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Tired of the elitism in venture capital, a couple of Stanford Graduate School of Business students decided to do something about it.
Steph Mui and a classmate in the MBA Class of 2020 had an idea: They wanted to create a fund that invested in their fellow students’ business ideas. In short, they wanted to make startup investing more accessible. “We were both frustrated with the status quo of venture capital being access-oriented and based on cliquey connections,” Mui shares with Poets&Quants.
They named it The 20|20 Fund, and they raised over $1.5 million for the inaugural investment vehicle. They used the funds to invest in 16 portfolio companies founded by members of the 2020 GSB class.
Since their June 2020 launch, Mui and the 20|20 Fund have helped MBA groups at some of the top universities in the country start their own investment clubs, applying the same legal framework that took her team countless hours to figure out. What’s more, she’s also started a legacy fund: Each new GSB class has started their own fund, applying the same template as the 20|20 Fund. “They’re getting bigger and have more participation and engagement,” she says.
A NEW TYPE OF INVESTMENT VEHICLE
Steph Mui: VCs “choose what and who gets funded, which affects the trajectory of where we go as a society,” but consumers should have more say
To qualify as an accredited investor, individuals must have $200,000 in individual annual income or at least $1,000,000 in net worth; as of July 2020, around 13.85% of U.S. households met one of the tests for accredited investors. Out of Mui’s class of 400 students, more than half expressed interest in participating — but of that group, more than 60% didn’t have enough net worth. And without accreditation, they couldn’t participate in traditional startup investment or be an LP.
Because a traditional investment fund structure wouldn’t work for their fund, the 20|20 Fund team had to get creative. Mui decided to leverage her experience as a NEA venture capital associate to create an SEC-compliant “investment club.” The club allowed non-accredited investors to participate in the vehicle.
“VC and private investments have driven so much wealth creation over the last 15 years and have outpaced public markets,” says Mui. “It’s sad that it’s so inaccessible for those who are not accredited. We wanted to help change that.”
‘WE’RE NOT CONSTRAINED BY THE SAME ACCREDITATION SYSTEM’
Unlike traditional funds, the 20|20 Fund is a collaborative model between its members rather than having one person make all the decisions and allocate the funds. “The laws around this type of fund are much different than traditional investment vehicles,” says Mui. “We’re not constrained by the same accreditation system.”
According to Mui, this model created a sense of equality amongst classmates; each member of the fund put in the monetary amount that they’re comfortable with. Then, it was a collective vote to decide on what to invest in—together.
“It was a passion project,” Mui shares, reflecting on the fund. “We brought it up to everyone we met, which was ultimately how we met our lawyers and other advisors that helped us piece together a new type of vehicle that could accommodate what historically hadn’t been done before.”
A COMMUNITY-BASED, INCLUSIVE MODEL
Not long after the 20|20 Fund was launched, word spread. MBA students, undergrads, and alum groups began reaching out to Mui for advice in starting their own funds. “We realized people were interested in this community-based model, which offers inclusivity and collective decision-making,” she explains.
Mui helped a number of MBA groups start investment clubs at such elite B-schools as Harvard Business School and Chicago Booth School of Business — and closer to home, at UC-Berkeley Haas School of Business, where another community-based venture fund was being launched. Co-led by Kevin Chang and a few of his classmates, Courtyard Ventures formed in early 2021 and has since invested in 20 Berkeley Haas student and alumni founders.
“We had a similar intention to support the California entrepreneurship ecosystem,” Chang tells P&Q. “Founders could leverage a deep network for help with hiring and customer introductions, while MBA students and alumni had a new avenue to invest in startups.”
‘AN OPPORTUNITY TO CREATE A MOVEMENT’
Kevin Chang: SVB was “just one more thing that founders need to worry about when they already have a lot on their plate trying to change the world”
What Mui thought would be a one-off investment vehicle experiment at the GSB began to draw increasing interest. “This was an opportunity to create a movement,” she says.
To help more people, Mui developed a business idea—which is now a full-fledged company called PIN, or Power In Numbers. It launched in 2022. She recruited Chang shortly after to help run sales and growth. Together, they work to help make it easier for communities to launch their own investment clubs by providing the necessary legal framework, managing the back office, and handling taxes.
Backed by Initialized Capital, GSR Ventures, and NEA, PIN offers features like automatic compliance reminders, tax filing for funds and investors, an easy LP onboarding experience, community investment voting, and bounty programs for portfolio companies. Basically, PIN helps to remove the barriers to investing in startups; those involved pay lower fees and, since there are more people involved, there is a lower minimum check size for investors.
Since launching, the PIN team has helped more MBA groups start their own vehicles, and are in conversations with most of the top MBA programs in the US. Aside from MBAs, Mui and Chang have also worked with TikTok creators, company alumni, accelerator cohorts, and professional groups.
“Our mission is to be the Robinhood of startup investing,” Mui says. “Over 50% of the U.S. population owns stock, and we want to get there for private investment as well.”
AN UNCERTAIN STARTUP ECOSYSTEM FOLLOWING THE SVB FAILURE
However, when the market is volatile, investing in startups may feel even riskier than usual, and certainly riskier than traditional investments. That was the case when Silicon Valley Bank recently collapsed.
When SVB failed, Mui and Chang went into crisis mode. “A few of our portfolio companies banked with SVB,” says Chang. “There were a lot of founders under a ton of stress, even those who weren’t banking with SVB.”
Mui says the SVB crisis fueled a sense of skepticism around tech in the startup ecosystem. She believes people are growing more discerning about how they spend their time and money. Chang echoes Mui’s thoughts, adding that there is now even more uncertainty in the ecosystem.
“It’s just one more thing that founders need to worry about when they already have a lot on their plate trying to change the world,” he says.
‘CONSUMERS ARE ABLE TO EXPAND THE IDEAS THAT GET FUNDED’
Despite the inherent risk of startup investment, Mui firmly believes that consumers need to have a bigger role in investing in private companies. While VCs may have a lot of power — “they choose what and who gets funded, which affects the trajectory of where we go as a society,” she says — she believes that consumers should have more say.
“Consumers are able to expand the ideas that get funded,” she continues. “It’s not just a small group deciding what companies will have the chance to impact the future, but rather consumers who actually feel the problems every day that they’re trying to solve by supporting these companies that have a role in that, too.”
For MBA students and alumni interested in creating their own investment clubs, Mui offers a word of warning: They must be sure that they love the process — and be ready to put in the work to nurture relationships.
“What I didn’t expect was that this journey would lead me to feel more connected to my community,” she says.
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