Podcast - Building a Fund Around Founder Empathy and Regional Needs

Patrick Driscoll: Welcome, everyone, and thanks for tuning in to "The Innovation Imperative." My name is Patrick Driscoll, and I'm the Director of Client Development for Emerging Companies and Venture Capital (VC) at Holland & Knight, where we work closely with founders, VC firms and investors navigating the full life cycle of innovation, from company formation and early fundraising through growth, scaling and ultimately that exit. A big part of our work sits at the intersection of law, capital and strategy, helping innovators and investors think clearly about how they build, fund and protect durable businesses. "The Innovation Imperative" is really about that journey. Each episode, we sit down with leaders who are shaping the innovation economy, often behind the scenes, to unpack the real stories, lessons learned and inflection points that don't always show up in pitch decks or press releases.

I am thrilled about our guest today. This episode focuses on emerging fund managers and specifically what happens when a founder and operator brings that experience into VC. We'll talk about the transition from building companies to backing companies, the realities of launching a first fund and the practical decisions that shape a new firm's thesis, brand, LP (limited partner) relationships and portfolio construction. Joining me first is my colleague, Danielle Price, a partner at Holland & Knight in Miami, who will lead today's discussion. She works closely with founders and investors in Miami and beyond and is a leader in the broader South Florida startup ecosystem. And we are super excited to be joined by our guest, Aurelia Edwards, co-founder and GP (general partner) of Edin Capital. Aurelia is also the founder and CEO of Standard Measure Technologies and previously founded Pink Scissors Stationery. Today we'll explore how Aurelia's operating experience informs how she evaluates founders, what she believes emerging managers need to get right early and how Edin Capital is thinking about differentiated strategy, disciplined execution and long-term success beyond financial returns. So with that, Danielle, I'll let you take it away.

Danielle Price: Happy to be here. As Patrick said, we wanted to definitely highlight your transition from being a founder to being a manager and what that experience has brought to the table. So to kind of just start with your background originally, can you tell us kind of how you became a founder and what your two founding experiences were? And I know one of them is still going, so how you balanced that transition too.

Aurelia Edwards: Thank you so much, Danielle. Thank you, Patrick. Yeah, in my previous life, I'm originally here from South Florida. I went to Florida International University where I received a bachelor's degree in biology and also one in chemistry and then moved up to New Jersey for graduate school where I got a master's in cosmetic chemistry. So by education, I am a chemist. However, in undergrad, I went to massage school because I felt that my purpose here was further than just creating things with chemistry, and healing with massage became a passion for 20-plus years. I built a private practice where I serviced high-net-worth and ultra-high-net-worth individuals throughout South Florida, New Jersey, New York and the Caribbean. And I really enjoyed my life there.

As Patrick mentioned, I also created Pink Scissor Stationery, which was a bespoke stationery company and event planning firm that spun out of my time working as a chemist. When I didn't feel fulfilled in my day job, I started doing event planning for our company to build company morale and just kind of have that creativity blend with the science that I had innately in me, and I realized that I wanted to, well, I only worked for four years in a corporate setting – that's my only corporate experience outside of college – and then went on to start building. So, launched Pink Scissor Stationery and then still had my massage practice going. And I built it after planning a friend's wedding and realized that I had a passion for it and they told me you can't do this for free, you need to charge people. And organically that built into a business that I had for about 12 years and went on to do weddings, corporate functions, event weekends, worked at things for the radio stations, things of that nature, alongside being a massage therapist.

Also in the world of being a massage therapist, Standard Measure Technologies kind of spun out of that. And what Standard Measure is, it's an AI-powered virtual measurement technology company centered around the beauty industry. We take precision fingernail and toenail measurements that the press-on-nail industry can then use to make customized press-on nails. Why is that important? As a massage therapist, my nails were always short. And living in New York and Jersey, my friends always wanted to hang out and I never had time to really get my nails done because I always had to work the next day. So press-on nails became my go-to. And on one particular day, I was going to my cousin's wedding, I was missing two press-on nails. And instead of just being able to buy the two that I needed to fit, I ended up buying a whole box set. And I had hundreds of nails at home, I just felt it being very wasteful. And I went down the rabbit hole of how can I create custom-sized nails for myself, and is it something that other consumers would want? So six weeks after that wedding weekend, I launched a pop-up store in New York City during Fashion Week where we manually measured customers, realized there was a need. There was a lot of interest virtually to order online. And so I went down another rabbit hole of how do I size virtually, and was able to build out this precision technology that then became Standard Measure Technologies and then became VC-backed. And it all really came from a personal problem that I experienced and wanted to solve that.

