The Hype Cycle And Realities Of Artificial Intelligence (AI) With Adrian Mendoza, Part 2

 

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Adrian Mendoza is the founder and general partner at Mendoza Ventures which is both Latinx and woman-owned and the first Latinx-founded VC fund on the east coast. His firm focuses on investments in Fintech, AI, and Cybersecurity, with diversity playing an important role in their investment decisions—about 80% of their portfolio consists of startups led by immigrants, people of color, and women.

Since its founding seven years ago, Mendoza Ventures has raised two funds and had two successful exits. The firm is currently raising its third fund, a $100M fintech fund anchored by Bank of America, focused on early growth funding rounds.

In 2022, Axios Magazine listed Adrian as one of the five most influential people in Boston and the LA Times honored Adrian as a DEI visionary as one of California’s most prominent game-changers and thought leaders in the business world today. Adrian is also a regular contributor on CNBC on the state of Venture capital in the US and the firm has recently been covered in Forbes, Bloomberg, and The Boston Globe.

In this episode, Zack Ellison and Adrian discuss:

1. Weaknesses of the Power Law Method in VC
2. Venture Debt and Equity Synergies
3. Benefits of Venture Debt
4. The Second AI Hype Cycle
5. Cybersecurity and FinTech Opportunities
6. Show me the Money! Why Revenue Matters Most
7. Ideal Scenarios for Utilizing Venture Debt

The Hype Cycle And Realities Of Artificial Intelligence (AI) With Adrian Mendoza, Part 2

This is part two of my talk with Adrian Mendoza, the Managing Partner and Founder of Mendoza Ventures in Boston.

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We’ve seen a shift across all asset classes, but especially in the VC ecosystem of folks that own companies that already have traction and demonstrated product market fit. Even if they’re not profitable yet, they have a clear plan and path to get there that’s reasonable. Something that you can look at and a reasonable person would say, “This can be achieved.”

I’ve seen situations where people are not following through and looking at what’s happening in the company. That’s not the case of the founder. In most cases, the founders are like, “Here’s my stuff.” It’s the case of the investor that’s not looking under the hood. You don’t go buy a car and never turn it on. You don’t go buy a car and drive it off the lot or test drive it. If you show up and buy the car and you bought eleven, that’s on you. We talked to a lot of LPs. It’s like, it’s not about, “I need to do this.” “I want to do this.” It’s like, take a step back.

Figure out whether or not you know the space or not know the space. What do you need to make the decision? If it requires you that you align yourself with a fund manager that has an experience in the space that also has a plan on how to make money. That’s also planned like what happens if things go bad? How are they going to fix that?

Anyone can sit there and do random bats. It’s doing the educated bats that’s going to make you money. Going back to the Power Law method, it’s great when everything’s a unicorn when you’re at a time that no one’s raising money and no one is profitable and then now seeing those 98% of failures, that’s when the failures pile up. It’s how you take that educated bet to make sure that exactly what you’re going to get you something to.

 

 

Key Investment Principles

Let me ask you a question that will summarize some of the stuff we’ve been talking about. The question is, what are the key investment principles that you live by? I will say that we’ve already talked about revenue, which is great. Principle number one would be, do they have money. Have they made money? Do they have traction? What are the other principles that you live by and you look for in teams that you’re going to invest in?

The second big one is the team coachable. At the end of the day, can they take advice from not just you as an investor but a board? Can they go in and scale it? This business is about people regardless. People are trusting Zack. People are trusting Adrian. People are trusting Founder A and Founder B. They have to be able to be not just trusting enough but be able to sell to make revenue. Also, sell themselves to an investor, a customer, and to potential hires.

At the end of the day, if nobody wants to work for you or work with you, you may have the best company, the best product in the world, but if there’s nothing there, that’s what’s going to kill you. If you can get people to work with you, it’s what I call the reference of, can you get people to believe in Christmas? To give up reason and say, “I want to do this.” “I want to be part of this company.” If they can’t help hire, that’s now going out and finding recruiters to do it.

If you can’t retain people, then you’re losing money and IP. You’re using the brain power there because people are leaving and that is important because of the coachability of those individuals. Everyone thinks that it’s the founder and CEO. It’s not just that. It’s the executive leadership team. As you’re scaling, you’re trying to tease out in an early stage, is this the cult of the founder? Is it just this one person who makes every decision, or are they able to build a team around them?

