Private Capital Talent Series Episode 8: Midwestern private capital and operational excellence

Episode 8 of The Private Capital Talent Series features Isabel Chirase of Drive Capital. We ask Isabel about the tested realities and opportunities of breaking new ground in the VC world, including the new geography of operational excellence.


Chris Gale  00:03

Welcome to the eighth episode of our private capital talent series on Midwestern private capital operations excellence with Isabel Walch of Drive Capital and Ryan Burger here at PFA Solutions.

Usually, we have the questions at the end, but if you hear something interesting and you want to ask something midstream, go ahead. And then afterward, we’d love to follow up with some of you to get some feedback and find out what you’d like to hear from us next. Now let’s go to Isabel. Can we invite you to tell us about what you’re focused on Drive Capital, and your path to venture capital?


Isabel Walch  01:03

Sure. As Chris said, I lead all things finance at Drive. So that includes overseeing our fund administration, our deal flow support with the investment team, portfolio analytics, financial reporting, and then just developing strategies in partnership with our portfolio companies as they scale as well. So my background was in finance consulting from Deloitte. And one of the reasons that I got super excited about Drive, and why I think the GPs also felt that I was a good fit for the organization, is because I’ve had experiences scaling finance firms, and Drive is at this really exciting inflection point where we’ve had a few funds historically and have started to accelerate the products that we go to market with. So I spend a lot of time thinking about what a world-class finance and finance operations organization looks like. And I’m always looking for new tools to scale the organization. And that’s kind of how I stumbled across PFA and some of the other tools that we’re using in our toolbox to support the whole Drive platform. I grew up in Amarillo, Texas, which always surprises a lot of people. But I ended up at Notre Dame for college, and then subsequently made my way back to Texas for grad school at Texas A&M. So I’ve been all over. I thought for sure undergrad was going to be the last Midwest winter that I ever had. But alas, I am doing my third one here in Columbus.


Chris Gale  03:01

So you grew up in Texas, you went to college in Texas and Indiana, and now you’re leading finance at Drive and you’re sitting in Columbus. How do those fold together?


Isabel Walch  03:20

Well, I think people probably think that my coming to Drive was a random choice. But one of the things that I’m proud of at Drive is this concept of building where you’re strongest. And really, that just means that we believe that you can build a world-class technology company, everywhere and anywhere. And so I think that the advantages come down to, you know, not just geography now. And so you can build in the Short North, which is where I’m sitting today in the Drive offices, or West Loop of Chicago, or we’ve got an exciting company that is based in Fayetteville, Arkansas. So we think that you build where the talent is. And we tell our founders to build where their customers are. And that is our investment thesis. And as somebody from a place like Amarillo, which is kind of overlooked, that really resonated with me. And so everybody in this space, and who’s tech adjacent, understands what cloud computing has done for the ability to grow huge technology companies. But I think that that also means you can have the best of both worlds when you’re building a venture capital firm.


Chris Gale  04:47

And I think you’re speaking generally about Drive Capital and the investment thesis. How does that mindset apply to operations?


Isabel Walch  04:58

So Drive was, and kind of is, a startup right alongside the companies that we invest in. When our partners Chris and Mark came from Sequoia, and they decided to put up shop in Columbus, they had really specific reasons for doing so around the investment thesis. But there just wasn’t much of an ecosystem of service providers in Columbus, especially in the fund accounting space. And I think, Ryan, where you are in the Northeast there, there’s a high concentration of people that you can turn to. But for the same reason that companies have been able to build outside of Silicon Valley in the tech space, I think the same has become true of the operational excellence that we can bring to venture capital, even being in the Midwest. And so from Drive’s perspective, very early on in the history of the firm, we started working with a company that is now Gryphon Group. They’re based out of Cleveland. I think the proximity was awesome when this firm was small and building because we could whiteboard and figure out what the firm needed to be successful. But we also engage subject matter experts across the spectrum. And sometimes we look outside of the region for that. And the pandemic made that even more apparent – the frequency with which I was getting connected with peers and learning what they were doing over Zoom. So our LPs know that we can really tap into the skill sets and knowledge anywhere.


Chris Gale  07:58

So I think Ryan and I both went to Virginia Tech, and I’ll just speak for myself, but I ended up here in Connecticut because I was dating – and I’m now married to – a software developer. And, you know, she came to Virginia Tech from Bulgaria. And I followed her to here to the Northeast because that’s where you had to be as talent for FinTech software firms. And then we have friends who are investing in startups in Bulgaria. So the talent situation is very interesting. How does the technology part weave into that? How are you using technology as you’re sourcing the best talent either locally or where it exists?


Isabel Walch  08:44

Yeah, so I think from a finance and mid- and back-office perspective, there’s the really obvious technology – we’ve got Slack, and we’re all on Zoom and we’re able to collaborate well. But I think that where I get excited, and what is needed from finance and for Drive, is making sure that the technology also can bridge the gaps between talent and experience and geography. So we have some platforms and accounting systems that help us work asynchronously, really manage timelines and, most importantly, manage the portfolio and aggregate data from the portfolio so that we can really keep a pulse on performance. The platform that we’ve started using this year is just another great example of how we brought in really specific tools that cover an area of expertise to complement the team members that we have.


