The Race To Invest In Underrepresented Founders: Real Estate Investor/Venture Capitalist Philip Michael, On Mogul Watch

Ebony Grimsley-Vaz
Written by Ebony Grimsley-Vaz
underrepresented founders
Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City. Photo provided to Moguldom by Philip Michael

Most founders we speak to want their companies to become a unicorn.

The good news is that the rate of unicorn creation is accelerating. The bad news? The odds aren’t good. A startup has 1.28-percent chance of growing to be valued at more than $1 billion, according to CB Insights.

Philip Michael is not like many millennials. How many adults under age 40 can say they have an $85 million investment portfolio and have worked to develop a 13-story building? Michael is a venture capitalist and CEO and managing partner of NYEG, a real estate and investment firm based in New York City.

We don’t chase unicorns. I chase solid business models. There’s nothing wrong with having a business that peaks and stays at $2M ARR as long as it’s not over-leveraged. It’s all about the business. Not everyone or everything has to be a FAANG.

Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City.

After moving to New York City from Denmark in 2011, Michael pivoted from a media background to investing in property and found his niche. Formerly the national editor and director of content strategy for commercial real estate publisher Bisnow Media, Michael helped to lead the company to a $50-million acquisition. He has created a real estate investment tool for NYEG and founded WealthLAB, an information platform to help millennials understand how to obtain wealth.

Investing in underrepresented founders

Now this rising mogul has partnered with Black female founders Odunayo Eweniyi (co-founder of PiggyVest) and Jasmine Shells (founder and CEO of Five to Nine) to create VentureLAB, LLC.

VentureLAB’s goal is to invest pre-seed capital “to empower or advise 1,000 startups run by women of color,” Michael said.

Oh did we mention? Michael is also the author of “Real Estate Wealth Hacking: How to 10x Your Net Worth in 18 Months”.

Michael spoke to Moguldom about making “common-sense” acquisitions, how he looks for companies to invest in and the race to invest in underrepresented founders.

Moguldom: Why did you start investing in startups?

Philip Michael:  For a few reasons. One, to diversify. Two, it’s more high-risk but it’s also incredibly rewarding, professionally and personally. I love the whole rush and thrill of startups. I get to be a part of something from scratch, helping people live out their dreams and so on. We invest in real estate, which is a stable asset class — the largest asset class. Our portfolio has performed tremendously, just based on common-sense acquisitions. I believe if you’re smart about not over-leveraging, you can essentially pick almost risk-free projects. I personally started with $79 in 2014, did my first deal in 2016. We have built an $85 million portfolio. So, real estate is a great hedge against the risk that startup investments inherently present. And lastly, to help the next wave of entrepreneurs the same way I was helped.

underrepresented founders
Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City. Photo provided to Moguldom by Philip Michael

I personally started with $79 in 2014, did my first deal in 2016. We have built an $85 million portfolio. So, real estate is a great hedge against the risk that startup investments inherently present.

Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City.

Moguldom: What was a memorable challenge you had in starting up?

Philip Michael: There’s a disconnect sometimes between founders and their vision and the actuality of business. I personally believe the order of “get the idea, then fundraise” is backward. The best businesses, in my opinion, are those where the idea is validated, there’s a proof of concept — i.e. someone will come out of their pocket to pay for the product or service. Founders, for all of their great attributes, don’t always see that first. And that’s the challenge.

Moguldom: What are some notable wins you have had with VentureLAB?

Philip Michael: We’re still new on the VC side. We just launched in May but the idea came from having a decent portfolio of startup investments. So we just formalized it and decided to be more hands-on. In terms of actual wins, partner Odunayo Eweniyi was just voted Forbes 30 under 30. She’s had tremendous success with PiggyVest. She’s also one of just a handful of Black women under 30 to ever raise $1 million for a startup. We also created WealthLAB, which we built in a week with a great team. And we received buy and investment offers very quickly into the process.

Unlike the typical one-in-10 odds of investment VCs typically mention, I believe you can take safer bets, even with startups. I’m hoping to bat at least 80 percent.

Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City.

Moguldom:  How much have you invested or intend to invest in capital?

Philip Michael: For VentureLAB, we are really more an institutional angel, if that makes sense. We have a tremendous amount of resources, not just from a capital perspective. My equity position pre-VentureLAB was around $1 million — nothing too crazy. We want to take it slow — smaller investments in the $25,000-to-$50,000 range in pre-seed ventures. We want to help give them capital and the framework to get to seed. I think that’s what sets us apart. Unlike the typical one-in-10 odds of investment VCs typically mention, I believe you can take safer bets, even with startups. I’m hoping to bat at least 80 percent, but we’ll see.

Moguldom: How do you find the companies to invest in?

Philip Michael: I tend to look at the founders. I also have a pretty good radar of concepts and projects and staying methodically disciplined. We stick to what we know, which may not be much, but I do, nonetheless. And, of course, the team. One company we’re involved with, we decided to do the deal because I thought the founder was “money.” Meaning he can fundraise effectively, execute, recruit and basically get it to the finish line. Or, at the very least, the next round of funding. And that’s effectively our investment thesis right there.

underrepresented founders
Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City. Photo provided to Moguldom by Philip Michael

Another one, Zonr.io, a prop-tech startup, was a no-brainer because it was relevant to my day job. The software allows any real estate investor or would-like-to-be real estate investor to type in an address and see what your building rights are. It’s instantaneous and saves you thousands of dollars on the front end in architectural fees, in time. On the back end you see how much more money you can make by buying a piece of land with building rights to four apartments versus just two. The idea was simple, not over-thought. It had B2C appeal within a very defined niche where the players all seem to operate in an even narrower B2B space within it.

One company we’re involved with, we decided to do the deal because I thought the founder was money. He can fundraise effectively, execute, recruit and get it to the finish line or at the very least, the next round of funding. And that’s effectively our investment thesis right there.

Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City.

I look at a few factors: team, traction and track record — the three Ts. With Zonr, the parent company is an architecture and construction business that’s grown tremendously and bootstrapped. Those fundamentals alone give me faith that the operational disconnects you sometimes find in startups — being clueless about money because you’ve raised it and not made it yourself — aren’t there. Being that Odunayo, in particular, is a master of user acquisition—she helped get over 230,000 users for PiggyVest mainly through IG ads—we believe there was a win-win there.

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Moguldom: Are you working with any companies we should know about or you feel are potential unicorns?

Philip Michael: Hailify is one that could become a nine-figure business. It’s a ride-sharing app and if the stars align, it definitely has unicorn potential. We don’t chase unicorns, however. I chase solid business models. There’s nothing wrong with having a business that peaks and stays at $2M ARR as long as it’s not over-leveraged. It’s all about the business. Not everyone or everything has to be a FAANG (Facebook, Apple, Amazon, Netflix and Google).

We want to be the premiere millennial-run real estate investment company, the very same foundation which will allow us to assist the next wave of startups.

Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City.
underrepresented founders
Philip Michael, CEO and managing partner of NYEG, a real estate and investment firm in New York City. Photo provided to Moguldom by Philip Michael

Moguldom: What do the next five years look like for VentureLAB or your other projects?

Philip Michael: We want to be the premiere millennial-run real estate investment company, the very same foundation which will allow us to assist the next wave of startups. We currently have the rights to develop the first Black-owned high rise in Jersey City. This we’d like to leverage to generate more visibility and awareness on the importance of investing, particularly for people of color. By 2053, Black wealth will drop to $0 and the main driver behind that is a lack of focus, culturally, on asset acquisition. Basically, minorities don’t own real estate, let alone startups. We’re currently exploring private options to grant ownership in our portfolio to under-represented demographics. We could go the public route but then we can’t control who buys shares. The purpose behind this move would be to do our small part in reversing that 2053 number. Ideally, from the startup investor side with VentureLAB, we’d like to invest in, empower or advise 1,000 startups run by women of color. That would be epic.