Nasir Qadree | Rewiring Funding for Diverse Founders

Jennifer Tescher:
Welcome to EMERGE Everywhere. I’m Jennifer Tescher, founder and CEO of the Financial Health Network. For two decades, I’ve worked with leaders across industries to answer one central question, “How can we make people’s financial lives better?” Now I’m sharing these conversations with you. Listen in to hear how these visionaries are rewiring our society to support financial health for all.

2024 marks the 20th anniversary of the Financial Health Network and the broader Financial Health Movement. And so for this year’s season of EMERGE Everywhere, we’re hosting a special series of conversations about the headwinds and tailwinds that will impact our progress in the years to come. In this episode, we’re focusing on the continuing role of technology in improving financial health and well-being, and how to ensure that we’re being intentional in how we invest and who we invest in. The people who make investment decisions in this country are overwhelmingly white men, and we need investors and entrepreneurs who reflect the diverse society that we live in.

Joining me for this conversation is Nasir Qadree, founder and managing partner of Zeal Capital Partners. In 2020, Nasir started Zeal Capital because he believed that not enough founders were getting a fair shot. Now, full disclosure, I’m an advisor to Zeal, and so I’ve had the chance to see Nasir in action from the beginning. I believe he represents the future of venture investing, and I’m excited to learn more about his approach. Nasir Qadree, welcome to EMERGE Everywhere.

Nasir Qadree:
Jen, it’s great to be with you. Thank you for having me.

Jennifer Tescher:
Oh my gosh, of course. So I’ve been reflecting on how we first met, Nasir, and you emailed me out of the blue.

Nasir Qadree:
It was a cold email.

Jennifer Tescher:
It was a cold email. And I’m not sure what it was that led me to take the bait, but your confidence and persistence just so blew me away. And it turns out that those were traits that were going to be critically important to your success, given the timing of when you decided to start a new impact investing fund called Zeal, all at the beginning of COVID and shortly after the murder of George Floyd. Tell us a little bit more about your journey and what inspired you to get started.

Nasir Qadree:
Jen, I recall very clearly how we connected and why we connected. And-

Jennifer Tescher:
Of course you do.

Nasir Qadree:
[inaudible 00:03:03] I recognized that if I was going to build a mission-driven, full-stop investment platform, that I had to include, not just other investors or those who build storied companies, but those who are also in other areas that amplify mission-driven companies, that focus on impact, but more specifically the sectors that we felt there was a huge market opportunity. And so I knew about you from afar and I said, “You know what? Let me just send her a note and see if she would be keen to just join me.” I did see alignment in the work you were leading at, where you were really supporting early stage financial wellness and inclusion technology companies, and particularly our Fintech category and how we viewed the Fintech industry. And for me, I am from Atlanta, Georgia. I’ve dedicated the past decade rethinking where, how and who we support and underwrite, and help scale mission-driven businesses. Started my career off in traditional financial services at Goldman Sachs and State Street Bank on the public market side. And then coincidentally, I got my start into venture after opening up a coffee shop that wasn’t-

Jennifer Tescher:
What? I didn’t know that.

Nasir Qadree:
It was a coffee shop. It was in the West Village in New York City, and it wasn’t your traditional coffee shop, Jen, it was half coffee shop, half incubator. We attracted a lot of entrepreneurs, and those entrepreneurs were meeting with investors. And as any owner would do, you’re respectfully nosy, wanting to make sure that everyone was okay. And for me, just being into finance more broadly, I was just interested in what they were talking about. And I had a chance to befriend a number of mission-driven and impact investors that piqued my interest to “How do I merge this traditional finance, love for finance, love for economics experience with mission-oriented work with technology being at the center of change?” And at that point, education technology was the sector that cared, Deep. Deep is about being on a number of education nonprofit boards. But that was the beginning of putting some personal capital to work and then lean into a few other institutions that allowed me to gain even more exposure within venture capital impact investing and building out a track record, which was critically important.

Jennifer Tescher:
So impact investing gets thrown around a lot as a phrase, I think you’ve attempted to trademark it, right?

Nasir Qadree:
Yeah, that’s right. That’s right.

