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Roc Nation’s VC Neil Sirni outlines his investment strategy – TechCrunch

Jay-Z’s Roc Nation announced in 2017 the creation of a venture capital investment arm called Arrive. And the company has been very busy since then – co-founder and chairman Neil Sirni said Arrival has made 29 investments to date.

At the same time, Sirni hasn’t really spoken publicly about these investments or the broader strategy. So he contacted me a few months ago, suggesting he was ready to provide more details on Arrive.

“We’re now for three years, 29 investments and expansion – so it was a good time to start opening up a bit,” he said.

During a few email exchanges, we discussed how Arrive fits into Roc Nation’s larger goals, how Sirni (a former Goldman Sachs executive) makes investment decisions and where he then focuses. . (Spoiler: Southeast Asia is a big part of that answer.)

He was also eager to provide testimonials from the companies in Arrive’s portfolio – for example, founder Aaron Rasmussen said that “when Arrive gets involved in your mission, they get involved”, while as Helm’s co-founder and CEO, Giri Sreenivas, said the company “brings something that I don’t see in traditional institutional investors – legitimate operational expertise around branding and marketing. “

You can read our email Q&A, slightly edited for length and style, below.

What is happening and how does it fit into the larger framework of Roc Nation?

Arrive is Roc Nation’s venture capital platform. Roc Nation is a full-service music and sports management, music publishing and entertainment company founded by Jay-Z. Roc Nation and its affiliates have built a diverse business employing several hundred people. These businesses include artist and athlete representation, a spiritual brand portfolio, a clothing line, a philanthropic division that runs four charities, a content streaming service, a digital team that oversees social media accounts. with more than 1.4 billion subscribers, a sales and marketing department. division that works on countless partnerships with Fortune 500 companies, communications, video production and live event production, among others.

Roc Nation infrastructure can add value to many types of businesses at different stages, which is why we created Arrive. For businesses in contact with consumers, Arrive relies on the Roc Nation infrastructure to help businesses with branding, design, marketing, communications and other services. For businesses, we use our extensive network of B2B relationships to help with business development.

Being a strategic venture capitalist on the cap table of a holding company is not only about the investment, but also about the amount of human capital that a fund can deploy to generate long-term, real and real value. unique for entrepreneurs and their businesses. Thus, we leverage the larger Roc Nation platform to help portfolio companies and, in turn, gain access to great entrepreneurs.

What types of investments do you normally make – types of businesses, size of investment, etc.?

We are relatively independent of the sector and the scene. We have dedicated capital in a start-up fund that tends to focus on Series A to C, but we also started growing SPV and investing ahead of the IPO as we lay the groundwork for a vehicle dedicated growth facility later this year.

How do you make investment decisions? Is Jay-Z involved in the process?

We are drawn to businesses that we can provide significant assistance to, but that are not part of Roc Nation’s mainstream mainstream music and sports industries. Thanks to our platform, it is an extremely wide set of opportunities. To date, we have made 29 investments under the Arrive umbrella in everything from fintech, insurtech, edtech, health and wellness, social and gaming. Geographically , we invest around 80% in North America, mainly USA, and 20% in Southeast Asia, namely Singapore, Indonesia and Vietnam. As a strategic investor, we never conduct transactions and always co-invest.

Our long-term goal is to generate real and unique value for the companies in our portfolio. If we stay hyper focused on this mission, we believe we have the opportunity to build a sustainable brand as a leading strategic investor.

Jay-Z Endorses Every Opportunity Arrives; he, Juan Perez and Desiree Perez overwhelmingly support Arrive and what we are trying to accomplish collectively.

TechCrunch: What is your biggest achievement to date?

Neil Sirni: I’m very proud to be the co-founder of Arrival and what it took to get here. In the grand scheme of things, we’re just getting started, but I’ve been an entrepreneur – having left a large public company – for over 10 years now. It has been a roller coaster with many sacrifices, but I can understand and relate to our founders and their journey, which makes this experience even more rewarding. The founders of Roc Nation have also built their businesses brick by brick, so that the whole organization is united by this entrepreneurial mindset. I still see myself as a founder and operator first, whose business is investing.