Danielle Price: The fact that you have a chemistry, numbers-driven degree and are so artistic and creative and obviously solving problems probably melded the two, that's an amazing journey. And so then how did you transition from – because you're still a founder and you're still running that company – to this new journey of being an emerging fund manager?

Aurelia Edwards: So fundraising is always a challenge for founders. So I launched the company in New Jersey, 2018, spent 2019 building up the technology, I guess you could say in stealth, and went public launching in 2020, March of 2020. And everyone knows March of 2020 was a very impactful month of the year for us. I believe it was March 12, then on March 13, if I am not incorrect, New York City shut down for COVID. And I was like, well, what do I do now? So I'm like, I'm going to Florida. My parents are here, moved down to South Florida. And mind you, I didn't know anything about the startup world. I was just doing what I thought needed to be done as a scientist, right? There's an entire, like, you create a thesis, a hypothesis, you prove it, disprove it, you get, you know, you test the market, you come back, you reiterate, you test again. That's what I did naturally as a chemist. That was what I was taught to do.

So coming down to Florida, I had a lot of time to, like, be online, see what's going on, and I got pulled into these different circles and realized that there was a lot of capital available. So there were a lot of grants that were available during COVID. And then started realizing that I can start pitching and doing different things to fundraise. So during that time, 2020, 2021 here in South Florida, a lot of people were moving to Florida for various reasons. And there was a real push for capital coming from the West Coast here and a real incentive for founders to start building and growing here. And I know the mayor of Miami went really viral with that. But at the same time, being a founder, a lot of people felt like they were set up. They were set up for like the "okey-doke." I'm using quotation marks; you can't see that. But a lot of founders in 2022, 2023 that moved to Miami, expecting to have this windfall of capital that they can get, didn't really feel that. They felt that they were going to a lot of networking events, a lot of investors were there talking, but no one was really –

Danielle Price: Writing the check.

Aurelia Edwards: Writing the checks. Or we weren't seeing it. If it was happening, we weren't seeing it, and I experienced that as well. But at that same time, I did receive an investment that moved my company out to Reno, Nevada. And I set up a headquarters there. And the energy on the West Coast felt very different when it came to VC and investing. And it felt different than it did in Miami. And I asked the question, because a lot of founders felt like they weren't being supported, they took it very personal. And for me, I'm like, I don't think that's it. I do think investors want to invest in founders and companies, but I think regionally, it looks different. Silicon Valley is Silicon Valley, and it's where it needs to be and what it's supposed to do for the region it's in – we don't need to be that. And I think investors invest differently in different regions. So how can we look at capital allocation in a way that makes sense for the investors in the region they're in? If they're risk-adverse, what does that look like? And how does it align what founders are doing? Because at the same time, I saw founders really twisting and turning to fit into a venture mold that they weren't with. And changing their business model in a way that was a detriment to what they were actually building. They didn't need to be a unicorn company. They could have had a really good company, but now they have no company because they made a lot of decisions to fit venture, because they were chasing that, with shows like that we see on TV when it comes to pitching for money. They're trying to all follow that, but everybody's company is not built for that. So coming back to South Florida after moving out to Reno was really just expressing that on a public stage at a panel. And it got the attention of one of our partners, Andrew Davis, who was an early investor at the time at Techstars. And he was like, I'm seeing and feeling something similar to what you're talking about, let's talk about that more. And that was the budding start of what we were doing. We wanted to bring like an angel syndicate here. So I called in my other partner, Eric Gavin, who is now transitioning out of Venture Miami, which was the economic development office at the city of Miami. So we started just kind of banging our heads together to see what we can do here to help, you know, increase capital allocation to founders while fitting the mold for the investors that we were seeing here.

