12: First checks building the future of cities since 2012 led to unicorn investments and $215M in AUM - Julie & Clara, Urban Innovation Fund

An ill-fated business school fashion show led to a venture capital fund with $215 million AUM. 

The duo met in 2010 at the MIT Sloan School of Management and soon after became research partners investigating why VCs were shunning startups in highly regulated spaces even though AirBnB and Uber were starting to reach venture scale very quickly. Tech-enabled startups impacting how we live in the real world were new (back then). Their research sparked Tumml in 2012, an early-stage accelerator, and culminated with the Urban Innovation Fund I in 2016. Now on their third fund with $215M in AUM and multiple exits, including CodeSpark Academy (acquired by BEGiN) and Electriphi (acquired by Ford). 

In this episode, Clara and Julie share how they lean into regulated spaces, take advantage of macro trends, and uniquely focus on the relationship between cofounders when investing—lessons from their own highly effective partnership.

Clara and Julie invest $500K to $3M into pre-seed and seed startups that make cities more livable, sustainable, and economically viable. This urban thesis covers sectors like climate tech, financial services, transportation, fintech, education, proptech, and future of work.

Highlights: 

• Clara and Julie had a hypothesis that urban tech was not only going to take off, but that it was also worthy of VC capital, contrary to what some of the top VCs thought at the time. 

• Sometimes, the role of an investor is to support other investors just as much as the founders. Clara and Julie explain the importance of being the investor who steps up and gains consensus among the other LPs when disputes or dilemmas arise. 

• The opportunity to invest in Electriphi, an electric vehicle fleet management software company, led to an acquisition that returned most of their second fund – all because they were brave enough to bet on the macro trends and tailwinds. 

• Matching up founders with opposite skill sets might work out, but Clara and Julie would much rather find people who truly mesh on deeper levels. 

• (00:00) - FIFU 13 - Julie Lein & Clara Brenner
• (03:22) - A new kind of VC: The Urban Innovation Fund
• (11:16) - Opposites attract? Optimizing for cofounder-cofounde fit
• (18:42) - What are Julie and Clara’s whys?
• (23:43) - Lessons from the first check: They won’t all be unicorns
• (33:23) - Lessons from the worst investment: The only failure is giving up
• (39:01) - The bear hug: Avoiding the bystander effect and getting other investors on board
• (44:37) - Lessons from the best investment: Catching Electriphi and the regulatory tailwinds
• (49:26) - Sensing change: The power of investing in a not-hot space
• (51:08) - What’s next: Looking ahead to the next 5 years of investing
• (58:03) - Becoming a better investor: What’s the secret?
• (01:04:20) - Pattern matching: What it is and what it isn’t to Julie and Clara
• (01:10:51) - Speed round