Base10 Fund II: $250M to Solve Real Problems for Real People

adeyemi ajao
7 min readJun 26, 2020


Less than two years ago, we announced Base10’s debut Fund I to invest in Automation for the Real Economy, or “problems that are actually important for 99% of people.” Back then, everyone was concerned about A.I. and the seemingly imminent threat of robots automating $4 trillion of the economy and displacing millions of workers.

Today, the world is dealing with threats that are both more urgent and far more dangerous than a robot takeover: The COVID-19 pandemic might have started as a health crisis but as its effects reverberated through the economy, it has made automation essential to survival for millions of people and small and medium businesses. As a result, Instacart is now an essential service and e-commerce penetration in retail increased from 16% to 27% in a period of ten weeks as storefronts closed temporarily.

Moreover, with issues of racial, economic, and gender inequality front and center, it is evident today more than ever that we have a collective responsibility to focus on urgently solving problems that are actually important for 99% of people. It is abundantly clear that if divided, we will fall.

We are announcing Base10 Fund II, bringing our AUM to over $400 million and making us the largest black-led VC fund. We want to use this occasion to talk about our two biggest learnings from Fund I:

  1. What “Automation for the Real Economy” actually means and what the tech industry’s collective responsibility is amidst the current challenge
  2. The kind of founders we should be betting on to solve these problems: those who represent and understand the challenges affecting the 99%

Automation for the Real Economy: Real Problems for Real People

Emily Mitra and her husband Anjan own and operate Dosa, a neighborhood Indian restaurant in San Francisco they have been building for 14 years. When shelter-in-place orders hit in March, Emily and Anjan knew closing was a real possibility — just as it is for up to 85% of U.S. restaurants — when they saw their sales go to zero nearly overnight.

While it was tough to hear that Emily and Anjan were struggling to keep Dosa afloat, we were proud to see one of our Fund I portfolio companies, Virtual Kitchen Company, come to their aid. As VKC helped Dosa switch to a full-service delivery model and cover a 30 mile radius overnight, Emily described their support as “a lifeline that kept our business alive.”

Meanwhile, in Atlanta, our portfolio company PopMenu was working with over 2,000 restaurants to turn their paper menus into digital formats while also suspending cash collections for the duration of the pandemic so restaurant owners “could focus on making sure their businesses made it.” Restaurants weren’t the only businesses hit hard; most other brick-and-mortar retail shut down and accessing necessities became difficult. The Pill Club worked overnight for several weeks to ensure its hundreds of thousands of subscribers continued to have access to birth control even as regulators in states like Texas and Ohio restricted women’s healthcare during the pandemic.

These are just a few anecdotes from our little corner of the world, but these are the stories that give us hope on what we can accomplish together. Base10’s portfolio is showing strong performance but is still very young, and our companies have a long road ahead to achieve their full potential and expand their impact. It was really only in the last decade that technology companies started focusing on the Real Economy. Today, companies like Instacart, Lyft, Shopify, or Nubank are showing us what automating the Real Economy could look like. They are also proving how much harder it is to build a company when you have to worry not only about SaaS metrics but also supply chain logistics, city regulations and ordinances, appropriately compensating gig workers, or managing expensive warehouses.

And yet, these are the challenges we want to undertake. We believe it is the tech industry’s collective responsibility to focus on the problems that affect 99% of people, and to work in tandem with communities, governments, and existing Real Economy companies to solve these problems.

A look at our portfolio shows just how much we believe this: Calii is helping farmers in Mexico eliminate middlemen to deliver fresh vegetables and fruits directly to consumers, Made Renovation is building a network of general contractors so that homeowners can efficiently and safely remodel bathrooms, Wise is helping small merchants get access to their hard-earned cash faster through their online banking tools, and Acquire is helping remote teams engage with and support their customers during the pandemic.

