We recently had a conversation with Adam Demuyakor, Co-Founder & Managing Partner at Wilshire Lane Partners, exploring his journey to where he is today, the importance of his professional relationships, and the future of diversity in venture capital.
Tell us a little bit about you and your background.
I initially graduated from Harvard as an undergrad and shortly after started my career in the real estate industry. I worked at Morgan Stanley in the real estate banking and private equity group and later had the opportunity to work at Carlyle in their public markets division, at one of their long-short hedge funds. For me, the public markets were intellectually stimulating, but I always desired to have a more intimate level of collaboration with the management teams I was working with, rather than investing passively, via the markets. I wanted to have a very hands-on approach, and so that lent itself towards earlier stage investing and specifically, technology investing. I went back to Harvard, to HBS, to get my MBA, and then I did deep dive into venture capital and technology. I had the opportunity to work at Andreessen Horowitz in between my first and second years at school and I ended up working at Fifth Wall for a few years before ultimately Founding Wilshire Lane Partners starting at the beginning of 2019.
What separates WLP from other firms, or is there anything that you do that’s unique?
At Wilshire Lane Partners, we focus on being a go-to strategic partner for firms that want help and real estate capabilities at the asset-level. I believe that generally, in the real estate industry, if you have REITs or large public real estate operators, or even extremely large private real estate operators, there will be a level of inflexibility when it comes to being able to help out a startup with asset-level (as opposed to portfolio-level) needs. This could also entail helping a startup get one more additional building to help expand their business or one additional lease, helping them out with their build-outs, helping them with broker relationships, or just general asset-level real estate advice. Where there’s that inflexibility in the industry, that’s where we want to be the most flexible partner possible. A lot of it has to do with my partner and co-founder, Atit Jariwala, who’s the founder of Bridgeton Holdings, a real estate private equity shop. We both have a unique blend of real estate and technology expertise that provides a really unique suite of value-add capabilities for the startups we partner with. So far, the companies that we’ve invested in (Common, MealCo, Neighbor, Aarmy, and others) have really appreciated what we bring to the table.
How would you describe your network development efforts overall?
It is extremely important. Networking in venture capital is a large component of deal flow, especially with us. We are a bit of a niche player that focuses on a specific category; we want to be well known and well respected in the industry for that space. Something that’s important for us is that whenever a great real estate deal comes across, with a company that needs or could use asset-level capabilities, we depend on the industry and people in our network to inform us about the opportunity and to get our take on the company. Additionally, we also are proactive. We generally have relationships with VCs at the top funds across the US and are constantly checking in with them, taking a look at their portfolios and their portfolio companies and seeing if there’s a way that we can help out with either existing deals or new deals that they may have on the horizon.
What are your workflows for promoting your network development and what systems do you use to keep track of those efforts?
We use everything from our own spreadsheets and Google Sheets to Airtable to more or less manage our relationships.
How do your network development efforts flow into other key elements of your work?
On deal sourcing, I had mentioned before that we want our networks of investors that we work with to send us the best deals that come across their way. If we see a deal that we like, we reach out to the investors or the VCs that we see that are on the cap table that would be receptive to what we have to offer. On due diligence, if we’re looking at a company and know that someone else in our network is looking at the same space or even at the same company, we will also be sure to reach out to them, get their take, and potentially trade notes. Finally, in portfolio management, if we have a company that’s looking to raise, we’ll use our network to let the VCs in our networks know and be aware of the impending raise process and give them a look at potentially leading around or investing.
Do you have any best practices or specific examples of how you try to stay up to date with your network?
I guess two things: consistency and being able to be data-driven. Starting with being data-driven, you’ll see over time that certain people in your network are going to provide certain levels of deal flow, or consistently provide certain levels of opportunities. Those folks in your network quote-unquote, have the hot hand. Once you identify those in your network who have the highest ROI when it comes to deal flow, it behooves you to make sure you have the second piece, which is the consistency. I will generally make sure that I’m checking in with those people regularly, not just when you need something or when they need something. Potentially, you almost have like a standing call, quarterly or monthly, to check-in with them or to trade notes. What we’ve come to find is that a lot of times the best opportunities can arise when you’re not expecting them. Sometimes it can be obvious, for example when you have a deal or when your friend or colleague has a deal, but sometimes it’s when you’re just you’re chatting it up in a blank space, that’s where a lot of great opportunities arise.
Is there anything that’s unique about your deal process, or any insight that you feel would be useful to someone new to the space?
