Rachel Springate Transcript
Clint Betts
Rachel, thank you so much for coming on the show. You are the founding partner of Muse Capital. You have had an incredible career up to this point, really done some fascinating and really interesting things, which we'll dig into. But tell us how you became the founding partner of Muse Capital.
Rachel Springate
That is a very long story, but thank you, Clint, for having me.
Clint Betts
We have all the time in the world, Rachel.
Rachel Springate
Like I said, I feel like I've lived nine lives, so to go through the whole chapter, we'd be here for a long time. But no, thank you for having me. Love your podcast, and-
Clint Betts
Thank you.
Rachel Springate
... you really have got some incredible guests, like guests that I look up to. So, thank you again. Okay, so maybe we can start with what we do today. So what is Muse Capital? So Muse Capital is an early-stage consumer venture fund that invests in overlooked, untapped companies and entrepreneurs in three key sectors. The future of how we care, play, and live. We typically invest where Silicon Valley has not, massive multi-billion dollar opportunities that have just traditionally lacked funding.
And so what does that mean? So, if you look at our care bucket, a very overlooked area within the world of care is women's health. And even though women make up 50% of the global population, our care is very much subpar and could be a lot better. And so for years and years and years, we were just like, "Why on earth is it that there aren't more companies and solutions that are tackling this very big problem?" And so when we dug a little bit deeper, we realized this was a great opportunity that has just historically lacked funding. Other examples of care are the future of elderly care and child care.
And then, in our play bucket, there are things like women's sports. Women's sport has been horribly overlooked and underfunded, but it's certainly having a moment here in the US. Then, our live bucket is things like the future of parenting. Parenting is changing very much from my parents' generation. So, what are the companies and solutions that are being built for the modern-day parent? And so that kind of gives you an example of the areas that we look at.
Clint Betts
So, give me a sense of these buckets. You have three buckets?
Rachel Springate
Mm-hmm.
Clint Betts
Okay.
Rachel Springate
Yeah.
Clint Betts
That's very cool.
Rachel Springate
And I think that, for the consumer, at least, these three areas are undergoing massive change right now. And we're not new to this. We started this eight years ago. Eight years ago, if you went out and said you were investing in women's health, you would be met with very blank faces because the people that you were pitching to really didn't understand the opportunity there. Thankfully, things have changed now, but there's a lot more work to do. And so, even though we've been doing this for a long time, I feel like we're just getting started.
And in terms of how I got to do this, I think I have one of the most non-linear paths into VC. I know. I think both my partner and I do. But honestly, I think I hope it's inspiring for other people because I think the idea of becoming a venture capitalist was just never on the table for me. And hopefully, it will teach people that you don't necessarily have to have a certain background to succeed in a particular industry. So, that non-linear path started... So I'm from the UK originally. Grew up there, went to school there, went to university there, graduated, and started my career in brand research of things.
And through that, I was able to build relationships with marketing directors of Fortune 500s, everybody from Coca-Cola to Aston Martin to Chanel. And that was a very fortuitous internship, really, where I built these relationships. And because of that, after I graduated, the founders of my next company heard that I had all of these relationships and said, "Hey, would you like to join us?" And these were the founders of a company called Quintessentially. And this is a global luxury lifestyle management company. Typically, they look after high net worth. Think of Richard Branson, for example.
In the UK, he would know everyone and everything, but if he traveled to Tokyo, to Rio, to Tel Aviv, we had people on the ground who could look after whatever needs he had. And so they found me, I think I was 23 years old at the time, and said, "Hey, all these brands, we'd like to start the corporate division of our company." So instead of working with high net worth individuals, work with Fortune 500s, their C level, but also with their top clients. And so I just thought, "Wow, this is great." I always wanted to travel, and it was a global role. And so, I just started to talk to my prior network about this service and ended up being with them for quite some time.
I think five or six years. Got to live and travel all over the world. So I went to different cities every few months, working with the local teams that could speak the language, and doing things like going to Milan and working with the Gucci group, Armani, and Ferrari, and then having the teams locally translate. And I got to do this across three continents and built a pretty extraordinary network. And it wasn't just Fortune 500 brands. It was also celebrities in the music industry, some of the music labels. And funny, my overlap with the sport was working with clubs like Chelsea, Man United, and Arsenal for their kind of VIPs and even for their players.