Jennifer Tescher:
What do you mean by it?

Nasir Qadree:
The term impact investing, as a strategy, as an asset class has matured. You also see storied banks and investment franchises being pushed to include whether it was impact or ESG and their mandate. In fact, some limited partners or stakeholders actually won’t invest in venture capital firms or investment firms more broadly if there’s not an intentionality around tracking metrics. And so in my experience, dating almost a decade now, I’ve recognized where I’ve been most intentional. And the way I think about that has been, on the one hand, recognizing and being intentional around how I built the team around me. And that’s dating back at Village Capital and then AT&T, and recognizing the diversity of thought, of skillset, of gender, ethnicity, you name it, and what that yields when you bring those high IQ, like-minded individuals together. You over-index in a pipeline of entrepreneurs who are investable, but also are equally left out or not getting the type of capital and resources and media attention as they deserve. And so a over-index and investing in more mission-driven or just in more underrepresented entrepreneurs.

And the third commonality that I’ve noticed throughout the years was that I was spending time in places that your traditional investment franchise was not. And that’s overlooked cities or second, third tier cities, Detroit, Denver, Des Moines, Kansas City, Atlanta, in my backyard, even here in DC. And then you couple that with the fourth pillar being the investment focus, whether it is financial technology, or your generalists. So that can be anyone. And then the last is how do we think about tracking very specific impact metrics from that particular portfolio company? And so when I thought about it as a combination, I said this is actually a strategy. If we think about these five pillars, the diversity of fund managers, the diversity of entrepreneurs, the proactiveness of earmarking our traveling dollars and dollars to overlook ecosystems, your sector or generalist focus, how you think about impact. Collectively, we view that as inclusive investing.

A five-prong market back approach that allows us to widen our lens yet keep alpha and impact front and center. And I was convinced, and still am today, Jen, that if you are a storied franchise or an emerging manager, if you’re in the public markets or the private markets, you can implement the strategy. My hope is that we can further level the playing field or democratize access to capital, particularly so that more women and people of color get a fair [inaudible 00:09:36] at capital. And so we decided to trademark this because we believe it is the gold standard and how investing should be.

Jennifer Tescher:
Clara Miller, the former head of the Heron Foundation, among other things, always says all capital has impact, right? It’s just about what kind of impact you want to have. So I appreciate the thoughtfulness of that framework. How do you communicate that or how is that received by potential investors? Or is it really that there’s a class of investors who care about impact investing and so they already get it? In other words, how much additional capital can you unlock from folks who aren’t already in the choir?

Nasir Qadree:
That’s such a great question, Jen. The way I think about it and why the five-prong approach is actually very intentional is that when you look at it from an investor’s standpoint or limited partner particularly standpoint, is that they actually care about one or maybe all five buckets. And so there’s also an intentionality in how you talk about it. Now, you don’t piecemeal it depending on who you talk about, but it’s a higher likely chance that they probably care about one component or several components of that strategy. And so that was also another intentionality around it, is that if you’re talking to a large FI that cares deeply about how can they get early access to new embedded finance companies, well the sector component and the maybe pillar one and pillar two and pillar three, because it’s focusing on more diversification and the sourcing capabilities is more differentiated compared to maybe another storied Fintech [inaudible 00:11:38] for example. And so it is also not just the act of executing the strategy, but also recognizing that these are five buckets that investors care deeply about as well.

Jennifer Tescher:
So let’s talk about the sectors in which you invest. I think EdTech, Fintech, and HealthTech, am I close?

Nasir Qadree:
You’re at the goalposts, for sure. And so it’s future work and learning with a lens towards employment pathways. So narrowing the skills gaps between education and employment pathways. The second is financial technology with a lens towards inclusion. So we look at areas like rethinking credit access, expansion, and resources for new and small businesses, rethinking payments, particularly for the un and under banked consumer. We’re very intentional in providing investing in products and resources that are particularly tied to the un or under banked consumer. The third is health equity, and being intentional coining it, calling it health equity, with a lens towards access and affordability of care, mental health and wellness, women’s health, maternal health, and social determinants of health. These are nine clinical factors that yield health outcomes, food security, housing and transportation for example.

