Q&A with Acumen Fund's Stella Tran

Stella Tran is an associate at Acumen America (the U.S.-focused fund within Acumen), based in San Francisco. Prior to Acumen, Stella supported early stage investing at Just Business Fund. You can follow her on Twitter: @stella.

What attracted you to venture capital and working with startups? 

Looking back, it feels like a very classic Silicon Valley story. In high school, I taught myself how to code and launched an e-commerce business with my friend. At the time, we didn’t think of it as building a company or launching a startup. We both loved fashion, and we wanted to get the great stuff we were finding in estate sales and thrift stores to more people. I still viscerally remember how excited we felt when we received our first set of orders from Australia. That was my first taste of entrepreneurship. It’s funny remembering that youthful innocence: at 17, I thought I had figured out how to run a great business. But I’d certainly grasped the fundamentals: if you build something people like and sell it at a price that sustains operations, you’ve got the beginnings of a viable business.

I soon left for college, and my early brush with entrepreneurship led me to reach out to the school’s Miller Center for Social Entrepreneurship. There, I met social entrepreneurs working on hairy, complex programs, and it turned my understanding of business and philanthropy upside down. These businesses were grappling with how to serve low income customers, and to do so sustainably. A number of the startups had Acumen as an investor, and they spoke highly of Acumen’s value-add as an investor beyond fundraising, from their willingness to roll up their sleeves to support their businesses to the values they carry as investors. Acumen’s work really resonated with me, and it inspired me to build a career around social entrepreneurship and investing with the aim to address critical social challenges. It was magic that the firm that inspired my career would be where I ultimately end up!

Why Acumen in particular? I discussed Acumen’s metrics and methodology in a Q&A woth your colleague Charlotte Parker – was that part of the attraction?

For me, it’s that Acumen’s investment mandate is singularly focused on poverty alleviation. I was also attracted to Acumen America’s work to serve low-income Americans. Growing up in socioeconomically diverse east San Jose, I saw and felt firsthand many of the issues that Acumen American looks to address today. One of our investments is in my neighborhood: Listo provides affordable, consumer-friendly financial services to underserved Latino customers, and looks to shift these customers away from alternative financial services and predatory lending.

I also liked that our team asks the tough questions about the challenges experienced by low-income Americans. What were the structural inequalities that led to these issues in the first place? My colleagues never shy away from speaking radically and frankly about our country’s history, the breakdowns in the industries we work in, the predatory ways in which some businesses treat low-income consumers, and what it may look like to achieve true systems change. We also push to learn about these challenges beyond the data. Our diligence process asks us to go out into the field and interview real people. And as a philanthropically-funded investment firm, we have a unique structure that allows us to support pioneers and take risky bets. It’s not to say we’re forgoing return for impact - the commercial viability of the enterprise ensures the sustainability of the impact. We’re just allowing ourselves to think big and creatively about the potential solutions.

And yes, metrics is a big part of it. Acumen’s commitment to impact measurement, grounded in learning from our customers, demonstrated to me that we’re holding ourselves accountable to our mission.

You've worked in social enterprise and product prior to Acumen. What did you learn from these roles that you bring to VC?

I worked at several early, pre-Seed and Seed stage startups at the beginning of my career, and they’re formative to how I operate today. I saw the growing pains of early stage operations, and learned about how different founders navigated tough decisions. Working closely with the founders of these companies, I also saw the emotional intensity and demand of their work. This helps me empathize with the entrepreneurs I speak to each day, and I find myself really interested in our founders’ wellbeing. And in working with such small teams, I now have a bias towards action: ready to take on any role, and developing an eye for identifying problems and finding creative ways to make things work. It’s led me to hack together tools for our own internal operations, which I hope increases our collective capacity as investors.

Acumen's website explains your approach to investing, but can you walk through the sourcing process for startups?

For Acumen America, our startups primarily come through three channels. The first is research: we develop a hypothesis and find all the relevant companies in the space. We also rely on our relationships with investors and entrepreneurs, and incubators / accelerators. We’ll then schedule a call or meeting with the entrepreneur. We often know in the first meeting if it’s a fit.

From this process, we aim to make 6 to 8 investments a year across those 3 sectors: health, financial inclusion, and workforce development. This process may look different if you’re pitching to our investment teams outside of the US.

How much interaction do you have with the other Acumen teams?

For the investment teams, we don’t interact with each other much because of how we’re structured. Acumen works in East and West Africa, Pakistan, India, and Latin America, and we have portfolio teams specific to each region. We do have time every quarter to trade lessons learned, and I find it super valuable to hear from my colleagues. How do their entrepreneurs think about impact measurement? How do they show up as investors? How do they increase their value-add?

