Elisa Miller-Out is Chloe Capital’s Co-Founder and Managing Partner. She is an experienced serial tech entrepreneur, having founded and led seven companies over 20+ years. She is an experienced investor, having invested in 38 companies, in addition to executing 8 M&A transactions. Elisa is also an active board director and community builder. As an Innovation Advisor at NYSERDA, she helps advise on an $800 Million portfolio of entrepreneurship and investment programs for climate tech startups. She also serves as a mentor and Entrepreneur in Residence with several organizations, including Cornell University’s Center for Regional Economic Advancement, Launch NY, 76West and others. In addition, Elisa is an instructor with the National Science Foundation Innovation Corps and a guest lecturer at Cornell and Columbia. Elisa serves as a board director at Dimensional Energy, Impact Makers, Switch and as chair of the board at Singlebrook, a custom software services firm Elisa co-founded and led as CEO for over 10 years. Elisa oversaw the successful acquisition of a division of the company in 2016. Elisa has been featured in the New York Times, the Washington Post, USA Today, Forbes and other publications, and she speaks about technology and entrepreneurship at events across the country. Elisa graduated Summa Cum Laude from Barnard College of Columbia University. Learn more at ElisaMillerOut.com.
Interview by Adam Lieblich, BRV Fund Manager 2021-2022.
What was your path to becoming an investor and how did you get to where you are today as an investor and founder of Chloe Capital?
I spent a lot of time early in my career as a tech entrepreneur and I spent some time in the software industry both running a software services company and spinning out some software product companies. This included building software for everyone from Fortune 500 companies, to startups, and even universities like Cornell. During those years I also spent a lot of time mentoring startups because I was often the only woman in the room, being in the tech space, and so was sought after as a mentor for many startups who were trying to get off the ground.
Throughout this time, I have held many hats as a mentor such as being an Entrepreneur in Residence at Cornell, an innovation advisor with NYSERDA (New York State Energy Research & Development Authority), and as mentor with the National Science Foundation. From this, I got to interact with a lot of Tech startups and saw that the numbers continued to tell a story that less than 2% of female founders receive venture capital funding, with less than 1% going to African American female founders. Yet, studies show companies led by women produce more sales, exit faster, and generate more return for investors. Because of this, I saw an incredible opportunity to make an investment return and make a tremendous impact in the space. I then came together with my leadership team to found Chloe Capital to decrease the gender and diversity gap in entrepreneurship and venture capital. We invest with a gender and diversity lens in women led startups across the US in spaces like climate, education, workforce, and health.
What was the transition like from being a founder and starting a company to becoming a mentor and investor? What are some of the things you took from your experience as an entrepreneur to the other side of the table?
In terms of the transition, it has been seamless because I am still an entrepreneur as a co-founder of Chloe Capital, forming a company with a team rather than joining a VC. Our whole approach is very entrepreneurial, and we are doing many of things I had to do when running a business like dealing with legal, building a team, and all the different things you need to do when starting a company.
That said, VC was always a better fit for me, but I just didn’t realize it until later in my career. I was never okay with just one company and always wanted more, so the portfolio approach really does appeal to me as someone who loves learning new things about technology and innovation. It was also way more suited to my skills, interests, and passions. I am an idea person, and some days can have 50 different business ideas before breakfast. I will be like ‘what am I going to do with all these different ideas since I can’t run all these companies myself’. As an investor though, I can be involved in many companies. My portfolio is close to 40 companies right now and I can be involved and play an important role in helping them.
I can also say that VC is a very different type of investing, having also invested in stocks in the public markets. In VC and angel, you get to have that personal relationship with the founders which I love. Being active as a mentor, I always really enjoyed being able to connect with the founders and being able to see what resources they needed and who they needed to connect with to help them in their journey.
I also realized that I was already doing a lot of the work as an investor for many years even before I even became one. During all my years as an entrepreneur, I was already building entrepreneurship communities like starting meetup groups with women in tech, mentoring entrepreneurs, and helping connect them with what they needed to scale and grow. I realized that the only part I wasn’t doing was moving the capital.
What are the things you look for when considering making an investment? I am sure you are looking at so many potential deals at any given time, so what are some of the things that stand out to you and signal that something would be a good investment?
Yes, I would be happy to talk more about our thesis and approach. At Chloe Capital, we typically invest in companies that are seed through series A. We mainly look at tech and tech enabled companies, enterprise SaaS being our sweet spot, and invest across the US and globally. We also look at companies that have a product in the market with some early traction. In many cases they do have some early revenue, but in other cases they may be pre-revenue and showing other types of traction with users or key partnerships. But we do like to see some evidence of product market fit.
