Episode 5: Farley Craig Capital
7:39PM Sep 24, 2019
from Georgetown University, this is venture forward a series of conversations with entrepreneurs in and around Georgetown, in which we discuss the startups they've launched, the obstacles they've encountered, and the small wins that have made all the difference. Here is your host, Jacki Abbey.
Dennis Craig is a Georgetown Law student who has wasted no time at all figuring out how he wants to leverage his law degree to impact the lives of others. The route he's chosen to achieve this is a venture fund he established with two like minded peers. The purpose of the fund is to strategically invest in underrepresented business owners and organization founders. Tennis credits his undergraduate alma mater, Howard University, with giving him a chance to figure out who he was and what he wanted his life to be about. Turns out he wants his life to be about making a difference in the lives of others. As a law school student at Georgetown, he's fine tuned his plans and acquired the tools he needs to invest in others, both strategically and financially. Here is Dennis Craig, co founder of Farley Craig capital.
Dennis, welcome to the podcast.
Hi, Jacki. Thanks for having me. Here at Georgetown Law School student who's launching a venture capital fund. Why did you decide to take this road less traveled and why? It was March 2018, when we first launched in the why was I had had this idea about funding companies for a long time. And I got together with a couple of my partners, both who we all went to our university to get there and we molded the idea around and you know, there's never really ever good time to launch a business. And so we just thought the time was now.
Okay, so you can got two partners. And you're all here in DC.
Know, so we all met in DC at Howard University. Actually, they were one of the first couple of folks that I met there. One of my partner's royal who actually graduated from the School of Continuing Studies in 2015. at Georgetown, at Georgetown. Yes, so he is here in DC. And then our other business partner, Justin ma is up in Boston.
Okay, so you got the East Coast covered?
What kind of support Have you gotten at the law school from faculty or other students? Do people understand what you're doing?
I mean, they understand it now that I tell them, there hasn't been much institutional support. But there was one professor in particular who I ran our idea by. And he really took a liking to it and thought we were onto something. And he's kind of helped Shepherd me through the process of starting and launching our fund. He's a professor of entrepreneurship, which there are a few business classes at the Law Center, but they're all like, you know, business basics for lawyers and things like that. So there are exactly so there aren't too many. But there are a few folks who are interested in entrepreneurship. And they've been helpful with that. That's it. That's great.
And is the business model for your VC firm? Is it? Is it typical? Or is there anything different about it?
What makes it a little different, I mean, we're not reinventing the wheel here, we're just taking a well defined model and bringing it down to what we like to call the grassroots level, meaning that instead of writing 50 200,000, almost a million dollar checks, which you typically see, in a series A or early stage financing, we're writing five and $10,000 checks. And we've sort of modeled it around micro finance is what we call it,
okay, and who are some of the clients that you've written checks to?
So so far, we've written two checks, and we have a third, potentially, we have some turns out for third entrepreneur, and the first company was a food truck here and last in DC. And with our micro finance, he was able to purchase a second truck to service more customers. And our other client is a film production company based in New York who, with us were able to buy extra production equipment that they're now using to film their own projects, as well as lease out there film production, folks up in New York, which brought in an extra line of revenue for them.
Oh, great. And what are the criteria you look for in your potential clients?
So for us, we look for four things. One, we look, especially to make sure that the founding team has either one minority or women founder, we look for market and revenue traction with a established community brand, that our fourth criteria is that we're looking to be able to help them so we don't want to just necessarily give money to folks that they don't need or you know, isn't going to really go to help build their bottom line. So we're really trying to have an impact can help grow the entrepreneurs, businesses,
okay, so they have to have demonstrated need. Exactly that makes sense. And what's the next step in your launch?
So for us, we're really excited at this point on so far, we've been, you know, writing checks out of what we call our Founders Fund, which is the money that we put together as the three founders to sort of have a proof of concept. But right now, we're in the stages of getting ready to raise our first formal Fund, which will be at about we're targeting 1 million with the potential of going up to 2 million, which will only expand and increase our work.
Okay, great. And what's the timing for that?
