GP Interview: Carmen Palafox

Carmen Palafox is the founding partner at 2045 Ventures and lives in Los Angeles. This is her Emerging Manager interview.

👉  Big Learning Up Front (B.L.U.F.): Sharing the fund management aspects of my business with founders improves our relationship and helps them understand fundraising. Which ultimately makes our founders better and improves our returns.

Carmen, tell us about yourself

I was born and raised in San Diego California, aka Flip Flop Nation, and moved to Los Angeles, after high school to attend USC. I spent many summer breaks at my grandparent’s farm in the coffee region of Northern Peru. I like finance, and started my career at Dimensional Fund Advisors in Santa Monica where I had the opportunity to launch new investment funds globally. I eat lots of dark chocolate. And I love beating my husband at backgammon because he is really good at it.

Describe your fund, 2045

Run a search on “Diverse teams outperform” and you’ll find credible reports showing higher performance. I support organizations focused on diversity, equity, and inclusion at startups and with my extended team can help founders optimize human capital to generate better outcomes. 

2045 is a pre-seed and seed-stage fund that backs diverse founding teams.

●      Thesis: Diverse founding teams build companies rooted in DEI that outperform

●      Objective: invest when at least one founder is an immigrant or from an underrepresented group

●      Generalist: I get excited about Climate tech, Health-tech, and Fintech

●      HQ: Los Angeles, California

Share 1 process improvement you’ve used individually or as a team which has made you a better fund manager

I’m transparent with founders and share what I can about my investment pace, process, and where I am in my allocation period. These are all variables that change over time. I’ve invested in over 25 startups at day zero or pre-incorporation and understand how frustrating fundraising can be for founders. Finding a fit on stage, sector, and or theme is a starting point. I learned over time that VCs have unique processes and strategies, some lead x% of the time, some won’t, some require consensus, some invest in many startups some don’t. Sharing more about my approach with founders helps them qualify me as a prospective investor and have productive interactions that are rooted in fact vs assumptions.  

Which founder from your portfolio has had the greatest impact on you and why?

The Founders I’ve invested in that impact me the most are mission-driven. Alex at Caban wants to rid the world of diesel; Andi at Amped Innovation wants appliances to be powered by renewable resources: Joel from Dash systems turned his training in precision missiles towards precision drops of essential goods, and Beatriz Acevedo is on a mission to help the 60 million Latinx in the US understand wealth creation.

What’s 1 thing you wish you knew before you became a VC?

I wish I knew the high value of liquidity to most investors. Investors have access to capital relatively fast, i.e., days, weeks, months in other asset classes, vs years in venture capital. Grasping liquidity and optionality has helped me set and understand expectations with Limited Partners. 

Tell us the story of a rabbit hole you recently fell deep into

I joined the board of the NVCA in June 2020 and have the opportunity to go deep on new programs. There are many discussed now that are revolutionary, e.g., Infrastructure, CARES, etc. I find myself falling into many deep rabbit holes since policy can nudge markets to act in ways that are sustainable.

I’m hopeful because I hear social and environmental priorities given weight. And I want to make sure that the trillions of Dollars that are coming to market as soon as this year are allocated in a way that helps our world thrive collectively.

Name 1 GP and 1 LP everyone should learn from -- and whom we should feature next

GP: Charles Husdon has blazed trails for solo General Partners that invest pre-seed and are generalists.

LP: First Close Partners. FCP invests early in underrepresented GPs and opens doors to other LPs. They have an All Star community.

Finally, what are the 3 best emojis?

🔥 📣 🤸🏿‍♀️

Carmen Palafox is now on the EM roster at << View all these EMs, learn from them and then teach me some new things.   

Thank Carmen for spending time with me on this. To get in touch, find her on LinkedIn or @PalafoxCarmen.

Thank you  — @reillybrennan /