met my partner who I founded Human Ventures with, Joe Marchese, about 12 years ago. And he's just a consummate entrepreneur. We very much connected on the fact that entrepreneurs see the world 10 years in the future and a lot of times they feel misunderstood. Having a community and a support system is so crucial, especially at the earliest stages of building your company.

Heather Hartnett:

And there wasn't really a lot of fundamental resources for founders in New York City. New York is a massive economy. So many different industries. Tech was not the center of that by any means, but now all of the industries are becoming tech enabled and founders are the lifeblood of innovation. And so, we're starting to see more and more founders start their businesses in New York. And so, in 2015, my background, just quickly, I actually started venture in 2005. I was out in the Bay Area. My father was an entrepreneur. I was exposed to entrepreneurship at a very early age. Kind of got thrown into venture at a time where there was not a lot of upward mobility there, there was not a lot of proliferation of venture firms. And so, but I did get exposed to it and I got bit by the bug early.

Heather Hartnett:

Fast forward, I was at tech companies. I was in philanthropy for quite some time and it built up my network of family offices quite a lot. And in New York, when I moved to New York, we really saw that the next generation philanthropists was an entrepreneur. They were people who were wanting to make a change, but they were doing it earlier. It wasn't that you have to make your money for the first 70 years of your life and then you gave back. Founders were starting to see where there were challenges and see where there were opportunities and they were building around that. And so, we decided in 2015 to start of a business creation platform, we called it a startup studio. And that was really to be able to help founders build together and create an opportunity for them to have shared resources, operational expertise and just build a community around that.

Samir Kaji:

Looking retrospectively, it definitely seems really pressing to actually create platform versus just a traditional fund. But it does introduce a different degree of difficulty when so many firms when they first start, they keep it really simple. They just raise a traditional fund, invest in companies and maybe there's some aspect of value add that they incorporate. You had all these different moving pieces. Why was this so important to you?

Heather Hartnett:

Yeah. I mean, even then it felt like capital was a commodity. It was, how are you actually giving back to the founders? Why are they choosing you as a source of capital? Why are you seeing the best companies? And for me, the funding gap was the very earliest idea stage from zero to one. And it wasn't necessarily that there weren't first check investors because San Francisco had made that become a thing with angel investing. But I think founders were more, it's easier than ever to…