This? So actually interesting enough, we are looking to start raising beginning of summer 2019. Hopefully closing, you know, a few months after.
Great. And then the next couple months.
Yeah. So we'll see, yeah, we definitely we've had some interest for some potential LPs that we've brought the idea to. So this seems like there are people who are interested in quite frankly, the need for funding minority and women entrepreneurs is so great and so vast, and there are a lot of people who are really interested in the work we're doing. So we've seen a lot of positive and received a lot of positive feedback. So we're definitely confident that we'll be able to raise a terrific, what are some of the obstacles or unexpected hurdles that you've encountered along the way, I mean, quite frankly, being three African American males, there aren't many more in the industry. So starting from that basis, the amount of role models, quote, unquote, that we could or cannot have, is one barrier. Another barrier that we've experienced is that neither the three of us have any formal education in venture capital, we don't have a background of venture capital. But we are confident that we're able, we're going to be able to actually play and have an outsize role in this space, since it is an emerging space as well. So I'd say those are the two things that are pretty difficult. I mean, also, just quite frankly, having a lack of access, we find interesting is that we're actually the entrepreneurs are we fit the profile of entrepreneurs we're looking to serve. And so that gives us a pretty unique insight into them. Mm hmm.
You did a summer program at a law firm last summer. It was that with their VC practice?
Yeah, definitely. So I was here in Washington, DC at Goodwin Procter in their private equity and venture capital practice, and got a lot of great technical experience at that, during that summer.
Okay to that, did you feel like you took a leap forward after that summer?
Definitely. Yeah, definitely. I'm also in some classes at the Law Center, that are taught by bc attorneys. And so just having that technical side of understanding, you know, terms, you know, when you're writing a term sheet to control the finances, you know, just having a better understanding of that has definitely been beneficial.
I can imagine. So you've been in business over a year now. Has your vision been the same since the beginning? Or have you had to adapt along the way?
Definitely, I mean, we've always said to say Northstar, which was to help fund and, you know, get out the dreams of entrepreneurs of color. But we've had to adapt, of course, I mean, I can hardly imagine this, any entrepreneur who started their business, going one way didn't have to adjust or amend their initial assumptions after going out to the market.
That's certainly true among the entrepreneurs I've interviewed. Everyone has had to pivot at least once. Can you give us an example?
Um, I mean, we at first, we were just very much sector agnostic. I mean, we just didn't know we had absolutely no idea. We just had an idea of, Hey, you know, we have all these friends with all these great ideas, who if they just had a little extra money could help launch them or get them to the next stage of their careers. So we started from that basis. And so at first it was, you know, we have a friend that's a comedian, we're potentially going to help set up a tour for him up and down the East Coast as a way to help build his star power. We have a friend who's a rapper, same thing. But then we started realizing, Okay, how about we actually invest in people who already have companies who are already working towards a goal. And going off of that assumption, we did a lot of market research and really realize how, how, how undercapitalized the minority and women entrepreneur sector has been and just trying to, you know, do our part to raise that awareness.
So are there any industries that you are now focusing on or that you envision focusing on as
you build the business? Yeah, so we're currently sector agnostic. what we realized is a lot of VCs who sort of have a sector, they've had 1520, you know, 30 years in that industry. And that gives them sort of the confidence to know that they'll be able to have an impact at this point.
So they can add it to a particular sector and then decide to fund in that sector. Exactly. Exactly. And you don't have money. Right?
Exactly, exactly. Aside from, you know, if you want to start a political startup, I guess, with my limited experience in politics, post graduation.
Oh, it will tell us a bit about that after you graduated from Howard.
Yeah. So I graduated from Howard with a political science degree. And I went to work for a political nonprofit by the name of Bill labels. And then I was the expert, I actually rose through the ranks and became an external affairs manager. And you attend for how long and that was four years. So my first two years, I was just a full time employee. And then the last two years is actually when I started law school. So I started my law career as an evening student, working in the day for about 40 hours. To be honest, with the 60 hours a week, I've been taking classes at the EP,
and what made you decide to, to not go to law school full time.