We are going to get it wrong a million times and so will our founders. Regulators will believe that unproven startups placing scooters on sidewalks are detrimental to cities, gig workers will not feel adequately compensated, financial institutions will not want to extend loans to startups trying to kickstart capital-heavy projects. And the truth is: they will be right. We will get it wrong at first, and it will be hard and take a long time… and we could not be more excited about it. At Base10, we have all been founders before and we want to work with the right kind of founders to tackle these challenges.

The Right Kind of Founders

This might seem obvious but we believe that to solve problems that are important to 99% of people, you need to work with founders that represent the diversity of that 99%. This is particularly true if you are focusing on real economy industries. It is not surprising that the founders of RoadSync, which facilitates payments for truck drivers, previously worked in the trucking industry. Or that the founders of construction marketplace Faber spent years working as construction workers. They understand both how big the need is and how hard it is going to be — we love that.

Select Base10 portfolio companies and logos organized by Real Economy industry

That means that if we do our work right and follow the data, we should end up with a portfolio that mimics the demographic, gender, race or religious orientation of 99% of people, right? A melting pot in which 50% of all babies born this year will be minorities and 50% of the US population will be minorities by 2024.

Unfortunately, the truth is that it is not that easy as 70% of all venture-led rounds today go to all-white teams. For a large percentage of the population, the path to founding a company, from education to securing basic needs like housing and healthcare, is harder at every step.

This presents a big challenge but an even bigger opportunity. Andy Rachleff, the founder of Benchmark Capital, said that to make money in venture capital you have to be not only right but also non-consensus, meaning that you have to be investing in people or areas that are overlooked by other investors. If the VC industry as a whole is overlooking minorities, you can generate alpha by simply taking steps to ensure that you don’t have this same blind spot.

The diversity challenge is so difficult because it is a problem that exists everywhere, not just in tech and venture capital. At Base10, we might be minority-led but we are not a minority-focused fund — we just believe, per our point above, that investing in minorities is great business. When we look back on these first two years, we see a promising beginning of our journey: more than 60% of our portfolio companies have minority founders (non-white or non-male), more than half of our portfolio is based outside Silicon Valley, and our small but mighty team already represents a broad range of backgrounds, ethnicities, refugees, and religions.

But the truth is, we can and should do a lot more — not because it is the right thing to do or because we personally want to, but because we believe (and the research agrees) that investing in diversity is one of the best ways to create outsized returns for our investors.

That is why today, together with our Fund II announcement, we are introducing our VC Diversity Pledge, in which we detail:

  1. A number of initiatives we are implementing or doubling-down on across our investment process, hiring practices, and bias training in order to increase the diversity of our team and portfolio.
  2. A commitment of 1% of the annual operating profit of the Base10 management company and 1% of all Base10 GP carried interest to support organizations fighting for inclusion and racial equality. This is a very small first step, but to put it in perspective, if widely adopted this could lead to $200M+ a year of annual donations¹ from the VC industry alone to these organizations.

We are working with funds like Precursor Ventures, Illumen Capital, and Plexo Capital on these initiatives and will have more to announce soon.

The Best Time to be Alive?

Our Fund I announcement ended on a note that now is the best time to be alive. In the midst of a global pandemic, a global recession, and with racial and economic inequality front and center, it would be easy to say that we were wrong. As entrepreneurs, we are naturally optimistic, but we believe today that the future is in our collective hands. We must work together, across digital and real economy, across different backgrounds, beliefs, and nations, to bring upon the future we envision. If we manage to do it, that future will indeed be unbelievably bright.

We will do our part by working harder than ever to give back the confidence that was instilled in us by our founders, limited partners, and broader community. And we will do so by adhering to and living by our values: Work hard. Be Humble. Serve our entrepreneurs. Serve our investors.

Thank you.

The Base10 Team

¹According to NVCA, there was $444B of AUM in U.S. venture capital at the end of 2019. If that $444B gave away 1% carry of management company profits (assuming 2.5% management fee and 25% margins) and 1% of carry (assuming 3.0x average fund returns, 20% carry, 12 year life), then it would be $205M per year in donations.