Jennifer Tescher:
And why these three?

Nasir Qadree:
So these three are directly tied to turbocharging economic mobility. And so when you think about future work and learning, we’re in an era where AI is obviously at the center of all three of these sectors, but the workforce is continuously becoming more and more competitive. And so how do we develop resources to ensure that workers are remaining skilled and upskilled, remaining competitive in today and tomorrow’s workforce? For Fintech, for example, we have to continue to think thoughtfully about how do we realize, whether you believe it or not, the American dream, where you’re providing access to, new forms of credit access.

Obviously [inaudible 00:13:50] is a great example of a earlier investment that you and I made in the early days. And so we see a great deal of companies that are rethinking credit access expansion, for example. And then health equity, there’s an intentionality around the number of technology companies that are creating more pathways for low wealth patients around access and affordability, for example. And so again, these are three… Many can argue other categories, but we believe that we can continue to find new innovation at the earlier stages that are directly tied to triple charging economic mobility across the country.

Jennifer Tescher:
Yeah, when we think about financial health, and we think about what are the biggest obstacles, or maybe flipped it around and saying it more positively, who has the greatest influence or impact on people’s financial health? We completely agree with you about those categories. Financial services has an important role to play, but by no means are they going to be the solution to the problem, right? There are broader systemic issues. It’s where you work, and how they pay you and compensate you, and help you grow. In the country like this, where healthcare is so expensive, and yet the care alone is not really necessarily going to unlock the broader health and wellness benefits. These are the big issues that I think often stand in people’s way, maybe also student debt. And I know you also invest into that arena around higher ed.

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So we’ve been at this for a long time and have long believed that technology can create more inclusivity. We were founded on that purpose 20 years ago. And I think Fintech today, it didn’t exist 20 years ago, but today it’s been around a while now. Maybe it’s a teenager. And I think a lot of people are asking just how much positive impact Fintech has had on financial health and Well-being. I’m curious what your thoughts are. You’ve been around in this space for a long time. What’s your take on that and how do you think Zeal can contribute going forward?

Nasir Qadree:
You know what? You’re right. Fintech, Jen, has definitely matured over much like impact investing has matured over the past 20 years. And when I think about the evolution of impact and how proactive… Traditional investors are investing in Fintech, and now, but more I’d say folks like yourself, who continue to lead the pack around the importance of investing in new technology at the earlier stages, it’s become the great enabler as you think about how technology gives, particularly un or under banked consumers a better experience around how to think about investments, how to think about savings, how to really shift their way of understanding the possibility of wealth creation, for example. And there’s so many new tools that allow consumers to realize their financial health in terms of full potential, and then even looking at it from a generational wealth creation perspective. And so there’s a lot of momentum and even capital that’s being injected into Fintech with a direct intentionality around financial wellness today.

Jennifer Tescher:
So Nasir, what are you seeing out in the world that you’re excited about? You must be seeing tons of interesting companies right now. What’s exciting you?

Nasir Qadree:
For sure. So I’ll break it down into three buckets. On the one hand, there’s an influx of companies that are on the future of work and learning side. I think there’s a number of employers that are interested in leveraging technology to really continue to help their employers upskill, reskill, explore new pathways outside of two and four-year degrees that yield credibility. So you have nano degrees, micro-credentials, badging certificates, for example. I am truly bullish on the healthcare with a lens source equity sector. So looking at areas such as social determinants of health, so these non-clinical factors that yield [inaudible 00:19:12] health outcomes, are seeing a lot of opportunity and particularly that are led by women. We are in the midst of beginning of Women’s History Month and we’re seeing a number of scalable, investable companies across maternal and women’s health. And then on the Fintech side, we are seeing a great deal of companies with AI at the center, thinking about payments and even resources for new and small businesses. And so in the benefits space, for example. And so there’s a lot of activity and a lot of, I’d say, end-to-end solutions.