Once you’re at 200 employees, it can’t be one person. That has to be an executive leadership team. This is why we do that 2 to 3-months of due diligence. We want to see what happens with the team. When there’s a success, what happens when there’s a failure? At the end of the day, that reaction from the founding team or the executive leadership team is going to tell you whether or not they can get coached. Whether or not they can grow with the company, but at the same time, as an early-stage investor, painting the picture of that team will have to get replaced.

If you are a two-person team and you go to 200 people, no one says that you can run 200 people if you’ve never done it before. That’s the important power. At the same time, the reality is we used to say it was a product. Product, which is the next piece, balances out with revenue. We’ve seen a lot of dumpy products that can sell versus we’ve seen a lot of great products that can’t sell. It comes down to they each need each other. The coachability, the team, and the ability to generate revenue.

That’s why, for me, the revenue piece is so important. Do customers trust you and the team? That generates revenue. Do they believe in the product and use the product that generates revenue? Are you able to raise funds from other investors because of revenue? As I’ve grown up in this business, that’s why it’s so important as an indicator of how you can measure success.

There’s one short-term factor that I’ve been thinking about that’s not an investment principle per se. It’s more of a tactical opportunity. I think companies that have more liquidity and stronger balance sheets and therefore, longer runways are going to have a huge advantage over those that don’t over this next phase of the cycle. My base case is things are going to get pretty ugly in terms of macroeconomics. We’ll probably have a severe recession. Asset valuations will fall. What that means is there’s going to be a lot of stress on the startups.

If they think they’re stressed now, wait until the stock market’s down 40% or 50%. Wait until unemployment’s up and rates are still high and inflation still rampant. My thinking is that companies that have the ability to withstand that negative economic period will be longer lasting and therefore, rise to the top. Not because they necessarily have even the best team or the best product but simply because they’re competitors get eaten along the way.

That’s this idea that Kelly Perdew, who runs Moonshots Capital, mentioned in a previous episode. He said, “If we’re out in the woods and we see a bear. I don’t have to outrun the bear. I have to outrun you.” My thinking is companies that have more liquidity don’t even need to be the best product. They can be number five in their category. If everybody’s under the gun over the next couple of years and they survived because they’ve got more liquidity and more runway. They will rise up. They will be number 3 or number 2 or number 1 in a product category because the others get eaten by the bear.

It’s funny because I use the bear analogy for something else and it’s funny enough, Kelly is completely right. This is why we’re seeing a strong mergers and acquisition market in the next 3 to 5 years. It’s why we’re seeing it now because there’s going to be a consolidation, whether it’s buying a company because they have capital or buying it because they have people. I’ve gone on another show. I talked about what it takes to sell a company. We’ve sold a couple of companies already in the past.

We sold one in 2024. It has to be about that positioning and what you think. The crazy thing and this is going to my bare analogy, I was on a panel as a bunch of VCs and I asked the question, “There’s all these dollars sitting on the sideline. What’s the bear going to do? Is it going to be a sleepy bear next year? Is it going to be a hungry bear?” Everyone was either 50%, “The bear’s not going to move and no money is going to go,” or, “I think it’s going to be a hungry bear.” I was like, “No, it’s going to be a bear on cocaine that is throwing money at every ridiculous thing.”

 

That’s just as worse as the bear eating people because now you have terrible companies and raise a bunch of money because investor money has to go to work. That in itself will create a mess because whoever happens to be in front of the bear will get a check. I think that is just as dangerous as the bear that eats you.

That’s what we’re seeing now in AI. People are writing checks that they don’t understand, in my view.

Checks they can’t cash and next thing you know, they’ll be like, “There was nothing here.” I do the same thing when you talk about the AI team. I go in to start talking about the data. “Tell me about your training data,” and they’re like, “What?” It’s like, “How did you make the decision? How many data points do you have?” They’re like, “I don’t have data.” It’s like, “How do you expect to make a decision?” It’s important. It goes back to doing the due diligence on how do you actually know this market. What are you investing in one of the outcomes?

To wrap up the thought on investing principles, coachable team. Not just a coachable founder but an executive team that’s coachable and also versatile and able to grow as the farm grows. That’s point one. Point two is having a strong product is important, but probably more important is showing traction and the ability to sell that product.

The nice thing of where we are in the space, because we’re waiting for the companies to have $1 million to $3 million in revenue, we’re going to look at all the older stage companies in a sector and in a vertical, then you start seeing the winners of submerge, those that have that $1.5 million revenue. The reality is it’s not always going to be the one that has the best technology. It’s not always going to be the one that has the best team.