In terms of the gender and diversity lens, we look at companies that have at least one-woman founder on the team with at least 20% equity at the seed stage and is in a leadership and decision-making role. We also target that over 50% of our portfolio needs to have a person of color in the C suite, also with at least 20% equity. This is looked at alongside the investment potential.
In terms of industries, we look at climate, education and workforce, health, and finance as some of our main industry themes. Beyond that, when you are investing at this stage, so much of it is about the founder, so we really like to get to know the founders well. We do a lot of that through our accelerator program model, where we run our signature programs which are virtual accelerators followed by a 48 -hour fundraiser experience. These programs give us a chance to get to know the founders, see how they interact with other investors, and really help them with so much more than just writing a check.
So, if you decide to invest in a company, it is a given that they would also be included in the accelerator? Or can you be in the accelerator and not necessarily get an investment? How does that work?
So, the way our model works is that we typically have a cohort of 5 companies in each accelerator program. We have done over 10 of these around the country, so have had over 50 companies participate so far. From the cohort of 5, we typically will invest in at least 1 from each accelerator program. We also make investments in companies that do not go through the accelerator program. It is a mix and can vary from program to program based on our screening and due diligence process, which is quite rigorous and involves a whole committee of experts across technology, market research, finance, legal, and more.
What advice do you have for startup founders looking to get into the accelerator or looking to get VC financing in general?
A couple things to think about here. Yes, accelerators can be a great opportunity and we encourage folks to apply for ours when possible. But other great things to think about when financing is founder-funder fit. In this regard, don’t just send out a deck to every investor, but instead develop a strategy to look into and research the funds, angel investors, and angel groups that are going to be the best fit for what you are doing. This will enable you to fundraise more efficiently and align goals better with your investors.
Another thing to think about here is what are your longer-term goals? Is this a venture backable business that you want to grow very rapidly and exit from? Or is it more of a lifestyle business that you want to run for a very long time or as a family business that you want to pass on to your kids? There can be all types of different approaches and funds for different opportunities. Is it an impact company or should it be a not-for-profit, hybrid model, or B Corp? All these different things can result in different types of funders that might be a fit.
There is also geography. Now with remote working becoming more popular a lot of investors are going into wider geographies. However, there are still a lot of investors that prefer to invest in a certain community or region. That is especially true for angels and angel groups. Where are you based and who are the investors around you in your region?
In addition, there are themes. What are the themes of the investors? If you have a climate company and then apply to an investor that only invests in retail startups, it might not be a good fit. You can also look at the stage. If it is an investor that is investing more at the growth stages, like series B or C or beyond, then they may not look at a company that is seed or pre-seed. All these things are very important to determining that founder-funder fit.
The other thing I recommend for founders is to go through a qualification step. Once you have figured out what type of investor you want to go after and what might be a good fit, you may come across new potential investors and can go through a qualification step where, just like they are qualifying you, you can also qualify them and screen them as an investor to determine if they are a fit for what you’re doing. That qualification step will allow you to be a lot more efficient as a fundraiser because you can go through and say ‘okay is the timing right for when the firm is deploying capital, are they the right theme, stage, etc.’ Some of that can be done with initial research online, meeting people, or checking out their blogs. It can also be done with an early meeting or interview with them where you get to know them more and their thesis, understand them better, and then can use that as your standard qualification step to narrow how many investors you have to target for more in-depth pitches and relationship building.
What are some of the trends you are most excited about as an investor?
So, I just got back from South by Southwest (SXSW) in Austin and one of things we often think about when we are there are what are the trends and what are we seeing in the industry. Some big trends that came about recently this year were about how climate continues to be a major theme and impacts all of us and there are a lot of exciting programs at the DOE level and state level in NY that enables startups to have exciting opportunities to start and grow cleantech and climate tech companies.
The metaverse was also a big theme at SXSW and we do have one portfolio company that is active in that space and partners with Meta, so we are excited to have some exposure there. NFT’s were another focus at SXSW since it is both a creative and tech festival.
Additionally, web 3.0 is another trend we are focused on now and we do look at a lot of companies in the blockchain space to see what is happening there.
In terms of the themes that we look at, we continue to be excited about the industries that we specialize in, such as the future of education and work, which we were invested in even before the pandemic.
What advice do you have for students and professionals looking to break into VC, investing, or starting a company?
Mentor others and help others in your path. By doing this, you will be able meet your own goals and build an ecosystem and better relationships in the process. The give-first mindset helps build startup communities and really helps folks launch their careers in more successful ways. So, help that student who is in the class below you and see where you can be of service to the community. This is a great way to meet collaborators and I have met some of my favorite co-founders by giving back to different startup communities and serving as a community builder.