I mean, at that point, I had been having such a great career. At no labels, I was making a bunch of great connections. I mean, one of my idols is Bernie Jordan, and I had a chance to sit in on a meeting with Vernon Jordan. And so I had just been making all these great connections. And it just to me felt like, you know, I don't want to put this on hold, I think I can do both at the same time. And quite frankly, I've always kind of vision myself as a renaissance man, and just kind of having a bunch of different balls and different plays up in the air, and quite frankly, matches my view myself, I have a lot of varied interests, I'm interested in a lot of things and that the ability to sort of explore those different options at one time was appealing
to keep your full time job and then add law school on top of that, that sounds like that didn't sound too daunting to you at the time, because you were used to juggling several things at once. Yeah, not
at all. We actually launched barley Creek capital, my last semester of doing both and, you know, people were like, how are you going to run a business work full time and go to law school? And for me, it was just, I mean, what is your
What was your answer to that?
It was, well, I do I was leaving the, my job in the next couple of weeks, I had actually given them like six months notice. So that was, that wasn't a big shock to anyone. But, I mean, there's no time like the president. I mean, I did it was something I wanted to do. And I've been thinking about it for a while, I've been talking to my partners about it. And you know, we were just like, let's do it, man. Let's let's, let's see what happens. And I think the great part of one of the things that I guess, going back to going back to any roadblocks is, because we don't have a lot of industry experience, we're a little bit more fearless. And that we feel like we can, you know, we're learning as we go. So we're easy. It's easier for us to pivot versus someone who's been in the industry, and its kind of wedded to one idea of doing it,
it doesn't feel like they have anywhere to go Yeah, exactly.
At least for us. It was like, Hey, man, let's try it. You know, if we fail, we fail, we learned a lot of ways not to do something. But on the flip side, if we succeed, you know, sky's the limit, which so far it has been.
So in other words, he felt like what could be seen as a disadvantage, not knowing any any industry sector in particular, you've used as an advantage, because your, your lack of knowledge to logic take bigger risks. Exactly.
Definitely. It's our curiosity. I mean, you know, when someone says, You can't do this, because of that, for us, it's like, well, we don't really understand that because we don't have experience in it. So let's unpack that a little bit. Let's try to figure out why it is that you know, you can only write things this way. Why can't we call ourselves a venture fund, even if we're only writing five and $10,000 checks? I mean, it's a venture fund people invest in us we invest in others, we expect to return, you know, we're working through the process. And
like I said, Because amounts are smaller,
exactly. I mean, smaller amounts, but the format is still the same. So and that's
in your world, that's known as micro finance.
Yep, definitely. And we coin and I mean, we didn't coin the term micro finance, but we use micro finance, basically, because the amount of the size of the checks are, as I said earlier, a little bit smaller.
And you have, you have any trouble finding people for whom that amount of money will make a difference?
No, and that's the thing that's been the most interesting, there is a significant need for investing in small bits, businesses and startups. A lot of times something that's super interesting to us is that entrepreneurs, you know, there's this whole, you know, if you're going to start a business, do a friends and family raise, and get the money that way. And then you can start have your MVP, your proof of concept, and then you can go out to institutional investors. But from our community, there are a lot of individuals who can't even raise that money from their friends and family, Like who? Exactly. So for it's just not an option, just point blank period. So we play a unique role in that we're able to help give them the financing, they need to sort of prove their concept that they can then and take to other institutional investors, or if they're already running a coffee roaster, like the one we're doing, like we're hoping to invest in here, they already have some good traction, they have a bunch of great accounts, and they just need to bring on some extra capital in order to spur that growth, then, you know, that's retirement, and we're able to help them get to that next level.
I see. So I've done a lot of work overseas over the years, and have interacted with a number of entrepreneurs who have benefited from micro enterprise, which is essentially people form peer groups, and borrow together a particular some and then split it among themselves to each take their business a step further. Now, the amount they can they borrow is typically in the hundreds. And that that's true. In many, many different countries, mostly developing countries, what you're describing seems like sort of the the US version of that, definitely minus the peer group, right? And the in for micro enterprise, the peer groups are how they have accountability to pay back, they have to pay all the money back together, and they hold each other accountable. Here, you're finding individual entrepreneurs, for whom five or $10,000 can really help take them to the next level, right? And you write an agreement with them, and then fund them.