Chris Gale  10:05

So Ryan, as the developers of FirmView, you’ve had a lot of experience working with GPs and fund services firms. How unique is Isabel’s approach and what she’s talking about in terms of talent and technology?


Ryan Burger  10:26

When we first got the inbound on our website from Isabel, we Googled and I think it said, like largest VC in Ohio. That is certainly unique. We have 15 venture capital firms on our platform FirmView right now. And I was looking at the numbers earlier, and more than half of them are centered in the Bay Area in San Francisco. So I think it’s something that offers a lot of opportunities. There’s certainly unique talent in the Midwest, and you could find new investment opportunities in the Midwest as well as even potential investors coming from the corporates, universities, and pensions in the Midwest. So there are all kinds of unique experiences that Drive can tap into being where they are and going against the status quo.


Chris Gale  12:01

And in terms of the mindset of driving innovation when it comes to tech and talent, is that a more common mindset amongst VCs? Or what are you seeing there?


Ryan Burger  12:22

VCs are our fastest-growing client base right now. Even compared to large private equity or large credit funds, their AUM size is not as large. They’ve embraced our technology solution. We’ve brought on a dozen over the last year and a half, whereas two years ago we may have one or two VCs. The innovative mindset of their portfolio companies and their investment thesis somehow makes its way down to operations. As Isabel mentioned, they’re a startup, they’re investing in startups, and they’re able to take a chance with smaller firms doing different things. I think they also have a very collaborative social arrangement. I think that there’s a very collaborative nature within the CFO, finance folks, and investment professionals at VCs – they share with each other.


Isabel Walch  14:26

I think you hit the nail on the head on a few of those things.  am on several Slack channels with peers and so it is an ecosystem, and it’s small and mighty. A lot of times we’re finding that we are creating the processes as we go. So I think that that has made us pioneers by nature as an industry and open to looking for opportunities that help us grow fast. I would also say here at Drive I’ve observed a really strong bias towards giving permission and experimenting. We are looking for a lot of upside in the companies that we evaluate. And we’re hearing pitches all the time about cutting-edge ways to really augment or even replace processes. And so I think it sort of does embed itself into our culture and looking for ways to be more effective. And from a talent perspective, we run lean. And so anywhere that we can make one person’s job better, that’s very exciting to us because we’re working on a lot with a little sometimes.


Chris Gale  16:06

Speaking of questions, I have a message asking if you’d have any advice on what Slack channels are the best to learn about operations and technology.


Isabel Walch  16:26

Yeah, so I would be happy to cull my list and share it with you over email, Chris. But I think that if you are in ops or finance, I have found the VCBC to be a great community that’s putting on events and has a Slack channel, and is geared more towards mid- and back-office versus the investment side of the house. So that’s my shout-out. But also forums like this – I am sure that I will be able to make one or two additional connections out of this. And I appreciate that.


Ryan Burger  17:04

Awesome. We love hearing that. I saw you on Slack, and then I found out VCBC is the one that a lot of people share. And I believe that there are separate streams of topics on that.


Isabel Walch  17:21

Exactly. And then maybe one other plug that just kind of came to me, but it’s leveraging your service providers and the fact that they have other clients. Whether that’s Silicon Valley Bank, or Gunderson, I’m constantly being asked to make a path where there isn’t one. And the first thing I do is ask, what are your other managers doing in this space? And that’s also been a really helpful vein for us, especially when there weren’t other VCs in Columbus.


Chris Gale  18:02

Ryan, I’m going to continue to go off track for a second. There does seem to be a hunger out there to learn more about technology. I don’t know if it weighs more towards the VC or PFP side about best practices beyond tech.


Ryan Burger  18:27

That’s right. Over the last few years, we’ve now onboarded over 30 clients onto FirmView. So we’re now seen as a thought leader, or at least a light thought leader in this space, because of all the different companies we are now working with. So we do get questions from time to time on how others do certain things, and we’re either able to field those or, to your point, connect them with our fund admin partners and other compensation companies in the space if they have specific questions. But we certainly see firms wanting to understand how others are doing vesting schedules, how others are handling this system, and how they set up their arrangements. We’ve been able to help clients think through things, especially the newer startup firms that don’t have a vesting schedule yet and they want to know what’s normal.


Chris Gale  19:35

And getting back on script. Tell me more about that mentality in terms of trying things but also wanting it to work.


