1Mby1M AI Investor Forum: Mark Phillips, Founder and Managing Partner at 11 Tribes Ventures (Part 1)

Mark Phillips, Founder and Managing Partner at 11 Tribes Ventures, discusses a non-Unicorn chasing investment thesis.

Sramana Mitra: Good morning, everybody. Welcome to today’s One Million by One Million strategy roundtable for entrepreneurs. One Million by One Million, as you know, is the first and only global virtual accelerator for technology startups, and we take pride in being inclusive. We are not focused completely on venture-funded startups. We do our share of VC-funded startups, but we also categorically support bootstrapped entrepreneurship. That’s been the case right from when we started. The whole mission of 1Mby1M is to support whom nobody else wants to support – the other 99%, as we call it.

This is our 680th free mentoring roundtable. This started back in 2008 and has been going on and on for a long, long time. We are here almost every Thursday, with some exceptions. Probably in any given year, out of 52 Thursdays, we are here for 48. So, a pretty strong show up rate.

We are going to start today’s session with a conversation with Mark Phillips, Founder and Managing Partner of 11 Tribes Venture out of Chicago. Mark, welcome. I’m looking forward to getting to know you.

Mark Phillips: It’s wonderful to be here, Sramana. Thanks for having me.

Sramana Mitra: So, Mark, tell us a little bit about 11 Tribes Ventures. What is your fund size and investment thesis? Give us an overview, and then we’ll dive into AI, which is the current topic.

Mark Phillips: I really appreciate how you opened the conversation here, because we see the world a bit differently too. In order to adequately describe what we do, if I may, I’d love to just share a brief background of my history.

Sramana Mitra: Of course.

Mark Phillips: I’m based here in Chicago. I’m trained as a strategy consultant. I worked at Accenture for years, and then I went to business school, and while there, I started my own company and I was in Chicago building a health tech company called Diasense. It was a hardware device designed to help Type 1 diabetics better and more passively measure blood sugar.

I drank all the Kool-Aid of the coastal mindset of venture capital. I think one of the things that I hope every entrepreneur on this call listens to is, you have to build a company that is right for you. What I was trying to do Sramana was build a company that was right for everybody else. It will come as no surprise to you that that company, whether it was spectacular or not, it failed. We got leapfrogged by a better product. We ran out of cash and morale. Frankly, morale completely crumbled around us. Ultimately, that business was shut down. I shared that story of failure, because it has been such a seminal moment in my life.

I went through a startling identity crisis because of that Sramana, just dealing with what is my value? Who am I if I’m not building this company? And even as a person of faith, that was a really important process for me to go through.

I look back on that failure with a ton of gratitude because I think it helped me understand who I am, what I care about, what’s the work that I want to do in this world.

So, we started 11 Tribes with that backdrop that business outcomes are great. I am a capitalist at heart. I want everyone on this call to make plenty of money and have a lot of financial success.

But there’s another half to the equation beyond the business outcome. We call it the founder outcome.

What does the mental, emotional, physical, spiritual health of that entrepreneur look like when they have either shut down the business or sold it to some type of competitor or a strategic buyout? When you exit that company, what is the quality of the things in your life that are most important to you?

I think the challenge that we as entrepreneurs run into is because we care so much about what we do, because the business we are building is like a child to us. We convince ourselves that we can put things like our mental health, our relationships with family and with friends, our religion or our faith to the side and say, “Those will be there in years”. But the problem is that they will not be there. That is not true.

Sramana Mitra: Yes.

Mark Phillips: As a firm, we exist to be the firm where Capital and Care are focused on the founder. We make an allocation of 2% of every dollar that we invest. It goes directly to the entrepreneur for them to put towards their resilience. We call it our founder resilience commitment. That’s coaching, it’s counseling, it’s leadership development, it’s organizational health, and that’s non-dilutive capital. So, if we put a million bucks into a company, we have a $20,000 grant that comes from our fund and goes directly to that entrepreneur. We’re so excited about that.

It’s so amazing to have a base of investors or limited partners as we call them, who are willing to allow us to use the capital in that way. It really informs the decisions we make as we think about what the type of companies are, and more specifically, Sramana, who are the founders that we want to be partnered with.

So, that’s an important backdrop. You can tell I care a lot about it because it’s a very personal experience for me.