It’s the one that could survive not getting eaten by a bear. Where it comes down to is who can sell it, because once you’re selling $500,000, $1 million, it’s hard to rip something out, especially in the enterprise side. That’s what people don’t realize. Once a Microsoft or an Amazon buys a product or service, they don’t easily rip it out. This is a 3 to 5-year contract and we saw this. I’ll use a perfect example in the fintech space.

Years ago, everyone was convinced that they were going to build a brand-new finance core. It’s what powers the bank and a credit union. They were incumbents in the space and many a startup died on the hill. Whether they had an AI algorithm, blockchain, hamsters running on wheels or bananas, literally, everyone died on the hill. It came down to, you go to the bank and you’re like, “Do you want a better product?” “Yes, I do.” “Do you want to do this?” “Oh my God, yes.” “Do you want a cheaper?” “Yes, I do.”

I got a 5 to 10-year contract. It took me three years and $1 million to implement that core. I’m not going to rip it out. Are you mad? Five or ten startups just died on the hill, and that’s the key thing that everyone thinks, “I’m just going to innovate to innovate.” It comes down to once some of these bigger players choose who that company is, these markets are set.

You’re right. A lot of people slipped on the banana peel. Running on banana peels. Are there any other key investment principles that you think are worth touching on in addition to the ones that we talked about?

I’ve been early in the market and I’ve been late to market. A lot of it is product marketing fit. Do you have something that people want to buy? Are you too early? Are you too late? The reality is, I hate to say it, a lot of it is just dumb luck. Are you at the right place at the right time? It doesn’t matter how smart you are or what best product is. You just happen to be in the right place at the right time.

I built companies that were too early or too late. I know when it’s right to be at the right time and that is just as important, as you’re looking at investing in these companies like, “Am I late? Are they doing something that people have already bought? Are they doing something that nobody wants to buy because nobody is educated enough to buy it, or are there way too many people in the market and way too many competitors?”

At the end of the day, as an investor, when you take a step back, people will say, “You should look at marketing data and the total addressable market.” It comes down to looking at the entire landscape and seeing where all the competitors are. If you’re looking at a vertical and no one can sell, who says that you’re going to find one that will sell something if no one is selling? If you now have 10 or 20 competitors all doing the same thing, then it’s noise to the customers.

If you can't retain people, then you're losing money, you're losing IP, and you're losing the brain power there. Share on X

That’s the important piece of taking that step back and when you’re doing due diligence. It’s to be able to look at what these levers are. Is it that they need more cash? Is it that they need more people or is it that they need more customers? What is it to be able to pull these levers? When you get to the point where we’re starting to invest and we’re AI is investing. It should be fairly mechanical. You should pour money in, and you should show quickly how you generate revenue or customers.

That’s the important thing. You go from that very early-stage evangelical sales cycle where you’re just preaching to the converted to now it just comes down to metrics. The important part of where we both are is the analysis of those metrics. If I give you $1 million, what comes out at the other end? If I give you $3 million, what comes out at the other end? If you’re already making $3 million, are we assuming that you’re going to continue to make $3 million?

That’s the important piece of when you’re looking at it, but beginning to look at operating models in cap tables and be able to look at financial modeling to make sure the business is clean. It’s not weighed down by anything but also their numbers are realistic. It’s luck and realism. Sometimes, it takes both.

Preparation Meets Opportunity

I think timing is incredibly important in any type of investing. I used to be a bond trader, a portfolio manager, and a banker and you could make a great trade or great investment at the time, but then because of the macro picture changing or things that are outside of your control, maybe it winds up not being so good.

It’s funny because, in ARI’s case, it started building it out a few years ago from scratch, and I was too early for the market at that time. Investors were like, “What’s venture debt?” It was literally over their head. They had no idea what it was. They couldn’t comprehend the fact that you could make 20% lending to early-stage companies even though people have been doing it for many years.

That slowed up in COVID. It slowed up fundraising for us. The reality is it was the best thing that could have ever happened because when SVB collapsed for reasons unrelated to venture debt and the markets wide open now, anyone investing in 2020, 2021 in particular, and 2022, those are terrible vintage years. It doesn’t matter how smart you are or what your strategy is, if you were investing at the peak of the market, you’re probably going to have some adverse returns.

For us, it’s perfect because we’re raising capital or building the firm and raising capital during the peak of the market. Now, we’re the only one out there in the entire world that’s got a clean balance sheet and institutional quality fund ready deploy fresh capital and everybody else is worried about their existing models.

