E119: How the Visa Foundation Invests w/Najada Kumbuli

Najada Kumbuli, Vice President, Head of Investments at Visa Foundation sits down with David Weisburd to discuss what makes a first-time fund manager a breakout success, why storytelling matters in impact investing, and why this is the most challenging fundraising market since 2001.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Weisburd?

  Unpack what it means to be a good storyteller as a general partner.

• 0:03Speaker 01

  Give me the numbers in a quick and an effective way that makes sense to me. Make things less complex, make it easier for me to understand because I may not be a health tech expert. Inspire me, both tell me where the opportunity is, but ground me so that I know the risk that I'm taking. And then the last thing is, I think there is something about the personal touch, right? Like, why do you want to be a GP? Why not work for a large private equity firm? What motivates you to start your own firm and make these investments in this particular sector, in this particular region, et cetera? Like, what's unique about you?

• 0:40David Weisburd?

  How do you advise that your GPs invest their time?

• 0:42Speaker 01

  So you want to make sure that everybody is aligned.

• 0:53David Weisburd?

  You joined Visa Foundation roughly four years ago and you built a program from scratch. How do you go about building a program for our foundation from scratch?

• 1:02Speaker 01

  It's been very exciting. So when I started, the endowment was invested only on public markets. As I said, the goal to bring me on board was to think about how can we align 100% of the endowment with the mission of the foundation? And naturally, on the impact, on the, from an impact perspective, our private market investments are the ones that squarely align with our mission to support entrepreneurs, whether in emerging markets or in developed economies. So what we did is we started with, with that first, you know, like, challenge, which was how do we align it strategically with the mission? And as I mentioned to you, we're really focused on women entrepreneurs. So by focusing on women entrepreneurs, we're really thinking about how do we invest in diverse fund managers and then are more likely to invest in entrepreneurs? So that's kind of like at the, at the macro level.

• 1:44Speaker 01

  And then by region, because we also have, we invest across five regions. The five Bs are regions, essentially. Each region has nuances in terms of what matters from an impact perspective. So we started at the macro level. We took additional lenses from a seam as well as a sector perspective by region. And then lastly, obviously, we layered everything from an investment perspective. So the, building the investment policy, thinking about the asset reallocation model, thinking about our target for asset class.

• 2:13David Weisburd?

  I've done quite a lot of business in sub-Saharan Africa. I took a Senegalese company public on NASDAQ. I was involved in the Team Nigeria Olympics team with Coach Mike Brown.

• 2:23Speaker 01

  Amazing.

• 2:24David Weisburd?

  Talk to me about, the reason I mention that is these are just like very, very different worlds. How do you get smart in a new market quickly? And talk to me about how you go about entering a new market and picking managers.

• 2:39Speaker 01

  Yeah, how do we get smart quickly? We listen a lot, right? We think about kind of like both bottoms up and top down approach of how do we learn? As I said, I think one of our superpower is our colleagues on the ground as well and our co-investors. So we tend to, when we enter certain markets, we want to see both at the macro level. And that is work that my team is doing from a research perspective. And then at the, the micro level and the micro level is I'm on the road. And when we're thinking about investing in a fund managers, we're going and meeting with the companies that they're investing in. So that I'm seeing firsthand how they're approaching this diligence. What are some of these customers on the ground? So like one of the companies that, you know, like a firm of ours has, has invested in Nigeria.

• 3:21Speaker 01

  They're digitizing small kiosk in Nigeria and making them, you know, kind of like enter the formal economy. Spending time around to like, you know, like to understand where and what are some of their needs? What are some of their challenges? Is what they're offering the right product and solution? And then because we have this bird's eye view where obviously we are not only investing in Nigeria, but we do similar work in, in India and in Colombia and in Brazil. We can start thinking about market archetypes and what is like, what works in certain markets and what can be replicated in others? Knowing that of course, the local nuances is really important.

• 3:54David Weisburd?