Yep, it's legally binding. But kind of to your point, the initial idea for probably great capital came from the group economics there. I mean, we're extremely familiar with the wealth gap in America, in just trying to figure out ways to do our part to try to help close that. I personally wouldn't be able to fund three, four businesses by myself, maybe only one or two. But if I team up with two of my partners, so I went to school with who I know are interested in this.
Yeah, your funding is together.
Exactly. And we can grow and build together, they're bringing their experiences Roy as a marketer, Justin has been in business development, I've been in external affairs. So you know, investor relations is something that I'm I've been building in, you know, consensus in agreements and relationships my entire career. And so we taking it now to have this legal education to add on top of that, we're taking all the different experiences we have pulling them together, along with our financial capital and hoping to have a greater impact on our community.
And you got it you hold each other accountable. Exactly. Yeah, exactly. Oh, that's great. That's really that's really neat. So Dennis, you were a shark tank finalist. And we all know bark tank is one of the highest profile pitch competitions here in Georgetown. It's, it's, it's it's an exceptional competition, for sure. Really. Neat evening. How did bark tank impact you and or your business?
Yeah, I mean, to answer that question, it it honestly accelerated our progression and growth. I mean, we were meeting every Saturday, and we still do this, but we were meeting every Saturday in the library at Georgetown Law. Actually, we were calling Justin, either on the phone or FaceTime. Just working through ideas, you know, at that time, no one was holding our feet to the fire in a sense. So we were we were progressing along. But I mean, there's nothing like being forced to drill down your idea and a concept into a three minute pitch that forces you to really flesh out all the different extenuating thoughts that you have. And that's really what this process did for us. How'd you clarify what you were actually doing? Yeah, definitely. I mean, even the professor I told you about, he's the one who nominated us for the pitch competition, the law school professor, exactly. He, He even told me even just the first day I brought in my initial business plan, and where he saw the performance of bark tank, it just was night and day. And, you know, I truly credit that to him and credit to the park tech experience, just
how far forward you were able to lead?
Yeah, definitely. I mean, even now, coming out of the competition, we've had a bunch of great opportunities. We like what, so one, one opportunity that we're really looking forward to and hopefully get to work on with is we submitted a proposal to monumental sports and entertainment, who, as you know,
it's hard, but exactly
who were over the entrepreneurship prize competition, he submitted a proposal
for venture development program. So a part of some of the work they're doing and se is some philanthropic giving, we obviously are really interested in it entrepreneurship, and not only, you know, just investing, but also showing that, you know, people from our community can be entrepreneurs you can be, you can start companies, you can even if you don't want to start a company, but maybe you want to help someone start a company, there are a lot of skills and intangibles that you can learn through entrepreneurship that can be applied through to your life and a greater aspect. And so
when you say our community,
I mean, the black community just, you know, straight up, but we also consider ourselves minority, so the minority community and whether you know, you're a gender minority, you're a racial minority, you know, quite frankly, there are economic minorities, quote, unquote, that is really interesting as well. So we just see ourselves as trying to help people who haven't been exposed to a lot of what's out there, and how people are generating wealth and how they're building companies and how they're making money for their families, and you know, their kids and their kids, kids.
And so people at monumental sports, we're interested in hearing more about that from you.
Yeah, exactly. And so we together a venture development program that we wrote from scratch, which is essentially an accelerator type program, but we call it a venture development program. And actually, why we are very intentional about calling ourselves a venture fund versus a venture capital fund is because we finance ventures, we're trying to help people who even if it's not a company, maybe they have an idea that they want to do. Or maybe if it's not, if it's if it's not a startup, which typically is associated with venture capital, maybe they just have a business that they're trying to get to the next level.
In other words, I'm saying it doesn't necessarily have to be a for profit business. Exactly.