With Acumen America’s focus on the three sectors (health, financial inclusion, and workforce development), what investments are you particularly excited about? 

I’m really excited about our entire portfolio, because our focus areas are some of the key pillars of a person’s quality of life and wellbeing in our country: health, stability and prosperity, and work. And our investing work is interrelated, so tackling one area could have compound impact. For example, we heard a lot about medical debt in the process of investing in Resolve and EarnUp, two companies in the consumer debt space, and we’re also looking at investments that make healthcare more affordable.

I’ve been spending a lot of time in health, so I’ll share our most recent investment there. To give you some context, we take a wider aperture of health. We think health extends beyond the doctor’s office, and it includes your social and physical environment. How can you eat more nutritious meals if you don’t know where your next meal is coming from? As a progressive insurance company, I’m sure Oscar is thinking about some of these questions as it looks to improve outcomes for your membership. So, if you’re food insecure, can the healthcare system connect you to a food bank? Or could your health insurance help subsidize your next meal?

Boulder is a remote opioid addiction treatment program that looks to reach patients in underserved communities. Addiction treatment for these patients is largely inaccessible. And if available at all, it is often low quality and does not set up patients for success. Boulder’s team wants to change the standard of care for addiction treatment, and deliver comprehensive and compassionate care that addresses all the dimensions of a person’s wellbeing. This includes ensuring that social services are available when needed.

How much change do you think an impact fund can catalyze to actually transform deep structural inequities? 

Transformation takes the effort of many stakeholders. While I think impact investors and entrepreneurs play a critical role, we’re only one piece of the puzzle. For us, I see our transformation as tiered. In the early days, entrepreneurs can introduce fresh thinking, challenge the status quo, and influence how businesses, non-profits, and government think about policy and solutions. Then, in the second phase, if these entrepreneurs achieve commercial viability and scale, and if they’re focused on the right set of problems, I’m hopeful that they can address these structural inequities. In our role as impact investors, we’re tasked with asking the right questions to find these entrepreneurs and innovations. For example: how do we not just find a cheaper payday loan, but fundamentally change how Americans are paid such that we no longer need payday loans?

What are some challenges that you’ve faced as a young VC in an early stage fund?

I struggled at the beginning to understand how to succeed in my role, and to do so without burning out. The associate role is expansive, and it looks different firm to firm. I asked my friends in venture a lot of questions, but, since our firms were so different, I find that most of us figure it out on our own.

At its core, it’s research, deal work (from sourcing, diligence, to deal negotiations), and building relationships. You might layer on portfolio operations and investor management if you’re at a smaller firm. All of these activities require a lot of time and a different set of competencies, and it was difficult to balance and prioritize learning/execution. And at smaller VCs, you’re often the only associate, so you don’t know if you’re doing well unless you have a strong feedback culture.

To provide structure to the role, I codified all the skills required to be a strong associate at Acumen America. It lists out all of my functions, and the skills required in each. I then look at this list to prioritize my professional development and find on-the-job opportunities to build out my skills. I’d like to build this out and share it with other young investors.

What advice would you give to young women who want to enter VC - on the investing, operations, or platform side?

Take the time to find the right firm and firm culture! Because it’s a competitive job search process, and coming from a non-traditional background, I felt pressure to take the first opportunity that I was handed. Ask yourself what kind of firm and firm culture you would thrive in. Would you want a long-term relationship with the firm? It’s a mentorship business; to do well, you need an environment that teaches you. Do you trust your colleagues? Are they the right people to guide you through venture? Do they seem like people who can collaborate effectively with in stressful situations?

And remember, you can join VC at any point in your career. In the meantime, you could become a subject matter expert or develop strong competencies in a functional area - ultimately making you a better investor.

🔥 Rapid Fire

Your top request from a startup? 

Financial models. I know it’s all speculation for an early stage startup, but I get to learn so much about how entrepreneurs think about growth and risks through their assumptions

A mobile app you'd recommend?  

Breaker, a new podcasting application. Podcasting is a crowded space but they’re making it fun with social listening.  

Favorite Instagram account? 

Cheating! I have three: @thingtesting. I love how Jenny’s interpreting content for venture that’s so uniquely her own. Also, Humans of Late Capitalism (@HumansOfLate) and Things I Found on EBay (@ebaybae) because they’re both peak Internet satire, and feels so viscerally relevant as someone that grew up on the Internet.