  We're Q4 2024, one of the most challenging venture fundraising markets, really since 2001, even more challenging than 2008. How does that go into your decision making? Are you somehow picking different managers, given the macro environment?

• 4:09Speaker 01

  We are bullish with our strategy in terms of diversifying across, I would say, maturity of fund managers. So as I'd shared earlier, we've done quite a bit on the first time fund manager side. And then we've balanced that with more established fund managers that have the track record that we can essentially analyze and feel strong about. As I said, it's been a challenging year, but we feel that the fund managers that we've been selecting to date have been performing pretty well and have the. The conservatism, I'd say, in them to know how to navigate this up environment. Where we've seen quite a bit is, I would say, rethinking about their sizes and rethinking about their fundraising journey for those that were in the fundraising journey.

• 4:53David Weisburd?

  What are some best practices for emerging managers navigating the current economic landscape?

• 4:58Speaker 01

  I would say a couple of things. They need to have the perseverance and the agility in them to know how to manage this economic cycle and the fundraising journey. They need to really be smart, I would say, with their fundraising strategy. And this is, you know, like not rocket science, right? Like, they need to have a few scenarios of the fund sizes. What we've seen a lot, David, is a lot of fund managers come to us and they say, we want to raise a hundred million dollar fund because a hundred million dollar fund is where institutional investors come in. While the reality is that the first time fund managers, given the current environment, you probably want to rethink about the fund size and you probably want to build your track record first and you probably want to go and align with smaller ticket investors. So then the next, you know, like in a few years, you

• 5:43Speaker 01

  can come back stronger and raise that funds. The advice that we're always giving early stage fund, emerging fund managers is to calibrate their fund size, rethink about their fundraising strategy, really think hard about who their first LPs are around the table and whether they can make connections to other LPs. We've been doing this a lot with our emerging fund managers. And then just, you know, like, I mean, they need to show professionalization of their firm. I put a lot of effort on thinking about not just kind of like taking the right deals, but do you have the right back office in place to, you know, to become institutional ready?

• 6:21David Weisburd?

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• 7:05David Weisburd?

  A lot of GPs are meeting with LPs and trying to prioritize which LPs are more likely to close into their fund. What are some leading indicators that an LP is interested in the fund and is likely to invest?

• 7:17Speaker 01

  Maybe I'll speak about myself and what I see with some of my closest LP peers. We never ask for data room access if we're not serious about it. So that's a good indicator. So that's one. The second piece is really getting quick in answering where you would come at in the sense of like from a ticket size perspective, because that helps LPs know how much they can allocate to that particular fund or not, or whether they have the room to make that particular investment. And then the third piece is like, it's kind of like some of the soft nuances, et cetera. Depending on who you speak to, are there other folks that are coming on board? So like if they come and speak to me, I usually have a conversation with, or two conversations with a fund manager, and then I pass it on to my team.

• 8:00Speaker 01

  Or vice versa, if it is my team, somebody else on my team will come and take a look at the opportunity. So those three ones come to mind as good indicators.

• 8:09David Weisburd?

  Why would you have initial interest in a fund, go into the data room, and not really want to diligence more thoroughly? What are the most common reasons?

• 8:16Speaker 01

  A lot of LPs talk about like, you know, like a great presentation in terms of like, get to the punchline quickly. Tell me what is, you know, like how you differentiate yourself from another fund in that particular sector or into that region. So just being very quick, simple language to the point is critical. Understanding really early on what differentiates you is one of the things that I look at. And then being able to articulate your track record. And I know that most of the times, emerging fund managers say, well, that's hard. Like, that's what I'm trying to do. I'm building the track record. But there are ways to show that you have the experience to manage this fund from, you know, like previous activity, from, you know, like work that you've done in other firms, et cetera, that maybe would be harder to, you know, kind of like import.

• 9:01Speaker 01

  Exactly the track record, but like just give me that like that understanding that you know how to do this. I said earlier about like the operations front for me, making sure that there is a team and a bench, or at least, you know, like kind of like an initial understanding of like who will do this work and where is the bench? And then like the back office is quite critical as well. We see a lot of like first time fund managers, they make it or break it on the back office side.