Danielle Price: Actually, you kind of answered my next question, which was why not join an existing platform. But it sounds like you were trying to solve a problem that founders face and not necessarily saying I've transitioned, and I have all this extra capital or knowledge and [I'm] ready to make investments as an investor. And it was more organic.

Aurelia Edwards: Well, initially we weren't thinking fund. We were thinking, how do we get private financial institutions to allocate their capital differently? Really, I could tell you what my qualm was that I felt that South Florida really centered on Miami and forgot about Broward County and Palm Beach. So how do we distribute capital across the three counties in a way that makes sense to unite us? Because as a founder, I found that we were running to different counties, just like I moved to Reno. OK, set up an LLC in Miami so that you can get all the things that they're doing in Miami. What about Broward? What about Palm Beach? So our initial discussion was, how do we unite private and public partnerships to kind of bring capital to the three counties in South Florida? And should we do it through being a nonprofit, or should we do it through launching a fund? So that was the initial discussion on how do we kind of capitalize this region in a way that makes sense.

Danielle Price: Interesting. And so, what's been the most unexpected part of your transition to launching a fund?

Aurelia Edwards: How similar it is to being a startup founder. The fundraising, creating your pipeline, building trust, making sure that the transparency is there. That, to me, has been one of the biggest eye-openers of how similar it is sitting on the side of the table as it was as being a founder. The other thing is seeing how, when we talk to founders and investors and LPs alike on what we're building and why we're building, this sigh of relief, and how refreshing it seems to say, we see you, we feel you, and we're trying to build a solution that makes sense for both parties so that we can build and grow in a line together.

Danielle Price: And so that also sounds like it's been an organic process because you didn't come up and say, well, you had an initial problem that you were trying to solve, but now that you've decided that you're going to create a fund to do it, establishing the thesis for that fund and how you're going to, like you said, get the investors to invest in the fund and then deploy the capital from that fund. How has that evolved, and how have you defined the thesis for the fund?

Aurelia Edwards: So from the initial thought process of South Florida as our focal point, how do we insert capital into companies that can then be distributed throughout the communities they serve? And we position it as integrated capital. Looking for companies that really fortify the infrastructure within regions. What does that infrastructure look like? It looks like people. It looks like the impact that they're doing and what they're building. How do they give back to the communities they serve, right? So you see our thesis kind of representing itself in the types of companies we support.

So if you think about agriculture or workforce development, things of that nature that you insert capital, then you can see it doing its work and benefiting the neighborhoods that it's in, is really a big one that we lean heavy on. And also just looking for really good, durable companies. We're not unicorn hunters. You know, a $20 million, $30 million ARR (Annual Recurring Revenue) company is a great company and can do amazing work in the regions that they serve. And there's many more of those. So how can we create an instrument that really grows with the founder in a way that their well-being is prioritized? They don't feel the stress to kind of grow at all costs.

Danielle Price: Which goes back to what you were talking about earlier about kind of moving –

Aurelia Edwards: Correct, correct. Knowing that you have a team that supports you and that your LPs also support you because they're excited to see – and we can talk about this further down in the next questions, I'm sure, on what the instrument looks like – but they're seeing it in real time how it's working and how they're benefiting as well at the same time. So that's really the big "aha" moment for us.

Danielle Price: Well, you can go right into that because one of the questions I had was, how do you as an emerging manager get LPs to buy into this new thesis, to these new managers, right? And like you said, it's like the same founder problem where you're out there selling yourself, like you began explaining to us how you started in this. So what is both your experience and advice for emerging managers about building credibility with the limited partners and having them buy into the thesis of the fund so that they could support the portfolio companies?

Aurelia Edwards: So it's the same thing as being a founder. You find your problem and you fall in love with your problem and making sure that when you see it, the others see it too. So gaps in the market, and I think in the last five years in the venture market, there's been a lot of gaps that LPs have seen in terms of how their capital is being returned to them and where those standstills are. Firms that are no longer around anymore because of the models that they were focusing on before. So in the last year, year and a half, we've seen a lot of alternative investment structures coming out, and LPs are looking for something different. They're looking to continue diversifying what they're doing, whether it's in real estate or standard VC, so that right there helps because we noticed why there's a gap that everyone's kind of seeing and they're looking for solutions in that.