And so it was a pretty amazing role to have in your early 20s. And probably the most famous deal that people would know about is the Black Amex Card. So the Amex Centurion, we were actually the company that ended up powering the back of that. And so it was a lot of fun. I think that in your early 20s, when you have little responsibility, it's a great opportunity, and it's how I built my network. Roll forward, corporate ended up being a significant part of that company, but I didn't think I was going to be able to go any further, so I ended up leaving. This was 2012, I think, and I found myself in Asia for a little bit.
And I was introduced to somebody who changed my life, a guy called Troy Carter. And Troy, back in 2012, was famous for being Lady Gaga's manager. At the time, she was the biggest pop star in the world. And so I just innocently just sat with him and said, "What's exciting to you?" And he said, "Technology and early stage investing." And I was fascinated. I said, "Wow, you're a music manager. What do you mean?" And he said, "Look, I've been spending a lot of time in Silicon Valley, and I just invested in this incredible company you should know about called Uber. What's Uber, and more importantly, why are they letting you invest?"
And he just explained that he was leveraging his network, and he was the one that got a lot of the big celebrities into that deal, which was not a bad deal. He was just one of the original people from Los Angeles who spotted what was happening in Silicon Valley and really became this catalyst between culture and technology. And he didn't just invest in Uber. He was in Warby Parker, Dropbox, Snap, and Spotify. One of the most successful superangels and an incredible guy. And it was at that moment that my mind was just blown. And I remember sitting with Troy and saying, "Hey, I have a pretty big network. How do I get into this space?"
And he's like, "Rachel, you should... there's very few people like us in Silicon Valley who don't just have the relationships but the business knowledge to get this done." And so, in that life-changing moment, I remember coming back to the UK, speaking to friends who work with startups and venture capital firms, and saying, "How does this all work?" Inspired, I ended up moving to New York in 2013, and I decided to start a consultancy that was essentially working with early-stage technology companies but then leveraging my old network to help these companies grow.
So, a partnership with a Fortune 500, a partnership with a celebrity, and I would do that for sweat, equity, and consultancy. And that was literally my pivot into tech. And after doing that, this was a time when music streaming was just coming into North America, so Spotify was launching in North America, Apple Music was launching, and SoundCloud was kind of the biggest thing if you remember that time.
Clint Betts
Mm-hmm.
Rachel Springate
And I had a client that was in the audio recognition space, and I ended up helping them do their deals with the labels, their deals with all the big DJs of the time. So I think Avicii, Calvin Harris, et cetera, to get them to adapt the platform. And then, most importantly, integrating that technology into the big streaming services.
And actually, the woman that I met to do the deal with for Spotify is Assia, who is my now partner in Muse Capital. And so, we actually met on a business development M&A deal. And I remember meeting her, and you have so many business meetings in your life that meeting her, I was like, "Oh, wow, she's cool and has a more fascinating background." And we ended up actually working against each other on the deal for a year.
Clint Betts
That's awesome.
Rachel Springate
So you get to know someone extremely well, and we ended up doing the deal. And after that, we just said, "Okay, at this point in our careers, we have made a lot of money for a lot of other people, mostly men." And we just thought, what's our legacy? What do we want to build? Clearly, we have some very unique skill sets that would be very valuable to entrepreneurs. And so gosh, eight years ago now, Muse Capital was born, and it kind of happened.
We just decided to join forces on the consultancy and start writing angel checks behind the kind of consulting work that we were doing and had some success pretty early, which doesn't happen in VC. And so we thought, "Hey, we should just be doing this full-time." And the original idea for Muse Capital was let's be really helpful on the cap table.
We have a background and a history where we are helping startups get their very first revenue-generating distribution partnerships, which is so hard to do when nobody knows who you are, yet we'd been doing this for a really long time. And so we just thought, "Hey, let's do it." And as we were building it, my partner actually ended up getting diagnosed with breast cancer, and it was a shock.
And I remember coming back from Europe, she had to go through a whole double mastectomy, which, if you know anything about this, is a six-month process, and she ended up kind of stopping what she was doing. I ended up moving in with her, and we just developed this extraordinary kind of friendship.
But also, that whole experience gave us this time to really think about what we wanted to build and actually going through that experience as two, I say, elder millennial technologists, we just said, Why is it that we have Uber, Instacart, et cetera, yet we don't have services like this in something as important as healthcare?