NEW YORK, NY – OCTOBER 20: Jay Z performs during Tidal X: 1020 at Barclays Center on October 20, 2015 in the Brooklyn neighborhood of New York City. (Photo by Taylor Hill / FilmMagic)

Given that Arrival has been around for a few years, what made you feel like now is the time to start talking more openly about the fund?

When Arrive launched a few years ago, I hated the idea of ​​talking about what we’re going to do. Instead, we wanted to take it easy; learn, improve, build and, in doing so, demonstrate that we are not and never will be tourists in the business ecosystem. We’ve now been three years, 29 investments and expansion – so it was a good time to start opening up a bit.

What is an investment example where working with Arrive / Roc Nation has led to gains beyond financial investment?

Getting to functions like many other investors in that we spend time understanding a company’s vision and then try to provide them with meaningful leverage to contribute to their success. Our toolbox is unique thanks to the Roc Nation platform and network. We have observed that both the companies in our portfolio and their other investors, generally traditional venture capital funds, find these complementary and additive levers in the table of ceilings.

Arrive typically works with holding companies in three main areas. The first is creative and brand marketing. The second is business development and partnerships. The third concerns communications.

Communication efforts are generally focused on short-term or immediate awareness raising. Many of the companies in our portfolio benefit from more media coverage when we invest in them. This initial attention usually wears off within a week or two, although these stories remain searchable assets the company might not otherwise have. While this may have some value, especially for consumer businesses, we believe it is at the bottom of the list when compared to the long-term benefits that can be derived from Roc Nation’s underlying infrastructure by brand marketing and business development.

In terms of creative and branding marketing, we probably saved our initial portfolio, in total, over $ 1 million by providing brand and agency work for free. Examples of this include campaign ideation, graphic design, video production, live event hosting, and product integrations, among other activities.

For business development and partnership support, we leveraged our network to help portfolio companies launch their own in-house philanthropic platforms, leveraged our B2B relationships to introduce new partners and clients, appealed to ‘targeted other strategic investors, helped companies navigate approval deals, and recruited non-technical executive talent to join their companies.

We don’t pretend to be a silver bullet, no investor can be, but we are focused on continuous improvement and strengthening the services we provide to our portfolio companies. The founder’s journey is never a straight line and we pride ourselves on being prepared to do whatever we can on their behalf. Stephen Francis, SVP at Arrive, and I are available 24/7 to our portfolio companies.

Do you see these investments as being primarily strategic for Roc Nation, or are you focused on financial returns?

The “strategic” investor, in the context of Arrival, refers to the strategic value that we bring to the capping table of a portfolio company. We leverage this strategic value to close deals and build relationships with entrepreneurs in which we have a strong belief. Our ultimate goal is financial return and Arrive’s investments are not intended to be strategic in nature to Roc Nation as an operating company. Instead, an Arrival investment is supposed to be strategic for the portfolio company.

You said you were agnostic with the capital devoted to the various stages. Can you tell us something more about the split between the initial and subsequent growth agreements, and how that might change with the new growth fund?

Out of our 29 investments, I would rank 25 in the start-up phase and 4 in growth. In terms of percentage of capital, the 4 growth investments represent a little more than 35% of the total capital deployed. When we have a dedicated growth fund, I would expect the growth investment volume to be around 3-6 per year.

What are your priorities for 2021?

At a high level, our priorities are to build a larger team to ensure that we remain very engaged in the portfolio as we scale and to continue to deploy more capital to support larger companies.

On a more granular level, I look forward to physically returning to South East Asia, namely Singapore, Indonesia and Vietnam on a regular basis. We are really bullish on the region and believe it is only a matter of time before more venture capital funds deploy significant capital there. We started investing a lot of time in 2019 as part of our plan to roll out around 30% of our seed money to the region. This expansion has been hampered by COVID-19. However, I will be doing quarterly trips once the trips normalize. There is nothing quite like face-to-face interaction for building relationships and trust, especially at the international level.

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