The second thing is just relationship building, and that's something that's really key. Getting to know your LPs, your networks, bringing them to the table when you're talking to founders that you're looking at so they understand the type of companies that you are building. Also very, very helpful and really just learning together on what we're seeing in different regions. And I think what I've seen the most beneficial [thing] we're doing is that that regional focus is really key. Because economic development is something that's a thread that connects us all, and when you're thinking about creating jobs, making sure that things are affordable in the regions, it benefits all humans. And when we put the person back at the center of our investment strategy, it's a win-win for everyone and you'd really get the LPs to fall in line.

Danielle Price: So that's your differentiator, when you're talking to your LPs – you've mentioned a couple – you've seen other alternative type of investment ideas. And so for the region and for you three as emerging managers for this new fund, like, what is that concrete differentiator and thesis that Edin Capital is deploying with its portfolio companies?

Aurelia Edwards: So, one of the big things is our instrument, the venture bond. It's a hybrid of structured profit sharing with equity upside. And it allows us to grow with the revenue of the company. So this is not just your traditional revenue-based financing, it's understanding the founder's needs and being able to build to a part where they're profitable and being able to take some of that upside and that profitability as they grow, but still keeping and reserving, if there is a large exit at end, having some access to that for all, right? So that's really a big differentiator, number one. And just how we support our portfolio companies, having a founder on board who sees them, that's one thing that I can say when we have these calls with founders, there's like this breath of fresh air that they feel seen, heard, they understand that we're here to make sure that they are building in a way that is preserving their well-being. And I know I said that earlier, but that's one of the big differentiators that we lead with.

Danielle Price: So South Florida, as you mentioned, and as I know, and our listeners in South Florida and Florida would know, is in emerging economy itself in this space. And so you guys are focusing on regional, and for the advice of other emerging managers who kind of feel like I need to kind of spread my wings and go as far as possible to find the best companies to get the best returns from my investors, how do you, like, what advice do you have for them to kind of build out that differentiated fund model that they can do in the region that they're interested in? I mean, is it, like you said, does Edin Capital's kind of venture bond apply to other regions that kind of meet the certain criteria that South Florida has? What's that advice look like?

Aurelia Edwards: Absolutely. I think you really brought up a great point. The venture bond does. We're focusing more in the heartlands, in the Midwest. We are focusing on areas where you do have capital allocators that don't necessarily have the access that we have here in South Florida or the Bostons, New Yorks, Austin, Texas, and places like that. So having something like the venture bond is a really great model for investors and LPs in those regions who want to allocate capital but are still a little bit conservative in how they allocate it. And this gives a nice hybrid in-between for that.

My other advice for emerging managers, and it's funny because I think we had spoke, I was in Barbados, I was talking about investing: Understand your market and your region. Investing here in the U.S., let's just say, globally, looks different than investing in the Caribbean islands or in certain markets, right? So understanding what the region needs from the companies that they're inviting in, because obviously we want to support the companies that are here and homegrown, but even if you're inviting companies into your region, what is that output going to look like for the community? You want to make sure that the capital that goes in floods into the communities and the neighborhoods. So really understanding the needs of the market, and is it building a new type of asset class or investment instrument, or is it looking to see what's out there already that you can kind of bring into your market to make it make sense? As a founder, it's like, don't reinvent the wheel, start with what you have access to. But when there are clear gaps, sometimes you have to build something new.

Danielle Price: Do you see that for, again, kind of on the theme of advice for emerging managers, maybe who are not founders and do not have that operator experience, right? Is that something that kind of came naturally to you because of your operator founder experience and kind of solving that problem in that scientific process background that you mentioned? As they like to say, like your whole story kind of gets you to this place, right? So somebody who maybe just isn't a founder and an operator, but wants to be an emerging fund manager, how do you get that, you know, that shift in mindset to be able to look at that same problem and solve for it instead of just saying I'm chasing unicorns, kind of, as you mentioned.

Aurelia Edwards: I'll say for me first, I have to shout out my partners, because they bring different levels of expertise that I didn't have and that I'm also learning. So we all complement each other very well. Andrew Davis, like I said, is an investor, global investor, and Eric understands economic development, he's also an attorney. So when you combine the three of us, we're a superpower. So for an investor who is not an operator, I think just instilling the basic skills of like building your CRM the same way you would for anything is like create that pipeline, create that relationship. If it's something that you feel like you don't have strong points, find partners. They don't necessarily have to come in as GP, but find advisors, anyone who can help you kind of build out that operational bench, if needed.

