Navigating The 2023 VC Landscape Interview: Buffy Alegria

Forbes Business Hollywood & Entertainment Navigating The 2023 VC Landscape Interview: Buffy Alegria Brian Penick Contributor Opinions expressed by Forbes Contributors are their own. I write about entrepreneurship, investing, and entertainment. Following Apr 6, 2023, 02:27pm EDT | Press play to listen to this article! Got it! Share to Facebook Share to Twitter Share to Linkedin Buffy Alegria, Investor and Venture Capitalist Buffy Alegria This article is a part of the “Navigating The 2023 VC Landscape,” which previously featured Mike Smerklo of Next Coast Ventures.

Click here to view the previous installment, and follow Brian Penick on Forbes. com for more expert interviews with top investors and entrepreneurs. For the next installment of this series, Brian Penick interviews Buffy Alegria, a venture capital and angel investor based in Yakima, WA.

Her primary investment focuses on healthcare and companies that amplify women and other marginalized populations. Over the past few years, Buffy partnered to build one of the largest women’s health-focused venture funds , and she has invested in over 55 companies, 85% of which have female or minority founders. Some of Buffy’s notable investments include PregnanTech (a device for preventing pre preterm birth), OtoNexus (a device for reducing antibiotic use in the middle ear), and many others.

Brian Penick: It’s been an interesting few weeks since the SVB VB announcement and further challenges in the banking industry. What are your thoughts and what impact do you foresee for the VC community? Buffy Alegria: The situation with SVB is really unfortunate. They helped fuel startups, VCs and innovation globally.

As a former corporate banker at a large bank, I recognize the impact SBV had on VCs and startups. They provided a pathway for this group that wasn’t available to more risk-averse traditional banks. I’m hopeful that as the dust settles, the big banks or new entrants to the field will find a way to offer these much-needed services and funding to continue to fuel innovation.

Larger banks can offer a structure or a product suite that creates an opportunity for the sector while mitigating the higher risk profile. Historically, they have yet to largely play in the space and are slow to innovate. It’s time for them to step up to the plate, be more nimble, less bureaucratic and more innovative themselves.

Penick: What best advice can you offer any VCs/LPs in this current climate? MORE FOR YOU The ‘Backsies’ Billionaire: Texan Builds Second Fortune From Wreckage Of Real Estate Empire He’d Sold Hermes Joins Europe’s €200 Billion Club As Global Luxury Sales Soar Global Intellectual Property Theft Continues To Threaten U. S. Businesses Alegria: It’s an ideal time for LPs (Limited Partners: those who invest in capital funds) to invest in fund managers with a proven diligence process who focus on strong founders and work with a founder-friendly investment term.

Anyone seeking reasonable valuations, strong KPIs, with an eye toward the future returns and successes of the company could do quite well. The decline in valuations, coupled with the hesitancy of some investors, creates opportunities for fund managers with sound diligence practices to acquire exciting companies that are strategic to their thesis, including those that have previously been out of reach. My main suggestion is for inventors and fund managers to be as open-minded as possible, searching for founders with different backgrounds, experience, and opportunities that might not pattern-match their historical talent pool.

Penick: That’s a great perspective, can you please elaborate? Alegria: Of course. Everyone needs to collectively join forces and be willing to stop pattern matching and look at founders who are different––who don’t look like them and don’t have the same perspectives. VC is a good example of a challenging industry to break into, traditionally, if you don’t have experience working at a VC firm or a direct relationship with someone at a fund.

VC jobs are hard to find, and there’s no defined list of skills you need to enter the industry. If we’re trying to increase the number of underrepresented founders and work opportunities for underrepresented populations, we need to make the door to enter much wider and not only work within our warm networks. We need to allow people who may not have the same type of backgrounds to be in the space and have a seat at the table, which will benefit us as a collective industry.

Penick: Very well put. Can you share thoughts for startups/founders as well? What can they do to navigate the current landscape? Alegria: Startups right now need to take the time to deeply understand their market, their customer and their competition to make sure they’re solving a real problem, not just a perceived one. Take the time to analyze projections and develop plans around expected performance, and then do more of a sensitivity analysis to understand the worst-case scenario.

How does that change your assumptions? What’s your ‘pie in the sky’ scenario? Do you have multiple business models or revenue streams that you can pivot towards to enable you to reach milestones as the market dynamic shifts, making sure you’re raising the right amount of money, generating revenue and have a firm grasp on your use of funds? Many underrepresented founders especially don’t raise enough money because they want to be resourceful with their use of funds, but often, they’re not raising enough to get them the runway they need. Valuations were sky-high before the market shift, and many investors were jumping in who are now facing down rounds. Investors are now more diligent about valuations, strong financials, market knowledge, founding teams and whether they are solving real problems.

Investors that focus on fund managers who have a consistent diligence process and a strong team that can find great companies should be fine. Startups and investors who follow these guidelines attract more capital and find better deals, respectfully. I personally invest in Women and underrepresented founders because I feel they are more scrappy and resourceful.

Penick: Based on your expert opinion, what will happen this year? What does your prediction mean for both entrepreneurs and investors? Alegria: It is a tough market. Some LPs are nervous, and capital is hard to raise, even for good companies. But there is still a lot of dry powder out there available for great companies and for funds focused on investments that not only return a profit but also solve pressing needs within their communities.

Infrastructure around education and workforce development with certificates and skill pathways will become increasingly important. We can all advocate for these solutions, which provide opportunities to educate people about VC, whether around investing, launching a company, or filling open roles. There’s a massive workforce shortage in healthcare, for example, which people could fill with the right skills provided by investing in infrastructure and innovation.

This problem creates an opportunity for investors, startups, the unemployed or those seeking new careers. It’s a good time to invest. There are a lot of good deals, and the declining valuations allow fund managers to create opportunities they couldn’t have had in the past because of higher price tags.

There are private companies and public money out there that have the thesis to invest in innovation and diversity. Removing barriers for historically underrepresented founders like Women, BIPOC, and other groups will only lead to more rapid change, greater financial returns , and, more importantly, better innovation and outcomes that impact everyone. I aim to change the status quo of investing, which given our current climate, is something I strongly encourage others to consider as well.

Thank you to Buffy Alegria for her time and perspective. Please stay tuned for more articles from my “Navigating The 2023 VC Landscape” series by following me on Forbes. com.

Legal Disclaimer: I am a partner at the venture capital firms LOUD Capital and Legacy Entertainment Ventures . For journalistic integrity, I have not included my perspective within my colleagues’ responses for this article to remain unbiased. Follow me on Twitter or LinkedIn .

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