And more importantly, what's going on with women's health because it feels like there's a really missed opportunity here." And so after doing some research through that process, we were like, "Wow, this is a really big opportunity." And so that experience was terrible as it actually informed our future, and our thesis was, who... where are these markets that are overlooked? And so we ended up...
She fully recovered, by the way, and we started our first funds. I think we raised our first fund at the end of 2018. And we just started to put our thesis to work. And as I said earlier, going out there and telling investors that we were going to be investing in areas like women's health and elderly care and childcare, we were honestly laughed out of rooms. I think one of the funniest interactions I ever had was with an LP who invested in funds and said, "You're investing in women's health and things like menopause." And he said, "Isn't that a niche?"
And we were like, "Wait, it's half the population. It's definitely not a niche." And luckily, back then, we were one of the first investors in a company now called Midi, and Midi is probably one of the fastest-growing women's health companies in the country today. We ended up leading their pre-seed, and they just raised it close to half a billion dollars a few years later. And so, but like that's not really niche.
Clint Betts
Yeah, that's not niche at all.
Rachel Springate
Yeah. So that's kind of how it all happened. We started that first fund and raised the second fund, probably in the two worst climates ever to raise. The first was COVID, and the second was the biggest market downturn, investing in these horribly overlooked areas. It wasn't for the faint of heart, is what I would say. But here we are.
Clint Betts
No, it's incredible. Thank you for telling us that story and your background; I just find it fascinating. I want to ask you all the stats that I've looked at in terms of venture capital that goes to women, which is around one to two percent, if I'm not mistaken. And the rest just goes to men. This is venture capital dollars invested into companies led by either men or women. About 99% goes to men, 1% goes to women.
And so, one, I want to ask you about that, but also, on top of that, what I find fascinating is what you're doing. I don't know; there are a lot of women-led VC funds, either. I wonder what the stats are there, and I wonder if there's any correlation between the fact that most VC funds are run by men, which means most men get VCs or get VC funded versus women. Give me your sense of that with those two stats. And again, I could be totally wrong about what they are, but last time I looked, it was like one or 2%.
Rachel Springate
I wish you were wrong. You're not. You're bang on. I think the actual stat is that 2% of all venture capital dollars globally goes to female or minority founders. And that stat is pretty well known. But I think the reasons why are really fascinating. And so, if you go a little bit deeper, in order to be an entrepreneur, you need to raise VC dollars, right, it's... in the tech world. And if you think about it as a female entrepreneur, who are you pitching to? You're typically pitching, and there are some stats.
So in venture capital, I think 15% of women work in venture capital, but of those women, probably about not even 1% have check writing ability, meaning that you might get a conviction on a female founder what they're building, but then you then have to go and present to your all male, "I see that this is a company that you should be investing in." And that's tough. Certainly, if you're working in areas like ours where the people that you're pitching to really don't have that personal experience, it's, "Let me ask my wife, let me ask my daughter," which is extremely frustrating.
And so the real... if you think about that, it's like, where is the money coming from? The entrepreneur needs to pitch to more women that have check writing ability. And today that's at 1%, so one, 2%. And so this whole thing kind of falls apart. Now, take it a layer deeper. Who funds the VCs? LPs, family offices, and institutions. What do you think the stats are up there? Pretty bad. And listen, we have experienced this firsthand. When you are going out as an all-female team that's trying to raise capital from LPs, they're called limited partners.
They're the ones who will invest in your fund and then will invest in your thesis. I get the feedback that I told you about. It's like, "These areas look so niche, I don't really understand them." And so the whole system breaks. So if you go even deeper and look at the LPs, the LPs are the investors that invest in the venture capital funds; I mean, the stats are not good there either, just in terms of who's controlling family offices, endowments, institutions, pension funds. But there is something very interesting that's happening today. In the next five years, $30 trillion of capital is going to transfer into the hands of women.
What does that mean? If you look at the family offices, the next generations will inherit that, and many of them will just happen to be women. And so you think, "Yay, hopefully, that will change because the women who are controlling the wealth will demand products and services and technologies that are meaningful for them." But there's a problem. And that is the education. Typically, in the family office structure, this isn't everywhere, but in many places in the world, it's the dad and the brother who are controlling the family businesses.