• 9:24David Weisburd?

  You have a very privileged vantage point in seeing hundreds of emerging managers, Fund One, Fund Two, Fund Three. Where is the opportunity today?

• 9:33Speaker 01

  We're all taking the bets on the Fund Ones and Fund Twos. And with those, as we know, is we're hoping that we're making the right choices because they can significantly outperform the more established fund managers. And so it's both an art and science there and you're,

• 9:50Speaker 01

  we're, as I said, we're bullish on the first, second and third time fund managers on the venture side. And we're hoping that the choices that we've made will matter a lot. To your point, as you do this multiple times, you start taking up on trends and opportunities. That makes sense. And what I mean by trends and opportunities is like trends of like what a good first time fund manager looks like? And what are they doing to get to that next stage?

• 10:14David Weisburd?

  What are some good predictors of a first time fund manager that will be a success?

• 10:19Speaker 01

  I think two things. First is it's both the money in and money out piece, right? In the sense of like a fund manager that knows really well their market and what they're trying to, where they're trying to invest in and can quickly and effectively convince us that that's where the market opportunity is from an investment perspective. And on the fundraising side, you could be the smartest, the most connected investor. But if you do not have a smart fundraising strategy and you cannot lend the fund to at least, as we said, two third of what you were thinking, that's challenging. And what we've seen is you need to have a diversified fundraising strategy. You cannot be banging your head to get like institutional piece on your fund. You have to go after the family offices. You have to go after the high net worth individuals.

• 11:04Speaker 01

  You have to go after, you know, like the folks that have been successful entrepreneurs. And so they can, you know, like kind of like back your fund, but also make further connections for you. And then sometimes go for those organizations that are taking more risk, like some of the foundations on the emerging fund manager side. And then if you can get one or two institutional investors toward the end of the fundraising journey, that's great. And that's what we've seen with a few very successful fund managers that we've backed.

• 11:28David Weisburd?

  My mentor, Eric Anderson, when I was starting my first startup, said, never wait for investors. Always keep on executing, always keep on achieving milestones, deploying capital, getting founders that will back you and give you references. Never wait, never rely on somebody else, always take ownership of the process.

• 11:46Speaker 01

  That's exactly it. And that's what we say as well. Like you need to like, you need to get to a first close. It might not be kind of like the traditional, you need to get to a first close at least thirty, like thirty percent of the fund. Like if you think it's gonna take longer to get a couple of other larger ticket investors, close of like, you know, make the first close, start making the investments, show how you do it. Like, and as you know, a lot of LPs want to see the memos that you're writing, the IC discussion that you're having. They're gonna be, you know, like interviewing your team, they're gonna be interviewing some of the founders that you're back. So be having all that buttoned up helps with the fundraising challenge.

• 12:23David Weisburd?

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• 13:05David Weisburd?

  I don't want to age you, but you've had quite a bit of experience in the space. You've seen GPs that come in with a contrarian thesis. How long does it take for LPs to quote unquote, catch up to a GP thesis that ends up being correct?

• 13:19Speaker 01

  Naturally, endowment tend to be more risk averse, right? Because, and especially endowment or foundation. So it takes some time to kind of like catch up on, as you said, contrarian thesis. However, again, I feel all of us, whether we are an LP or a fund manager, it's the power of storytelling. Like, there's been certain cases, and I've seen it. You know, we've been convinced that the opportunity is there and we've done it. I can't speak to others, but endowments and, you know, they sometimes move slow and they need additional data points. The reason why I'm excited about the poll that I took at Visa Foundation is because the board of the foundation saw this opportunity to actually push the envelope,

• 14:03Speaker 01

  be a little bit more catalytic and take some bets. So for us, we've, I think we've caught on a little faster.

• 14:09David Weisburd?

  You mentioned good storytelling. Unpack what it means to be a good storyteller as a general partner.