I think you have to identify what matters to you. It’s understanding that there’s both objectivity and subjectivity that goes into investing and you have to determine what works for you. Take objectivity – let’s say a company grows 50% year over year in revenue, that’s a key fact and it’s important that you’re able to get to that fact and discern it quickly, accurately, and efficiently. On the subjectivity, whether that 50% Year-over-Year growth is fast enough, whether that’s good, that’s average, or above average, that’s up to you and your judgment, but that is a different type of call. You can have three different venture investors that will come back with three different perspectives: one might say “50% growth, that’s not fast enough”; one will say that it’s average; one will say that it’s great. There’s no right or wrong per se. I think the key is to find your ethos when it comes to investing, the metrics, and the attributes that matter most to you and stick to them.
Do you have any predictions for the future of our space?
I think there’s a lot of pent up softness in the economy and I think the government has done a decent job, at least from the standpoint of the economic market by not allowing the pandemic to completely crater the market, particularly the stock market, and then as a derivative, the private market as well. That being said, there’s a lot of pain out there, a lot of hurt from folks that the government wasn’t able to sufficiently support. I think that pain is going to move through the system and you’re going to see a lot of substantial demand and business models start to weaken, especially companies that have bad business models and have, more or less, relied on the last bull run that we saw. Potentially there’ll be a reckoning of sorts across the industry. So I do think we’re going to continue to see more bad business models blow up. But we’ll also see companies that focused on having great unit economics, great business models, and being conservative during the last bull run be able to survive and then be able to thrive as their competition starts to reduce or decrease.
How have you had to adapt this year?
We’ve done a few deals this year and where we had not met the management team in person prior to funding, which is something that we did not do prior to the pandemic. And I think that’s just one example of an adaptation that people will largely have to see across the industry. Until it becomes safe for people to consistently be able to meet with one another in person, I think you have to figure out how to do the same thing that you did in person and get it done virtually.
Is there anything that you would like to share?
I think there’s been a lot of focus on the byproduct of racial injustice— a newly visible social consciousness across the country as of late. I think there’s also been a reckoning specifically on technology and venture capital and how those are some of the least diverse industries, which obviously is a shame because they’re probably responsible for some of, if not the most, individual wealth creation, out of any industry out there. The question is what can VCs and investors do to help the problem? You see a lot of VCs that make statements and proclamations, but I think those alone are not enough. Instead, we have to move words into action. I think venture capitalists can adopt policies where they state they’re going to push to commit to have a certain percentage of their portfolio be inclusive of underrepresented groups of people, whether it be women, Black founders, or Latino founders. By more than just saying those statements, I think that’ll help move the needle. For example, at Wilshire Lane Partners, we’ve committed to trying our absolute hardest to have at least 50% of our companies include either an underrepresented minority or a woman who’s part of the management team and/or the founder group – we’re currently above this threshold today. So what I think I would love to see from my unique position in the industry is less talk, less symbolic gestures, and more commitments to accountability and real action.
Do you find it challenging to discover unrepresentative startups?
I don’t find it challenging because I’m actively focused on trying to find them. I’ve made it clear, externally, that we like to find and meet diverse teams that we want to back, not because we’re trying to help those groups out but because the data and the research are well stated that diverse teams produce larger and bigger outcomes for investors. For me, I feel that I actually owe it to my LPs and my investors to find diverse teams, because they have a greater chance of success based on the research that you’ll find anywhere from McKinsey to Harvard Business School. That being said, no, it’s not hard. On the other hand, finding a unicorn or a company that’s going to be a billion-dollar business is hard, yet people willingly embrace that challenge. Finding teams that have underrepresented minorities or women that are part of them isn’t hard; you can just make the concerted effort and be able to do it. If you invest in a team and they’re not diverse, then it’s worth investors having conversations with their founder teams explaining that based on the research, it may be worth adding a woman, for example, to the team and that will increase their chance of success.
Do you feel like that movement of inclusivity is going to fade, or is there a way to keep this effort top of mind ongoing?
It could be either a movement that fades or it can be a lasting change. I believe that in order for it to become a lasting change, there has to be accountability, where you have people that care, insisting that proclamations and words are not good enough. Those people must continue to lend their voice towards pushing for real actions, and again, those actions usually are driven by a level of accountability. It becomes more than just a temporary movement with real dollars, by investing in different groups of people in different communities that ordinarily are ignored. If that can continue to happen, then we have reasons to be optimistic that it’s not just a fleeting moment in time. It actually can be a full-on positive change and trend in the industry. And so I’m hopeful.