Probably right. When you’re at the top of the market, it doesn’t matter how good you do due diligence. If you’re investing at a high valuation, it doesn’t matter how much if you have a warrant because if the next round is a down round, there goes all your warrants. There goes all your underwriting because you got cut off at the knees.

This vintage is going to be incredible for both of our funds. Looking at the numbers of our own fund, I was like, “I called this by skipping that flatness and going straight to these businesses that have revenue that are still early, but you’re going to help them pop in your going to help them just climb the J-curve.” There’s going to be something incredible fast for turns that happen where no one else is afraid. Too many people were busy running around and being like, “The bear’s going to eat me.” You and I started fighting the bear while waiting. Take that there.

It’s the perfect time to fund from that. Coming up to 2024, I think it will be the best vintage year in the history of venture debt and one of the best vintage years in the history of venture equity because valuations are lower. You’re getting great access to the best companies because they can’t get funded generally by most folks. You can be incredibly selective. There’s very little competition for deals. It’s very different from 2021 where there were fifteen term sheets for every halfway decent deal. Maybe even fifteen term sheets for crappy deals, quite frankly.

Now, we’re seeing great deals that are getting no term sheets. Nobody wants to fund them because they don’t have the money or they’re not willing to deploy the capital. What that means is that, if you are in a position where you have drive power and you can invest, you’re getting great valuations. You’re getting in at a time that’s a perfect inflection point because you’re going to basically help them bridge this gap over the next couple of years, when we’re probably going to have a recession.

You’re going to be perfectly positioned to ride that upward trajectory with them. I just think it’s preparation meeting opportunity. I don’t like to call it luck when people say to me, “You’re lucky.” I’m like, “BS. I called this. I was prepared. Other people won’t and now we’re going to seize the opportunity.”

 

I see the same thing. This is just the right time and the right place. It’s being ready to go and then being able to bring in the right LPs at the right dollars to say, “Let’s come in and let’s also help you co-invest. Let’s get you access to these deals. Let’s do everything. We have built the infrastructure behind it and that’s the power of both of us. It’s not tooting our own horns. We’re just being honest. We built this infrastructure already.

Once you have the rails, you could put whatever train you want and roll it down the hill. That’s the power of it. Those that are going to use this year and next year to build their funds and their own rails, they’re going to miss out. By the time they deploy, it will end of ’24 and ’25. If you’re not coming into the market now and deploying, you’re just going to miss out.

There are a lot of large asset managers that are trying to get into venture debt. To your point, they can’t build it fast enough. I’ve had a number call me and asked if I would come work for them or if they could buy stock in ARI and if they could acquire us out. I’m like, “No. Why would I do that?” We’re about to go hit a home run and you’re behind. Now, you have to catch up, and you’re going to have to open your wallet immensely to do that.”

It will take them to 2024 to deploy. We see a lot of this in the secondary market. For secondary healthy shares, there are a bunch of big asset managers. They’re not going to be ready to buy until mid to end to ’24. At that point, they’ve missed it.

You only got one shot. People that are waiting to bet after the race is run. They’re going to miss out. People are like, “Let me see how you do over the next eighteen months.” You’re going to see how I do, but you’re not going to participate. If you see these big returns, don’t call me to try to get in because you already missed it.

The doors are closed. Once the train leaves the station, if you didn’t buy a ticket, you’re not going to ride.

I’m changing pace here. What are some risks that are keeping you up at night as an investor?

Risks For Investors

The biggest thing is time. Time kills all deals. The reality is, with the right timing, the right dollar, and the right infrastructure, you can do anything. A lot of what we’re seeing is that a lot of people are trying to wait it out and realizing that that’s a risk in the market because you can’t wait it out for the next 1 to 2 years. You’re not deploying and you’re not having alpha. The value of money not doing anything is going to hurt a lot of people.

That’s the thing about it. When you look at both from the manager’s side, the manager, that’s not the point because they’re worried and scared that they’re not going to get a deal. It’s a game of catch-up. The LP that’s waiting until 2024 or 2025 because they’re too scared to do something, time is going to kill it. This is about calculated bets. The nice thing is his time is on our side. The nice thing about it is we can go and do these 2 to 3 months of due diligence.

I’ll be very honest, the founders that ran up those and said, “We’re going to close this deal and your money needs to be in,” those guys are gone. Those companies are gone. Those founders are gone. It’s funny because time is the most important value that you can’t get rid of. It’s time you do an evaluation. That’s important. The amount of time it takes you to make a deal is important. I think that’s the risk across the board of finding a good balance between go.