Jennifer Tescher:
So you just mentioned that this is Women’s History Month, and I don’t need to tell you, but according to PitchBook, startups with all female teams received just 2% of VC funding last year. Really ridiculous, given that we make up at least half of the population. And we also know that funding can be very hard to come by for founders of color. So I’m curious to hear a little bit more about what do you think needs to change in order to open up these markets? Is it that we need more Zeals? Is it that we need more private equity or other kinds of investors to understand that there’s plenty of opportunities with diverse founders? How do we really break down these barriers systemically?

Nasir Qadree:
Jen, I follow you. And the truth is, there is not one cookie cutter, not one approach that will solve the inequities that continue to exist for women and people of color. But I can highlight a couple of systems level change that I truly and strongly believe that should take place. And I would say that I’m, today, still a bit pessimistic in terms of where the progress we will make down the line, if these areas are not changed aggressively. And that is, who is deploying the capital? And so that is critically important. There continues to be an inherent bias in terms of where are investable companies? There is a pattern recognition that there is a pro and a con when we think about pattern recognition.

But in this case, there is a overwhelming con when we are viewing portfolio company… Viewing perspective companies. And we are a group of, quite frankly, white men who are based in the Valley who are graduates of, if not same four or five universities. And I think there we have to break that mold. And in order to do so, I do think there needs to be more venture firms or investment firms, platforms that are led by women and people of color. And so I do think there needs to be a proactive approach where you have senior associates and principals who add storied franchises, get them out of there, and let’s seed them to start their own firms. They have strong investment acumen, they have track records where they’ve probably weren’t the lead deal maker, but they did a lot of work.

With an anchor they can build, in the next generation, venture capital firm, for example. So the first component of the system that needs to be democratized or disrupt is who is deploying the capital, both at the venture capital level, but also at the limited partner level as well. That continues to be archaic. And it hasn’t changed. And I’m very, very transparent there. I think where I’m most optimistic, Jen, is that over the past six years, you are seeing a lot of nonprofits that are training the next generation of diverse institutional aspiring fund managers. You have La Familia, you have Gaingels on the LGBTQ Plus side, you have All Raise that is really mobilizing the importance of women in VC.

You have black VC, you have HBCU VC, you have SEO and MLT. You have these nonprofits that have traditionally, particularly like an MLT or SEO that are really focused on traditional financial services. But over the past five plus years, you’ve seen this interest in exploring careers and the private market’s, private equity. And so I’m really excited to see these organizations scale and to see some of the alums go out and explore careers in the private market’s, private equity. And so while we have a long way to go, I do think there’s a nice foundation of, and I call them islands of excellence. There are a number of organizations that are doing the work that are hopefully democratizing how we think about access to capital. And so again, I don’t think there is one cookie cutter approach in terms of how we create systems change, but those are two aspects that I would argue has to change. And that is at the investor level and at the LP level.

Jennifer Tescher:
Well, in honor of Women’s History Month, let’s take a minute. I’d love to hear you talk about, brag about some of the female founders and the companies that Zeal’s invested in recently. Tell me about a couple.

Nasir Qadree:
Absolutely. So I think about Laura Kornhauser, who is the CEO and Co-founder of Stratyfy. She is rethinking how we think about credit and risk management at different FIs around the country and that scale the globe. Laura Rowley, who is the founder of Icon Savings Plan, who was rethinking how we think about 401k, and particularly for the gig worker. And even I think about an incredible founder in Fanta Gilliam of Wealthy, taking social finance, particularly for the un and under banked consumer to create that experience more at home, and so they can really understand, taking financial literacy within that platform so they can see a path towards becoming financially well off. And so those are just three examples. I think about Melanie also, our first health equity company that’s based here in Washington DC called View Health that is unbundling how we think about the autoimmune space.

And so these are incredible women who, and I think I would argue, knowing all their personal stories, that why they came to this work to build those companies is deeply rooted personally. And I actually think that’s a common theme, at least in my experience and most women that choose to become entrepreneurs, is that it started off, yes, they have the skillset, they understand the market and all the acumen, but unfortunately the challenge is deeply rooted personally. And so for them to explore making a for-profit business side of it at a scale, and in fact it’s also a mission-driven business, I think I can see even more and more powerful story. And so in honor of Women’s History Month, I am just so in awe to proactively invest, continue to invest and support at scale women entrepreneurs.