• 14:14Speaker 01

  Give me the numbers in a quick and an effective way that makes sense to me. Make things less complex, make it easier for me to understand, because I may not be a health tech expert. Inspire me, give me, kind of like both tell me where the opportunity is, but ground me so that I know that the risk that I'm taking, again, kind of like back to the, I'm not losing money here. And then the last thing is, I think there is something about the personal touch, right? Like, why do you want to be a GP? Why not work for a large private equity firm? Like, what motivates you to start your own firm and make these investments in this particular sector, in this particular region, et cetera? Like, what's unique about you? But start with the numbers.

• 14:57David Weisburd?

  When I look at GPs or even startup entrepreneurs are the best storyteller, they have this paradoxical mix of on the ground, blocking and tackling with the ability to sell a large vision. I think founders and GPs tend to have, over apply one of those two. Either their entire stack is about, this is what I'm going to do next, and this is what I'm going to do next, and I'm going to hire this person. Or they say, you know, page one is, this is a $10 trillion market. And if we only get 0.1%, we'll be billionaires.

• 15:27Speaker 01

  Right.

• 15:28David Weisburd?

  That's that's the other extreme.

• 15:29Speaker 01

  Yeah. In the end, all LPs have their own personalities, right? Like, I mean, we all invest depending on, you know, like our and that's why it's important to have even tying it back to our strategy. The reason why we made the decision to invest in what we call diverse fund managers is because they bring it, you know, like they bring different perspectives around the table and look at problems in a different way. And so me as an Ayata, I'm sure I invest very differently than somebody else that is a CIO in an endowment in a foundation or university. So a good storyteller gets back to understand who your audience is as well.

• 16:04David Weisburd?

  When you advise your GPs on where to focus their resources, should they be spending more time with the true believers, the people that resonate with their story? Or should they be being more persistent with the people that may not believe on or may be on the fence? How do you advise that your GPs invest their time?

• 16:18Speaker 01

  Yeah, I would say for, you know, like the first effort are on the ones that are the true believers, right? Like get them to sign the checks so that you can first that

• 16:25David Weisburd?

  Low hanging fruit.

• 16:26Speaker 01

  The low hanging fruit, right? Like, I mean, close the make the first close, start making deals eight. And then the second one go through those that need a little bit more, you know, like convincing. And then it's it's about why and who those folks are, right? Like, because there's a lot out there that might need more convincing, but you need to rank them, right? Like in the sense of, were you thinking? So we see with a lot of like fund managers or GPs, they want LPs around the table that are aligned with some of the exits and insights in particular sectors that they're investing in because they they bring a different perspective. So think about the LPs. What will they bring to you beyond just the check? And the check is important, but what networks, what insights, what capabilities? LPs have a vested interest for the fund to be successful.

• 17:11Speaker 01

  So you want to make sure that everybody is aligned and incentivized in financial return of the fund.

• 17:18David Weisburd?

  There's a concept in psychology called convincer mode, famously advertisements, you have to see them seven times before you

• 17:25Speaker 01

  Yeah.

• 17:25David Weisburd?

  Just something. That's actually a misnomer. So seven times, seeing an advertisement seven times captures 98% of the population, but there's actually these people that are automatic convincers. They will actually watch, watch an ad and purchase right away. There's people that takes two or three. So rank ordering them based on their convincer mode, or how much, how many proof points do they have to have? To use an extreme example, I don't think you really have to sell Benchmark in venture capital today. I don't think you have to sell Sequoia. You don't have to sell these top decile founders fund, because even the person that is the most skeptical wants to invest in those funds. So it's all about rank ordering those LPs based on how difficult or how much they resonate with your story from day one.

• 18:07Speaker 01

  And at the end of the day, what are you getting out of them beyond the check, right? Like, I mean, are, do you line them as people to advise you on the next fund? Are they going to make other connections for you in the future? And yeah, I think it boils down to the long game as well, being smart about, you know, where do you, sell me the first fund, but also tell me, you know, where the opportunity is in funds three, four, and five.