You can’t just always go and go. You’ll get burned out, but you can’t also sit on the sidelines and not do anything. You’ve got to do a little of both. That’s my thing for a lot of the funds that are doing well now. It’s both deploying and raising all at the same time. It’s being able to take a step back but being able to do the risk to be able to show traction and also, at the same time, be able to show track record. If you wait until you deploy a year and a half from now, there are no good deals. If you wait to fundraise, you’re going to miss it. It’s finding a good balance across both.

I think you hit on something there, which is the risk for LPs not doing something. LPs tend to think of this risk if I do something, there’s risk in doing that, but there’s also the risk of not taking the action. In other words, there’s the opportunity cost of missing out.

Time kills all deals. Share on X

The key of it is sitting on the sidelines and realizing that it’s in bonds or treasuries, not generating any alpha because this isn’t the game of alpha. This is planting the seeds of returns happening in 3, 5, and 10 years. The more you wait, those returns will get farther and farther on. We saw this very early on. I saw this with the university endowments that didn’t invest in venture years ago.

Those that did, did tremendously well. Those that didn’t are now scrambling on, “How do I do this? How do I get into venture?” The ones that started 6 or 10 years ago were able to generate fantastic returns because they saw things hitting the threshold. They saw things popping and now they have returns, but it’s about planting the seats.

That’s important from both the messages to the LPs. It doesn’t have to be big. People ask about, “Do you invest in this or do you invest in that? Are you going to do just all venture debt?” I’m like, “No, you do everything.” You diversify your investments across the early stage, mid-stage, and late stage, as well as products like venture debt. Those are what the investors deal. They found short-term, midterm, and long-term products.

That way, if one falls out, you still have a midterm. If that falls out, you still have long-term and you’re still looking at generating alpha. That’s what the good CIOs should do. That’s the thing about why both of our strategies do well because they have different time horizons. You have milestones on 5 years and 10 years. I have milestones on 5, 7and 10.

I’m able to sync those up so that there are subsequent compounding returns over the next 5 to 10 years. As a good LP into both funds like ours, that’s what you have to look at. What is the time horizon, but at the same time, what does it take to generate a good diversified return set over multiple different asset classes versus the LP that’s just in one asset class expecting that to be like the end-all and be-all?

It’s the conversation I have quite frequently with LPs because many folks I talked to are either family offices, large family offices, or registered investment advisors who are often managing billions of dollars. Sometimes, on behalf of hundreds or thousands of clients. A lot of them, historically, were only in stocks and bonds when it came to market exposure, 60/40 portfolio. Now, many want to move into what’s called alternative investments, which is anything except stocks and bonds.

Usually, the gateway drug, I call it, is real estate. That’s the first thing that people invest in once they get out of stocks and bonds because it’s something everybody understands. Almost everybody who invests in a house probably owns it in most cases. They often have been involved in commercial real estate. They understand real estate and that makes sense to them. They invest in that first.

The next thing that you usually do is invest in private credit. They think, “I understand real estate,” both equity and debt on the real estate side. Private loans to corporations make sense as well. Middle market loans and venture debt start to make sense to them. What I’m seeing is more folks now are saying, “What I want to do is get out of stocks and bonds. I want to try to generate some higher risk-adjusted returns and alternatives. I’ve already done real estate. Now, I want to take the next step.”

This goes into your point, which is about diversification. My point to these folks is you shouldn’t just pick one manager in venture equity and say, “This is the one seed stage investor that we like. This is the one private equity fund that we like and the one venture lender that we like.” What you want to do is diversify across multiple aspects.

Previously, I’ve called this diversification within diversification within diversification. First, you move into alts. That’s diversifying your portfolio from just stocks and bonds, then you move into real estate and private credit. You’re diversifying within alts. Within private credit, for instance, you can invest in all types of different loan strategies. Within venture debt, don’t just invest in ARI. Invest in 2 or 3 managers.

You’re right on the money and that’s what the good CIOs at Findley offices and institutional investors. They spread the risk. Here’s the thing. It’s not just early-stage or venture debt. Its sector focused. I want to have some exposure in biotech. I want to have some exposure in fintech. I want to have some exposure in this portion over here. I can have a venture debt fund that’s ARI and that’s doing tech versus one that may be doing biotech or pharma.