Exactly. Then so. So this program would be for folks who have ties to Southeast that still fit our HTC correct, excuse me, Southeast DC who still have, we still fit our investment criteria. And we're going to work with a couple of those companies, approximately five to six for this first pilot program iteration, which we hope this so successful, that, you know, it's just something that, you know, monumental, potentially, wow, and, you know, keep doing you have to hear even when we're gone, this is still something that it's giving back to the community. And what's interesting is, this isn't something we just came up with from whole cloth. We went on a listening tour, we went out to listen to it. Yeah, we went out to the community spoke with people, we asked them, if this was brought to the community, would people be inclined to participate? And the answer was overwhelmingly Yes.
Yeah. So that how many people did you talk
to? So we spoke personally to about five to six, corporations, corporations, companies, organizations, just a mix. And then we spoke to a bunch of other individuals at least 25 to 30, who have ties to that area
attached to Southeast DC, correct? Oh, great. Great. Yeah. And then after you got that information, then you at the proposal,
definitely, we had already had an idea is something that we wanted to do, because it also would serve as a way for us to kind of get more experience helping grow companies. That's essentially what we want to do. Once you know, at this point, we're looking to raise one to 2 million, but down the line when we're raising, you know, 100 200 million, having this initial experience at this grassroots level was only going to help us and propel us, related down the line. So we're just very intentional about a lot of the ways that we're gaining and obtaining knowledge aside from research, it's, you know, you have to be in the field, you actually have to get your hands dirty, you have to make a couple mistakes and realize that you know, you didn't cross all the T's and dot all the i's, but it only helps further the further reader further iterations. Sure, sure.
Bark tank is a big audience. Definitely after you pitched Was there anyone you met that you might not have otherwise met?
All right, right. I'd say that. I mean, obviously, the reason we were so interested in doing it is because we knew we'd have the opportunity for billionaire Ted Leonsis to give us feedback on our idea. And then we also had a chance to meet a bunch of the VCs or angel investors that were there. We had, there's a guy that runs one of the we work labs in southeast that's a student here as well. I met him he Connect
is a we work love. Yeah. In in southeast. Yeah.
Yeah, it actually is. It's actually right across from the Navy Yard.
And for our listeners sake, we work as a shared workspace that was founded by a Georgetown alum. And there is a we work office, which which now houses the Georgetown venture lab. And so there's partnership between we work and Georgetown entrepreneurship initiative, to provide working space for entrepreneurs out of Georgetown, exactly
when ties to the university. So that's great, that one's in closer to the campus, but the one I'm speaking of, there's some entrepreneurs, minority women entrepreneurs that he works with there that he connected us with. So there's just been leading the individual who works, the student who works at the, we work, okay, and
so so through through this other student, you were able to meet other people definitely working out of that shared workspace.
Right. And if the venture development program is eventually funded, he's also agreed to help us house and you know, have some events there as well. So it's just been interesting to see, the network of individuals who are interested in micro financing is definitely helping this community. So it's been amazing. And we, I mean, it was our first foray into the public, you know, coming out of the library room and the Law Center.
Was it just really an idea before that?
Yeah, definitely, definitely. We had invested in our first company, which was someone that we that a, the food truck company was actually an individual that we went to school with, so we knew his business. Were able to speak with him. But he invested in him exactly. But before that, you know, we everything else was was brand new. And so it was just a great opportunity to sort of take, and honestly, we had this idea to take it to the public and really get some feedback. And that's what we're looking forward to, you know, all criticism is great criticism, in our opinion, positive. We're just trying to do it be the best that we can. And the only way we can do that is if we get opinions from others.
And you seem to have gotten a large number of those.
Great. So you mentioned Tilly gnosis who underwrites spark tank, if you had an opportunity to ask him one business question, what would that be? Well, the first one would be Ted, would you invest in finally create capital?
But no, all jokes aside, the business question I would ask him is how he knew it was the right time to delve into the various sector that he's dealt in, as I mentioned earlier, have a varying interest, I'm really interested in a lot of different things, which is what attracted me to entrepreneurship, being able to work with different companies in different peoples from different sectors in different locations, which is amazing. And just knowing that he's been able to move and be successful in so many different areas. I just really be interesting with how he knew it was the time to make those moves
as you shifted, exactly and invested in different sectors. That's because time is energy, exactly money.