So when suddenly it's the daughter, sometimes they have the education and knowledge on what to do with that, but most of the time not. And there's a lot of philanthropic capital that gets deployed, but it's teaching these women in family offices that you can invest in for-profit companies that are also having the kind of impact that you care about. And so that's just a little bit more information on what's actually going on behind that 2% of women's staff. And that's why.
Clint Betts
Tell us what Muse is focusing on over the next 10 years, given all of the reality that you just gave us.
Rachel Springate
Well, the most important thing is in order for that whole system to change, so you have all that information on that 2%, but not typically the deeper meaning behind it or the reasons behind. For us, the only way this is going to change is if people like us are successful, right. We have to show that you can invest in these horribly overlooked, underfunded sectors and make a lot of money.
And so, over the last eight years, we have been very, very focused on not telling our story, just really rolling our sleeves up and helping those entrepreneurs get the metrics that they need to succeed. And so we're hyper-focused on that. And as I'm sure you know, venture capital takes time. We're eight years into our journey and two funds. It's only about now that all of these results are really starting to come in, and that's extremely exciting for us. So that's the most important thing.
And in terms of what we're excited about, I mean, given all the advances in technology and AI that are thrown around a lot, we're super excited because we think about what are the use cases of AI that apply to our thesis, right? How can we make women's lives better with artificial intelligence? How can we make parents' lives better? Again, areas where it's not really thought about in Silicon Valley. And so we think that's a huge opportunity, and we're seeing some amazing companies that are going for it.
Clint Betts
Given your... everybody you've invested in and just the incredible network you have, what's a commonality you've seen in traits or whatever, however, you'd put it in terms of what a great leader is, maybe even what a great... what makes a great entrepreneur. What makes a great leader?
Rachel Springate
So interesting. I think a few things. I think the best entrepreneurs that we have are the ones that have the most grit. The ones who are determined at all costs, no matter what the markets, et cetera, throw at them to be able to survive and thrive. And not everybody's built that way. And really looking for that ability to just keep going no matter what the circumstances is something because we invest so early that we really look at it because everybody can have an idea.
It's like when we do our due diligence, it's like, "What have you actually done? Can you execute?" And there's a lot of very smart people out there, but in terms of actually rolling their sleeves up and doing the work, it's a lot less. And so I think the ability to execute and then the ability to have self-awareness means that you alone cannot do everything and that you need to identify your strengths and then hire the team that can plug those weaknesses.
I get red flags when I hear an entrepreneur that thinks they can do everything, right. It's like, "You need to build that team that can step in. And honestly, you shouldn't be doing that because you need to be focusing on other things. Grit, the ability to hire, and just a really clear vision and mission." Those are the things we look for in entrepreneurs.
And then a step away from the entrepreneur is three things we look at: team, timing, and TAM because if you don't have all those three things lined up, it's you could have a great team building something at the wrong time. It's a very interesting thing right now with AI. Or you can have a huge TAM but the wrong team that's never going to work. So I think the stars have to align there.
Clint Betts
Yeah, that's an interesting way to put it. Finally, we end every interview with the same question, and that is, at CEO.com, we believe the chances one gives are just as important as the chances one takes. When you hear that, who gave you a chance to get you to where you are today?
Rachel Springate
So the first people to talk about is my parents. I'm sure everybody says that, but I have an immigrant mother. The immigrant mentality. Make most of the opportunities you have today because you literally have family members who would kill for what you do. And then people like Troy who came in and kind of opened my eyes.
I mean, Troy is an amazing human being who is super humble at the same time. And then, honestly, my business partner Assia. She's... We took a chance on each other. I think we saw something very special in each other, and we knew that we were very complimentary. And by the way, that's the hardest thing to find in a co-founding team. Most partnerships and startups fail because of that dynamic.
And given what we've been through both personally and professionally over the last decade or so, we feel like we're bulletproof at this point. It's like, "Throw anything at us, personal, professional, we've figured it out." So I mean to her for taking the chance.
Clint Betts
Rachel, thank you so much for coming on. Seriously, what an honor.
Rachel Springate
No, thank you for having me, and I hope it was useful, interesting, and inspiring.
Clint Betts
It was. It was all those things. Thanks so much.
Edited for readability.