That’s the power of taking a step back and having these different buckets. If one gets murdered, you still have another bucket. If that one gets murdered, you still have another bucket. The ability for the whole portfolio to go to garbage is pretty rare. We’ve done it well and spread the risk out across sectors, across products and across life cycles, late stage, and early mid-stage. That’s the power of what a good manager can help you with.

Sectors To Invest

Are there any sectors that you think are going to do better over this next phase of the cycle? What are you most interested in investing in sector-wise?

 

Cybersecurity is going to do well. Years ago, when we started, there was a lot of vaporware and garbage. There are a lot of incredible companies being created now by incredible founders who are seeing the need in the market. Whether it be in fraud, risk or compliance, it’s at the core of decentralized finance. It’s embedding cybersecurity solutions and KYC. That is the next emergency stage. At the same time, I’m always looking at what the next vertical is. What’s the next market?

For us, the next piece is what I’m calling Climate Tech 2.0. You’re getting away from building solar and batteries to software and financial transactions. That is going to be the course of that next innovation economy. A lot of money has gone in already and you realize you’re going to have data sets and finance and dollars moving through it that are going to require fintech, AI companies, and cybersecurity to manage. I think that is going to be the next frontier in the next 1 to 2 years that we’re just going to start digging into because we think there’s an opportunity there.

Is there anything that investors should be thinking about over the next 3 to 5 years in terms of how to play innovation in their portfolio?

We covered this one. It’s diversification. It’s setting and looking at short-term and long-term investments. I think what people don’t understand is when you’re investing in an early-stage company that is a 10 to 16-year life cycle. These are long-term investments, and being able to find a balance between that long-term may hit out that long. How do you diversify into something that’s shorter-term, a product that you’re doing that’s going to generate alpha quickly and that 15% return, a middle-stage product like us that is looking at 5 to 7 years?

I hear this from LPs, “This is going to be liquidity in six months.” I’m like, “That doesn’t happen that.” These are long life cycles, especially without IPOs happening. It’s taking a step back at your own portfolio and looking at it and saying, “What are the goals in the next 3 to 5 years? How do I diversify my risk but also start laying down the groundwork for those 5 years, 7 years, or 10 years?” What you do in the next three years is going to be critical.

If you lay down the wrong investments or the wrong seeds, then nothing happens by year 5 or year 7 or year 10. It’s critical now to be able to team up with the right manager and the right co-investors who are going to be able to help you into these markets and these companies where you get to learn about these investments, but also being able to build your own portfolio. For me, that is the critical thing for the next years. A lot of people are going to miss this window. The key is, what do you do to make sure that you have a foot in this space of alts where you’re able to generate alpha where people are not going to be generating alpha?

Adrian, it’s been great having you on. I always enjoy talking to you.

The captain, thank you again.

Reach Adrian

What’s the best way for folks to reach out to you, whether they are startup or they’re an investor?

LinkedIn. I’m pretty active on LinkedIn. Feel free to reach out. Send me a message. Say, “I saw you with the captain. I would love to talk,” and I’m happy to talk.

 

Important Links

• Zack Ellison on LinkedIn
• Applied Real Intelligence (A.R.I.)
• 7 in 7 Show with Zack Ellison on Apple
• 7 in 7 Show with Zack Ellison on Spotify
• 7 in 7 Show with Zack Ellison on YouTube
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• Adrian Mendoza on LinkedIn
• Mendoza Ventures
• From Star Apprentice to Leading Venture Capitalist with Kelly Perdew
• 7 in 7 Show Disclaimer

 

About Adrian Mendoza

Adrian is the founder and general partner at Mendoza Ventures which is both Latinx and woman-owned and the first Latinx-founded VC fund on the east coast.

His firm focuses on investments in Fintech, AI, and Cybersecurity, with diversity playing an important role in their investment decisions—about 80% of their portfolio consists of startups led by immigrants, people of color, and women. Since its founding seven years ago, Mendoza Ventures has raised two funds and had two successful exits.

The firm is currently raising its third fund, a $100M fintech fund anchored by Bank of America, focused on early growth funding rounds. In 2022, Axios Magazine listed Adrian as one of the five most influential people in Boston and the LA Times honored Adrian as a DEI visionary as one of California’s most prominent game-changers and thought leaders in the business world today. Adrian is also a regular contributor on CNBC on the state of Venture capital in the US and the firm has recently been covered in Forbes, Bloomberg, and The Boston Globe.

The Mendoza family just recently launched Mendoza Impact a philanthropic initiative to help fund diverse and female founders and fund managers.