Nathalie Molina Niño is an entrepreneur, investor, and author of LEAPFROG, a book that shares uncompromising advice for women entrepreneurs to win in business despite not having family money, cultural capital, or connections. A proud daughter of Latinx immigrants, she is a fervent champion for diversity & inclusion. Her recent article on FastCompany, “Why is #FinanceSoWhite?” addresses the lack of diversity and racial bias in the finance industry. Here, we follow up with Nathalie on how to take her insights from that piece to further chisel down more solutions. Read on to learn more about how to increase representation in finance:
First, tell us about your journey. What key moments in your life/career have led you to developing a passion for championing women, as well as being a voice for diversity and inclusion?
Climate activist and scholar, Mary Annaïse Heglar, recently wrote that, “Every so often in interviews or panels, someone will ask ‘What made you want to get involved w/ climate action?’ Or ‘What made you fall in love with the planet?’ It’s always such a confusing question because it’s an indirect way of asking ‘When did you decide you wanted to live?’”
Maybe a little like Mary, I don’t remember the day I realized that I thought I was a human being, deserving of the same rights and considerations as men. I don’t remember when I noticed that speaking up mattered and that silence is not just counterproductive, but is actually at the root of the problem. Every problem, from climate injustice to poverty to sexism, racism and all forms of bigotry, is fueled by what MLK called “the silence of our friends.”
All to say, I don’t know when the passion for my own survival started, but I hope it’s contagious because we need armies of us (and our allies) to get behind leveling the playing field for women everywhere.
In your last FastCompany piece, you mention that many emerging manager programs designed to increase diversity in the finance industry have failed. For asset allocators interested in identifying, measuring and removing bias, where would you suggest they start? What tools do they need?
Symphony orchestras transitioned to blind auditions from 1970 to the 1990s, which resulted in a 30 percent increase in the proportion of women among new hires. Asset allocators could consider doing something similar. Bias training has largely failed, according to most studies, so I would caution allocators against quick-fix solutions that well-intentioned consultants or HR managers might be selling. Whenever a company wants to focus on something, it ties it to compensation. This is no different. Make diversifying your fund manager cohort a key performance indicator, tied to pay and bonuses. And when that diversification effort pays off, make sure the executives and staff who delivered the change, benefit directly. People have a funny way of very quickly and effectively figuring out how to solve things when their livelihood depends on it.
In that same article, you spoke about on-ramps and the importance of building the next generation of fund managers. To do so effectively, what type of resources can be offered and invested in so that these next-gen fund managers are well-equipped?
For starters, we can invest in the ones already right under our noses. Wharton’s 3rd edition of Project Sage (slated to publish this Spring) is expected to catalog over 100 funds or firms that focus on investing with a gender lens. Sadly many of those firms struggle to secure LP dollars and fixing that issue is a great place to start. We do not have a pipeline issue. Beyond that, it’s time to think critically about whether the existing investment frameworks are serving us. For example, is high risk, “spray and pray” venture capital really where we want to be sending communities without strong safety nets? The median net worth of black Bostonians is $8. That is not a typo. A model that’s predicated on a lucky, privileged few surviving is not a model that’s designed to create multi-generational wealth. We need an investment model for true builders of businesses, people who have track records of starting and growing businesses that last, not just flipping them to hit short term IRR targets. It’s time for long-view investing that is rooted in proven, operational excellence rather than praying for the next unicorn.
You yourself are an impact investor. What advice would you give other investors to help them invest in a way that reflects diversity and inclusion values, and what should they be demanding from their asset allocators in order to make sure their money is invested with these priorities in mind?
Actively find founders and fund managers to invest in that come from underrepresented communities, both because it makes a difference to the industry, but also because the data shows it’ll be better for your bottom line. If your advisors don’t agree, insist they read the research and study up. Give them time to transition but demand results and hold them accountable. Family offices are an important source of early capital for up-and-coming fund managers and can signal traction as fund managers graduate to institutional capital, so smaller investors make a big impact when they put their support behind new managers.
On the entrepreneur side, you also address creating businesses as a woman/POC leader, and all the extra hurdles you have to jump through when you are not rich, white, or male. You have a book called LEAPFROG. What is one “leapfrog” advice you can share as a teaser to your book?
One of the topics I cover is funding for startups, and my favorite hack is called “Debt Is Not a Four Letter Word.” In it I explain the importance of a balanced capital stack, I demystify the often empty-promise of venture capital (framing it instead as an option of last resort) and encourage founders to embrace the importance of debt to help grow their businesses without having to give up equity and therefore control. The mortgage crisis and predatory college loans have left many founders with a terrible impression of the roll of loans, so this is an important message to share with founders. As is the creation of startup debt funds, which we need many more of, if we’re really going to support growth and innovation among the companies that venture is currently ignoring.
What excites you most about being a part of SVC, and speaking at our upcoming conference?
I’ve never met a more enthusiastic, quirky bunch of misfits than the people I’ve met at the last two SVC summits I attended. I’m honored to be a part of the community but most of all, I’m excited to get to know everyone and co-conspire to disrupt our industry and produce real outcomes together.