• 18:32David Weisburd?

  In your fifth year as head of investments at Visa Foundation, what surprised you the most about your role?

• 18:36Speaker 01

  I would say the importance for me to follow the advice that I give to my own JPs. And what I mean by that is be a good storyteller, right? Be able to articulate complex investment concept to simple ones to my board, the board of director of the Visa Foundation, that are, they're not investment professionals. They do not have a background or expertise in impact investing. Where I came from, everybody was an investment professional at Calvert. Everybody, you know, like, lived and breathed impact investing. When I showed up here, people had, you know, simple questions about, you know, what is impact investing? And why should we do it? So I would say the importance of communication, knowing your

• 19:17Speaker 01

  audience, storytelling, getting the basics right is really critical. And then, that's why I was saying, get the numbers upfront to build your narrative. That's what I've been doing quite well, to make sure that the analytical part of our work is understood and understood well, so that we influence and encourage others to, you know, engage with Visa Foundation as colleagues, but also the board to continue capitalizing the endowment.

• 19:43David Weisburd?

  A great analogy is a great presentation is like an iceberg. You have all the numbers, all the data, all the experience, all the interviews on the bottom side and the tip of it is this beautifully colorful presentation that everybody could flip through, but, but all the, all the statements are deeply rooted.

• 19:59Speaker 01

  Yeah, and make sure you know the footnotes really well. On one of my first board meetings at Visa Foundation, I remember exactly that we had done this great presentation and then our CEO at the time was just flipping through the presentation, David, and he goes like, on page thirty in the appendix footnote seventy eight, what exactly is that, Najada? How was it calculated? And I'm like, okay, let me tell you exactly how it is.

• 20:21David Weisburd?

  Good question.

• 20:22Speaker 01

  Good question. But he was like, again, page thirty eight footnote seventy eight. And I'm like, let me see which one that is. And of course I had the backing, but that was, that is one of those moments where also like as an LP, when you're asking your GPs, exactly, give me this number. Those are some of those trick questions that you want to see. Do you have all the elements? Do you have all your data points? Are you prepared to answer these questions in detail? But don't give me the detail upfront.

• 20:44David Weisburd?

  A lot of that is also subconscious trust building exercises. You know, they ask you about three, four footnotes and then you, you answer them and then you're, you're set. You don't get tested as often. You've been endowment style investing for over fifteen years. What do you wish you knew when you first started?

• 21:02Speaker 01

  The, the endowment style investing, we've done very traditional, right? Like we do about sixty percent to give you a perspective, sixty percent in public markets, forty percent in private across private debt, private equity, venture and real assets and absolute return. I would say on the technical front, and especially like sitting where I am at Visa Foundation, the absolute return asset class is the one that like I feel I, I had to, you know, build my technical expertise on because it feels a little bit sometimes as like, you know, like the catch all for investments that don't fall between private equity or private debt or venture capital. And so like really being smart with that particular asset class from a diversification, from non-correlation perspective was one of the things that I, as an investment professional, had to get smarter on.

• 21:42Speaker 01

  And then on the, on the strategic side, I would go back to the point or on communication, storytelling, setting the strategy and the vision and motivating both the leadership, but also my team and the importance of, you know, just being a good storyteller versus being a great investment professional. I had to move from, you know, writing the memos myself and learning how to let go, which can be complicated for people like me that love the numbers and the analysis.

• 22:12David Weisburd?

  It's also humbling to see when somebody else could do something as well or better than you.

• 22:17Speaker 01

  Oh, for sure.

• 22:18David Weisburd?

  One of the scaling challenges.

• 22:20Speaker 01

  Yes, certainly my team does it much better.

• 22:22David Weisburd?

  Well, Najada, this has been really enjoyable. Appreciate you jumping on the podcast.

• 22:26Speaker 01

  Thank you so much, David. Likewise, and look forward to keeping in touch.