Isabel Walch  19:57

So I’m sure that a lot of people feel similarly, that when you start as a really small shop, everybody sort of feels a lot of strong ownership around the way things have been done. And I appreciate Ryan saying that the VCs have moved fast. But I also find that sometimes it takes a lot of pushing to get people to let go of the processes that we hold on to in our spreadsheets and things like that. And so I tried to challenge the partnership and the GPs to think about what is best served through professional services and software. Carry jumped out at me first: One, because as we’ve hired more, our carry model was getting unwieldy. And two: mechanically it’s not that complex. But it started to feel like it was a risk point. And something that jumped out at me as a super sensitive workflow, because it’s people’s money. And so I thought there’s got to be somewhere I can turn to not have a 50-person organization that’s still managing carry on a spreadsheet. So when I came across FirmView, I thought “This is going to be fantastic.” Because one, we get the accuracy and the consistency, but we also get a way to kind of control who is involved in this process a little bit better. And we create a new level of transparency for team members. Historically, it was just kind of PDF statements that we were distributing. Now employees can look at their vesting schedules, they can understand where they sit relative to the fund. So, you know, I think that this has been one of my first big pushes in breaking down barriers and getting more alignment in the organization.


But I will say that I looked at a few other platforms, outside of FirmView. And once I decided to go down the software route, I didn’t really want something that was going to be just like an overlay to Excel. And there are a lot of hybrid solutions out there, but where you’re still kind of a human in the loop, and that to me didn’t feel like it was going to fully augment the process. So what I liked about PFA is that they were doing something specific and well. This was something that was going to replace an entire workflow and do it well, and also really let us customize to our firm and scale as we grow. It’s going to work for us hopefully one day when we’re at 100 headcount or wherever we’re heading.


Chris Gale  25:19

And Ryan, I want to get your response on what are realistic expectations in terms of what software should be able to do on its own without you necessarily needing to reach out to someone. But first, we have two questions. Isabel, as you broaden the geography of your employee base, and perhaps the experience set outside of VC, do you see a Medici effect as you collaborate around issues you’re trying to solve?


Isabel Walch  26:05

I love the collaborative nature of the peer group, like every other head of finance that I talk to is ready to jump in and support me. At Drive, we say “Open the kimono.” I don’t know how PC that is. But everybody’s open to sharing and operates with candor. Even though we’re investing in cutting-edge firms, some of the things are more rudimentary than you would expect. But I also think we’re balancing with trying to counteract groupthink to some extent. And maybe it’s a little bit easier for us because we’re in the Midwest and we’re in less of a bubble. And so I feel like we have a healthy balance of collaborating, but also not feeling like we necessarily have to follow the herd.


Chris Gale  27:23

That’s fantastic. The second question is, what are some of the successful ideas you implemented around building your culture in a remote world?


Isabel Walch  27:46

So I don’t think that we’re perfect at it yet. We’re still early on this. But I think that we’ve implemented things that Drive didn’t use to have because everybody was just sitting on the same floor. We’ve implemented a monthly all-hands. We’re also doing teach and learns. And because we’ve just had new departments spring up – like we have an engineering team now and a data scientist – doing teachings across departments has been really important for just making sure that we’re not siloed. And then I think we have defined responsibility a little bit better. When we were small, everybody kind of had their hands on a lot of pots. And that can be tricky if you’ve got people scattered. So I think we’ve also tried to be a lot more deliberate about who is the point of contact for what so that everybody gets the necessary information. And then lastly, from the finance perspective, that’s been through tools. So FirmView is a good example of how now anybody can click in no matter where they’re sitting. We’ve also been using Air Table, which is a tool that I like because you can add users with different permissions. I can do like bottoms-up planning with some of the other teams and then take a fuller view to the GPs.


Chris Gale  29:44

Fantastic. We’re super grateful to have Isabel on because she’s actually in the weeds when having those conversations about carry and compensation.


Isabel Walch  30:00

I don’t want people to think that you paid me to say this because you didn’t. But it has been a lot more turnkey because usually this time of year, everyone’s pinging me to remind them how much carry they have in these forms, they can’t find carry letters, blah, blah, blah. Everybody went into this season knowing what they have, and where they’re vested, like some of those table stakes questions were already answered. So I’ve had more time to just focus on working with the partners on, you know, where we’re taking folks in 2023.


Chris Gale  30:41

Thank you so much. And Ryan, I promised to come back to you.


Ryan Burger  30:46

So I think we have to give Isabel a discount with all these complimentary comments about the platform, but great to hear that it’s working well. And you’ve stood up the employee portal, so everyone can log in and pull down their information. It’s great to hear.


Chris Gale  31:03

For overtime. Ryan, did you have a quick response on the software? Implementation?


Ryan Burger  31:10

Isabelle brought up great points on that. Ultimately, if you’ve purchased software, you want it to be turnkey, you want to be able to use it. That’s what we’re certainly striving for as we build new features and functionalities. We’re taking a step back and saying, how can this be configurable? How can a user add a new column, add a new button here, or add a new page? We’re investing a lot of resources and time in making sure that we have that capability. That being said, I think that enterprise software does require a people aspect, a significant amount of our time is dedicated to working with clients to make sure they understand the product. And then we are developing new features and functionality to react to their requests to develop reports the way that clients need them to. So I think that the people aspect is absolutely important. And then certainly we are as a company striving to make the software more configurable and business-user driven. We’re not an Apple iPhone yet, but hopefully, someday we’ll we’ll have a product without a Help file.


Chris Gale  32:28

Awesome. Thank you very much. Thank you, everybody, for joining us.

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