Interview with Darrel Frater, Investor at Visible Hands

OneFund - October 25 2022

Interview with Darrel Frater, Investor at Visible Hands

OneFund recently sat down with Darrel Frater, an investor at Visible Hands, a VC firm focused on supporting overlooked founders working on launching and scaling high-growth startups. Darrel's passion for supporting diverse founders and closing the wealth gap really shined through during our discussion which we greatly enjoyed and resonated with us given the mission of OneFund. You can check out our whole conversation below to see Darrel's thoughts on his career, the current state of the pre-seed ecosystem, and what comes next for himself and Visible Hands!

OneFund: I would love to hear a bit about your career and journey in to Venture Capital.

Darrel: As a brief introduction, I live in New Jersey and have always had a passion for entrepreneurship. As the son of immigrants from Jamaica who came to this country and immediately focused on building businesses, entrepreneurship was all I knew. It wasn't until after reading a book called “Why Should White Guys Have all the Fun?” by Reginald Lewis in 2018 that I learned about Venture Capital. The book taught me about the journey of the first black American to build a billion-dollar business which he ultimately achieved through venture capital and leveraged buyouts. Inspired by this book, I made it my mission to break into venture capital to drive change within disparities in income inequality.

From there I did everything I could to become well-rounded in company building and startup investing. I went on to found two companies, PromSocial and TheClub, made several investments into companies as an angel investor, and went back to school to obtain my MBA. Shortly after completing my MBA I had the opportunity to join the team at Visible Hands which has been an amazing step in my journey towards playing a major role in closing the wealth gap.

OneFund: What makes Visible Hands unique?

Darrel: At Visible Hands we invest in diverse founders at the earliest stage, pre-seed. We are typically the first backers and believers of these founders investing as early as idea, pre-product, pre-revenue, and early traction. We believe that entrepreneurship provides one of the best ways for people from underrepresented communities to build wealth, but oftentimes these founders do not have access to the traditional “friends and family” capital to get their businesses started. We are happy to fill this gap in the market and take early bets on these phenomenal founders.

OneFund: What type of companies do you invest in and what does your process look like?

Darrel: At Visible Hands we are industry agnostic and are looking to back companies with high growth potential that are led by diverse teams. We have portfolio companies from an array of industries. For example, Alta is a no-code mobile-app development platform while Parfait is a company using AI to help women order custom wigs online.

We currently make investments through our accelerator programs. We have the Visionaries Accelerator program where we invest up to $175K into about 45 teams per year. This accelerator runs in the fall and is mostly virtual with a 1 week in-person orientation. We are excited that we will be launching new programs this spring. More information on those programs will be announced later this year.

OneFund: How has the current economic situation impacted your investment process?

Darrel: The downturn seems to have impacted later stage investors more than most early stage investors like us. We are continuing to invest at the same rate in innovative and diverse founders regardless of the current environment. Although we have seen more companies having more difficulty in fundraising from other investors.

On the fundraising front, fortunately for us, we finished closing our most recent fund just before the slowdown. We have sufficient dry powder to continue making investments prior to going back out to market for our next fund raise.

OneFund: Has being a founder influenced your point of view as a VC?

Darrel: Being a founder before being a VC offers a ton of advantages when investing in the early stage. I have a lot of empathy for founders building in the "zero to one" phase because I've been there. A big part of what we are doing at this stage of investing is trying to identify the founders that have the talent and perseverance to make it through and build a company that will achieve long-term success.

I have a thesis that going forward, especially at the pre-seed stage, investing won't just be about getting into hot deals. True alpha will come from a firm's ability to increase the likelihood of their founder's success. Being a prior founder helps with this immensely.

OneFund: How did the MBA influence your career journey?

Darrel: My MBA at The College of New Jersey was extremely helpful in my journey into VC. First, I was building TheClub and PromSocial while doing my MBA. This enriched my educational experience because I could workshop my ideas in class. I’m a very practical person so implementing the course lessons in real-time was impactful.

Outside of the classroom, the MBA unlocked a lot of VC related opportunities for me. In particular, I joined an MBA-student focused fellowship called Score 3 Ventures which helps people seeking VC roles get real world experience. Doing this, I was able to work with over 60 founders writing deal memos, helping them improve their pitching, etc. This was perfect practice for going into VC full-time. One week after graduating, I had the opportunity to interview for the associate role at Visible Hands and the rest is history.

Advice I would give students looking to break into VC is to leverage the network and connections that come from your school experience. It isn’t what will get you the job, but it will open many doors and opportunities, giving you a chance and a slight edge. In my opinion, 80% of getting a job in VC is about your network, which will help you get more opportunities. The other 20% is your actual skillset to showcase your talent and close the opportunities you get in front of you.

OneFund: What comes next for yourself and Visible Hands?

Darrel: For me personally, I want to continue to grow as an investor, specifically at Visible Hands, and help us grow as an organization. I plan to be at Visible Hands for a long time but eventually go on to launch my own fund. I believe that the wealth gap is one of the biggest challenges in the world today and I want to back founders who are looking to address this. Stay tuned!

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