MBA alumnus and Founding Managing Partner of Plexo Capital, Laurence “Lo” Toney excitedly talked about his journey as a fund manager and his diverse entrepreneurial background. Check the full episode of the podcast, to learn more about his passion for helping start-ups and his mission to give back to the community. Meantime, we’ve summarized some of the episode’s highlights.
Forming Meaningful Relationships
Lo Toney knows the importance of being intentional about the relationships he forms with people. He recognized that hard work alone is not enough to establish a company. It’s not just what you know; it’s who you know. Signaling competence to people that share the same mindset, goals, and values at the right time is important. From college friends to his colleagues from his former company, these connections brought him closer to the opportunities as he pursued the path of a venture capitalist.
“I’m truly blessed to have lifelong friends from both high school, college, and my fraternity. And look, I can do some business as well. One of my fraternity brothers is actually on the endowment board for Hampton University, and I’m sure that helped.”
The Importance of Building Credibility
He attended Hampton University, a historically Black college, where he met with schoolmates who helped him later in life. The university, through Dr. William R. Harvey, trusted his capability to lead a business. Hampton University was one of the first Limited Partners of his firm. He built that trust by practicing transparency when working with people in his circle and showing them what he could do. These relationships that are willing to stake in his company helped him get more credibility for more investors to come in.
By securing the trust of other partners and investors, Lo received the same opportunity from the company he previously worked with, Google Ventures. His experience as a partner in the early-stage investing unit gave him a good start. When Google’s co-founders Larry Page and Sergey Brin saw his growth potential, he received massive support from them, he incubated his idea at Google Ventures over 18 months and founded Plexo Capital in 2018.
“My former manager, David Crane, the CEO of Google Venture, approved transitioning my role from a partner on the investing team at GV to an entrepreneur in residence. And the company that I worked on was Plexo Capital. I did that for about a year and a half, incubating it inside GV and then spinning out around March of 2018. And Alphabet came on board as our anchor investor. I was able to bring those capital accounts for the original five LP commitments we made. And then, I went out and fundraised successfully to add Intel Capital, Cisco Investments, The Royal Bank of Canada, Hampton University, and The Ford Foundation for Fund I. So, Fund I, $42.5 million. We made an additional 15 LP commitments in addition to the five I brought with me. So, a total of 20 LP commitments for Fund I, and we have an active portfolio of about 23 companies.”
Diversity in Business
Lo aims to build an inclusive network, as he saw that in general, Black partners in early-stage funds have a great eye and pulse when it comes to venture capital.
Their experience gives them a unique lens to evaluating entrepreneurs that might not typically be considered right by the founders. According to Lo, diversity creates a powerful network effect that’s untapped mainly in venture capital. Something that’s crucial at the seed stage because it leads to a more differentiated flow of deals.
“For me, diversity means a lot of different things. At Plexo Capital, we’re specifically focused on ethnicity and gender. We started with this strategy at Google Ventures, focusing on Black general partners leading early-stage venture funds.
It proved to provide not only additional deal flow but also a little bit of alpha, especially given that there’s not a lot of data for these early-stage companies. So, it comes down to familiarity with some of the problems or the opportunities the entrepreneur is going after and for what we want to accomplish.”
His plan to back seed-stage funds led by people of color, both men and women, worked to produce successful deal flows and create a flywheel effect in the Black business community. The relentless effort of funding early-stage businesses to take off and execute their vision builds momentum until a point of breakthrough.
“At Google Venture, we made five Limited Partner commitments to seed-stage funds led by Black General Partners. It worked for us at GV to fill the top of the funnel with more deal flow. And then it also provided those GPs that we back with a way to help their fundraising activities.”
Lo’s passion for seeing people of color succeed in their business concept is instrumental to the birth of his company, Plexo Capital. The name is a Portuguese term for an intricate vascular network. Something that he hopes to mimic for the company to help the community forge better and stronger networks. He envisioned a platform that allows everyone, regardless of their ethnicity and gender, to be connected to opportunities and win. Aside from seeding funds to help the early stage business get started, Lo’s firm provides free access to fund management resources that he curated and benefited from.
Click here to listen to Lo Toney’s full podcast episode.