Jennifer Tescher:
Yeah. So this is personal for you too. Where does that come from?

Nasir Qadree:
My mother, Jen, had me while she was in college at Clark College. Today, it’s called Clark Atlanta University. And as I grew up with a single mother, along with my brother, she worked several jobs, but she also offset what she knew. She probably had the biggest challenge in parenting. And so she put us through a number of nonprofits, like Boys and Girls Club of America or Scouts, to really help us understand the importance of service, entrepreneurship, and understanding different career opportunities. And so while my mom probably can articulate exactly what I do day to day, I remember we’ve had a conversation right after I graduated from high school, and I told her my mantra was very vague, and it still is today. It’s about impacting lives. I didn’t know what that looked like. I felt either had to be in government or I had to work in a nonprofit.

Nothing wrong with those two, but the more I matured in my career, I realized that there were other avenues of impacting lives and how more specific that impact statement, personal impact statement develop. And my mother, my grandmother as well, because I live with her as well. I have my [inaudible 00:29:08] My wife, Chloe, is also in this work at the Gates Foundation, really is focusing on women’s equity, women’s empowerment, underneath Melinda French Gates. And so I am enamored with amazing women, but more specifically my wife, Chloe, who is also in this work in pushing my thinking in terms of how do we continue to create equitable access to women particularly. And so those women and many more, add more wood to my fire and remind me why this work is so important.

Jennifer Tescher:
So we’ve talked a lot about the importance of impact and how it needs to be embedded in everything Zeal does. And we talked a little bit about the fact that you hold your portfolio companies accountable by having them report on the metrics that are relevant to their business. Now, let’s go up a few levels of abstraction. Let’s pretend we’re 10 years from now. What will success look like for Zeal? If you roll it all up, you roll up all of the metrics that those companies are sharing with you on a regular basis, how will the world be different if you’re successful?

Nasir Qadree:
I view success based on those companies maturing in a way where those impact metrics are now at scale. They’re at scale across the country and hopefully the globe. But more specifically, when you think about how these companies are impacting lives, we’re probably not saying, “Hey, check your FICO score.” Maybe we’re saying, “Hey, check your [inaudible 00:31:03] score.” Taking rental payments as a means to increase FICO score is a new normal across tenants around the world. How a gig worker thinks about their 401k plans, they’re embedded… They’re looking at icon savings to help them think about what that looks like as a gig worker, as the gig economy continues to thrive.

That to us is… Will change the game in terms of how we think about 401k plans for gig workers. And when I think about these different solutions for creating more access to affordability of care, it’s potentially continuing to think about how other countries have provided free and even more affordable access to care. And if we can’t mirror how we view that in other countries, then what does that look like for a Zeal portfolio company to tear down those barriers. So no matter what your zip code, what your income is, you’re going to get high quality care. And maybe that’s because of a company like View Health or OXA Health that’s tearing down those barriers for you. And so, again, going back to this very bold, savvy as it may sound, impacting lives, it’s the role that these technology companies across these three categories will play to disrupt systems that can afford more affordable healthcare for low-wealth patients, and access for workers to upskill and reskill, so it can remain competitive in today’s tomorrow’s workforce.

And for un and under banked consumers to have more resources so they can manage their capital, their finances, so they can become more and more financially healthy, for example. So that to us, if we get that right, that to us is success. And I think the other component of success is that you see more venture firms taking the inclusive investing strategy because it was intentional that we wanted to share this publicly. Most investment strategies are not shared publicly. I think that’s very intentional. Why? And so inclusive investing becoming the gold standard, again, whether you’re a storied franchise or an emerging franchise coming up,

Jennifer Tescher:
Yeah. Nasir Qadree, thank you so much for joining me on EMERGE Everywhere.

Nasir Qadree:
Thank you so much, Jen, for having me.

Jennifer Tescher:
The financial health movement will only be successful if everyone comes to the table. EMERGE Everywhere is proud to be supported by US Bank, a longtime champion on this journey. Thanks for tuning into EMERGE Everywhere, powered by the Financial Health Network. Visit our website to get the latest financial health insights and resources and join the growing movement at finnhealthnetwork.org.