But a lot of it for me, what I bring to the table is that really structural approach of what's the problem? What's the solution? Test it. Does it work? It doesn't work. Let's tweak this. What's the feedback? It's that feedback loop, right? Talking to founders, asking them what they want, talking to potential LPs and also your peers and asking them, what are they seeing? What do they need? What are they missing? What did they wish that was better? And really just putting those responses back into, OK, is what we're bringing to market, solving these problems or addressing these issues that my peers or my potential LPs or the founders I want to serve are seeing.

Danielle Price: That's great advice and very, I was going to ask you kind of for like, you know, your top three advice to emerging managers. You mentioned, you know, having a deep bench, whether it's your co-GPs or advisors and service providers, understanding the local market, solving the problem and kind of going through your process to do so. I know, and I've met all three of you and you are superpowers, you know, individually and definitely as a team. So, what are the common mistakes that you kind of consistently are coming up with as emerging founders that you're trying to always kind of get ahead of?

Aurelia Edwards: I mean, I would say, and this isn't really a mistake, I think it's when you don't know is infrastructure and how important infrastructure is. Again, as a founder, we run out and start building and then we forget about the things that keep us sturdy, right? Like legal, insurance, fund admin. Yes, you need money and you need portfolio companies, but once you get that, what do you do with it? We found that number one, having those in place first, having our legal, having our fund admin, compliance, CRM reporting, whatever software technology, AI tools that we have kind of built out was really important. One, because getting the money, getting the portfolio companies, we have places to put them. But number two, there's a wealth of knowledge that these partners of ours have that became like an automatic bench for us to ask questions, right? We have amazing legal, compliance, insurance, things like that, where we can ask questions. Hey, you know, we just did this new deck, can you just look at it and just give us some feedback on what you think? Then from those relationships, you may actually get referrals for different things. So that's something that I would tell emerging managers: Get that done as soon as possible because in putting these things in place, you're also getting a wealth of experts and advisors that can help you navigate this space.

Danielle Price: The team is important, right? Both internal –

Aurelia Edwards: The team is important!

Danielle Price: – and external team. And, OK, so keeping on that that advice, just for recently, you know, we're with a whole bunch of post-exit founders who are looking for something else to do, and not necessarily wanting to create a fund, but investing, like, what is your kind of general five-second advice for them to kind of get their feet wet but at the same time really support the communities that they're involved in, because I think that's a great theme and that you guys are really prioritizing at Edin Capital.

Aurelia Edwards: I think one thing you can do is co-investing, right? So you may not necessarily want to invest directly into the fund, but if you can build relationships where you can go in alongside a specific deal that a fund is investing in, that's a great way to get your feet wet. If you have a bunch of friends who are all exited founders, you can create a syndicate. And that was one of the things that, when I left Reno, I wanted to kind of say, hey, can we do something similar here? There's different ways to do syndicates, but the one that I was a part of each LP or an investor put in a certain amount of dollars that became a pool, and then they would do due diligence on, you know, 10 different companies that they like, they choose the top two or three, and then portions of this pool got invested into it – that's one way to do it. Or take an angel network where you have monthly meetings and, you know, maybe two people go in. So if you want to get your feet wet, look for those in your community or create your own. You can always find an investor, an LP, to come and advise you through the process, but it's a really cool way to understand the deal.

One of the big things and another reason why I wanted to do that here is that there's so much value in getting to know the founder. A lot of people review deals on paper, a deck, they're seeing the numbers, but they don't fully understand what the founder went through to get where they are when they're presenting the company to you, what decisions were made. When building, some of these decisions, which may look like, oh, this founder made a bad decision, when you see the full context of limited resources, the competition, the market timing, that may have been the best decision for them to make. And you'd never know that without that human interaction. So with the syndicate that I went through in Nevada, we spent about eight to 10 weeks, every week just talking, getting to know – there was a personal relationship. And sometimes your best founders are the ones who weren't successful with their first endeavor, but they learn from their mistakes for their second. So it's really important to get to know the founder. Those soft skills go really far, and maybe you don't invest in this first endeavor that they're building, but they might be, you know, your unicorn for your next investment.