Because, you know,
as we all know, you know, there's no really right time to ever kind of do anything. I mean, you can think about something, it's like, well, it's not the right time, it's not the right time, but for someone to be as successful as he has, you know, there's something about knowing when the right time to move is when to take the leap. Exactly. I mean, interested a little for
Okay, yeah, I hope he is chance to hear that question. Definitely. Lastly, I'm going to ask you, as you've been building this business, what is is there been one piece of advice that you that you really hold on to? That has meant something to you? Um, I mean, there's a ton I'm gonna I'm gonna be quotes guy.
Yeah. So there's all the time. I mean, quote, scriptures, it doesn't in any nugget that someone could share with me. But actually, Megan Roman, who's an entrepreneur and resident, the day before the pitch competition, she sent me a poem. And actually funny enough, I thought she just sent it to everyone because she was over the else's family prize. But as we were preparing, she was, she was over.
Okay, so she was everything. Okay.
So she sent me this poem, and I just thought, you know, she sent like, something to everyone. Like, it was just kind of a but it was a teddy roosevelt poem about the man in the arena now, man. Yeah. And she got what you say. Yeah. And she is it? Yeah. So essentially, it's all about you know, anyone can say what they want the naysayers, you know, there's people Oregon always going to have opinions about what you're doing. And why shouldn't do what you shouldn't do it and what you're doing is wrong, or, you know, you're not exactly. But it's about the man in the arena, and the only way and you sort of have to find comfort in yourself and knowing that, right, you all have opinions, but their opinions on what I'm doing, and what I'm working on, and the good that I'm trying to do, and how I'm trying to shift the culture and how I'm trying to shed light on this community of entrepreneurs to have all these great ideas, but just need a little help. And so for me, that was just me, quite frankly, I printed it out. I framed it as in my house now because to me, it just really felt that way. You know, when you you're in the arena Exactly. When you're unsure when you're not you know, when you don't know any essentially anything that you're doing aside from you know, the articles or books that you've read, I read them all I read reintroduce, you know, breaking into VC I've read at all I've read all the articles, I read how hard it is how difficult it is. But it was something that another venture capitalist told me a few weeks ago when I was interviewing him for a project actually, that I'm working on was you are venture capitalist it is you're actually writing checks, you are doing things that people always say that there are a lot of individuals who have never even written their own check, but consider themselves VCs or that the, you know, they're they're the expert authority, exactly. Expert authority on this. But you know, you've done something that more than half of them haven't done is you've actually put your own money on the you are an investor. Exactly. And so just kind of knowing that and still accepting that we know we don't know. And, you know, we're trying but just, you know, being a man in the arena and actually knowing that, yeah, you know, anyone can say anything, but just know that at least you're trying.
Yeah. And I interpret that, quote, often. I remind myself, don't listen to the people in the cheap seats. Someone else is in an arena. Great, then they can speak into my arena, but they're the cheap seats. Definitely gotta tune them down. Yeah,
exactly, exactly. And so that was just really instructive. I mean, I had some other entrepreneurial endeavors when I was in college and things like that, but nothing to this magnitude. And it's a lot of work. I mean, we put a lot of time into what we do, and try to figure it out, trying to identify companies trying to be better every single day, making sure you know, we file our taxes on. Like, there's just a lot that comes up. Exactly. But I wouldn't have it any other way. Honestly, it's been a great experience. And I can only imagine where we're going to go from here.
Well, Dennis, the work that you and your partners have done so far. It really, really does show. Thank you.
Thanks for coming today. And tell us about telling us about your business and your journey. Yeah, I appreciate it. Thanks for having me. And I just want to last stages, you know, all those folks out there who are thinking about starting a business just jump in. There's no time like the president to really get out there and follow your dreams. That's a big word.
Thanks for coming.
Venture forward is a production of the Georgetown entrepreneurship initiative at the McDonough School of Business. Our production team includes Jacki Abbey, Christy pills, and Ben Zimmerman. Thanks for listening. Until next time,