Danielle Price: And speaking of, you know, five, 10 years in the future and what that looks like, what is that success other than obviously financial success, which I know you all will have, look like for Edin Capital and look like for you and your partners as emerging managers?

Aurelia Edwards: Because we have such a regional-specific, initially right now, today, focus, we'd love to see us be able to rinse and repeat this in other markets here in the U.S., but then taking it globally as well. And being able to build out these structures that you're injecting capital into really great companies that can then do really good work in the community, right? Create great jobs, create affordable housing, help with water or other types of vital life needs that you're seeing in places that don't necessarily have access to things like that. So that's where we see Edin Capital, being able to create this flow of capital, not having to tie up investors' money for 15-plus years, where there's more access to their capital, they can continue to do more and more because of the way they're investing. That's where we see the success.

Danielle Price: Well, I'm sure we will see it, and I look forward to seeing it. Thank you for joining us today and sharing all of your pearls of wisdom, and all the best to you and your partners at Edin Capital.

Aurelia Edwards: Thank you. Thank you so much, Danielle, thank you Patrick.

Danielle Price: Thanks, Patrick for having us.

Patrick Driscoll: Absolutely. That was an incredible discussion. I, as per usual, take 1,000 notes and try to come up with some great takeaways. And it was very easy to find several. So thanks for making it that way. The first one I have is founder empathy is a huge differentiator. So Aurelia, as a former founder, also with that whole chemistry background, really helped her get aligned with the founder perspective as she's diligent in companies and understanding how to be a value add. Investor-founder alignment starts with founder empathy really at the end of the day. Leaning into the scientific method for creating a hypothesis, testing and iterating I think is a huge advantage that you bring to be a GP of a fund. Not all VCs or GPs have that type of understanding of how to evaluate companies, for example. The second key one is not every company should be built the Silicon Valley way. I did very much enjoy how you discussed geographic differences and how something might work in South Florida versus Reno versus New York. I think having different experiences even in the Caribbean allows you to see these key differences and how you can kind of lean into them to unlock founder success.

Third one is the idea that Edin Capital is built around economic development, which I love, not necessarily only unicorn hunting. So you're looking at things like job creation, workforce development, community impact, regional growth. It's a fantastic model for a fund where you're looking for larger impact, which, in my opinion, is a huge differentiator to attract some interesting LP money and even some great founders that might otherwise not necessarily be perceived as venture-backable or someone that's going to bring that venture power scale growth. You're rethinking venture capital through this new structure, which I very much enjoy learning more about the venture bond model that you've created. You kind of talked about starting with a nonprofit maybe. Let's see how we can really build this out. You landed on the fund model, you created the venture bonds, and this gives founders more flexibility while still creating investor upside, which I think is very well done.

 You also talked about how that's appealing to different LPs with perhaps lower risk thresholds that are able to get into this game. And then your advice for emerging managers, the final point I'll make is always – and I think it is super important – know your market, do your research, understand what founders, investors, communities actually need. Miami does not equate Silicon Valley. Reno does not equate New York. The Caribbean does not equate the U.S. So really understand those key markets. Building a deep bench, you talked about your partners and how you kind of maybe did an internal SWOT analysis of some sort to identify strengths, weaknesses, how you complement each other.

And then finally, I'll mention from the law firm plug, institutionalize from day one. So really have your CRM set up, have your insurance provider, fund admin, tax, audit, compliance and of course your legal counsel locked in, so you can build and scale from there and not have to retroactively go back and figure these things out once you get a couple of checks in the door. And, yeah, so I think that my closing sound bite would be founder empathy, regional expertise and innovative capital structures are three pillars of what you're building. And I think it's a really interesting story and fantastic thing that you've built and all the best to you and best of luck. And I can't wait to kind of see what you are going to get up to and the success you're going to bring to the region and to all of your companies.

Thanks to Danielle for hosting such an amazing episode, and I love the dynamic that you both have as well. Thanks to our listeners. If you want to reach out to myself, feel free to contact me at patrick.driscoll@hklaw.com. And with that, I'll sign off and say thanks again to everyone and until next time.