Learner's Mind Conversation with Erika Cramer
Female VC Investor (gender-lens), veteran investment banker, family office, board member and advisor, and active cyclist
Welcome to a new series at The Learners Mind!
Starting in 2024, The Learner’s Mind brings to you interviews and conversations with female fund managers and investors whom I have the honour to know and work with throughout my investment career and 100 Women in Finance within which 100 Women in FinTech (my non-profit work).
Research here and here found that female fund managers outperform their male counterparts, and mixed-gender teams deliver the best performance. Despite their outperformance, female managers manage about 12 to 14% of assets in the US, and only about 1.4% of US assets are managed by firms owned by women and/or people of colour according to the Knight Foundation.
With this new series, I hope to introduce the various roles of finance to the younger generation interested in a finance and investment career. Also, I share where some of the female fund management talents are around the world as finding the right person to advise/manage your money and grow your wealth is fundamental if you don’t want to do it yourself. Or, simply enjoy learning about their fascinating journey that will inspire you to join this field.
Please share this if you think a friend or a colleague would be interested.
In celebration of Women’s History Month, I am particularly honoured and happy to introduce you to Erika Cramer, a long-time friend, fellow committee member at 100 Women in Finance, board member, and changemaker in the world of investment banking and investing.
Ms. Cramer is a co-founder and Managing Partner for How Women Invest LLC, a gender-lens venture firm investing in tech-enabled startups founded exclusively by women.
She is a 25-year veteran investment banker in the financial services industry having focused on mergers and acquisitions within the asset management, wealth advisory, and fintech solution sectors. She has advised public and private financial services firms on over 52 transactions representing over $240 billion in assets under management in consolidations.
She co-founded an investment banking boutique which was acquired by Raymond James Financial and formed two registered broker-dealers where she served as Chief Compliance Officer. A Latina, she is an experienced board director and advisor serving Prospanica and, previously, Trips for Kids Bay Area, Atlanta Life Insurance Company, and OpenInvest (a fintech firm acquired by J.P. Morgan Chase).
Ms. Cramer is an active speaker and mentor for women in finance and leadership; she is a member of the Athena Alliance, WAVE and 100 Women in Finance. Along with her husband, Ms. Cramer is engaged with their family office. She is the mother of two daughters, an advocate for individuals with intellectual disabilities, and can be found cycling the scenic routes of California and New York. Erika earned an MBA in Finance at Pace University and a bachelor’s degree in Finance from West Virginia University.
Connect with her at LinkedIn: https://www.linkedin.com/in/erika-cramer-2034298/
In this interview, Erika shared her most important lessons and skills as a VC investor (terrific information for fellow VCs and founders), advice to younger people in finance, trends and tools she is most excited about and more.
Enjoy our conversation!
Q. What are some of the most important lessons you have learned as an investor?
Access to information is more limited when investing in private versus public companies. In venture, it’s even more complex because the company may not have a long track record with financial and other data to analyze for trends, quality of management, and even demand for the product or service. However, as an early-stage, but not first-money or idea-stage venture investor, there is an ability to conduct due diligence and make informed investment decisions. Some of the lessons I’ve learned are:
Time is a luxury and must be managed efficiently. If there’s even one item or area that doesn’t pass a smell test in diligence, then move on to the next one. Such a gut reaction means there’s likely something that will prevent the company from achieving success.
It is critical to partner with a founding team that is transparent and respectful of their relationships with their investors - it’s a signal for success. One can have the most interesting product or service, but if the company doesn’t have the right leadership in place, then the ability to continue to scale with outside capital will eventually become limited.
Strong leadership can take a mediocre product/service to successful outcomes. Inevitably, there’s always an “uh-oh” moment after investing. No one is perfect. Leaders who know when to lean into their board, investors and relationships for support, and not skirt the situation, are more likely to overcome inevitable growth challenges. Just like raising a child – it takes a village.
While having marquee, branded investors on the capitalization table can be a sign of credibility and an indicator that a product or service is viewed as having market potential, it’s not always an indicator of success.
Knowing the percentage allocation of their investment in a portfolio company relative to the size of their portfolio is helpful. A loss for the well-known venture firm may be minimal relative to the size of the prospective loss in your own portfolio. As such, their diligence may not have been as extensive as you thought because their risk/return appetite may be very different from your own. At the height of VC investing, I saw a lot of spaghetti thrown against the wall. That’s not comforting for my risk/return profile and, is simply, frustrating.
Q. Which figure/mentor has impacted you the most in your life and how?
I’ve been blessed to have a few, but the most impactful were my parents. Their perseverance, love and hard work as immigrants to this country have given me a strong drive, faith, and ability to succeed.
Q. What is your biggest accomplishment?
My marriage of 30 years and my children. Partnerships are hard – business and personal. Despite many challenges (some I self-inflicted), we continue to have fun. We have an autistic adult daughter and our journey is different from most.
Q. If you are not working in your field, what would you be doing?
A hard question. I love learning and working in an industry where I interact with and continue to be inspired by smart people. I aspire towards a balanced life with family & friends, fitness, art & culture, travel, and spirituality. So, I want to continue in this field because there isn’t an age limit.
Q. What advice would you give to your younger self?
Listen more before you speak, but speak up respectfully and often when you know your subject matter. I knew more than I shared.
Q. What is your most valuable investor/ fund manager skill?
Hard work and dedication of time. I know I’m not the smartest investor on the planet and don’t have the wallet size and resources as some of the best investors. This means I need to roll up my sleeves, do the financial modeling, research to a level of comfort (which can sometimes stress founders so that’s another skill: to balance and prioritize the desire for information) and spend time with the management team and those surrounding them. Process and organizational skills are key and constantly can be improved and refined.
Q. What are you most excited about in the future (trends, investments, and ideas)?
Venture today is the most exciting. After the bank debacles, interest rate fluctuation, and softening of IPO/M&A markets, those with a checkbook can be more discerning and negotiate better terms. I’m excited about how accessible machine learning tools can allow companies to better develop, get to market faster and scale more efficiently with less capital. This environment allows an investor to better distinguish between hype and heroism.
Q. What is the most important book you have read that you want everyone to read?
In this polarized society, I should say The Holy Bible. What comes to mind because all my friends and family are guiding 20-somethings, and I wish someone had given me similar advice: “The Defining Decade – Why Your Twenties Matter–and How to Make the Most of Them Now” by Meg Jay, PhD.
Q. What are the 1-2 important tools/apps (investing or others) you cannot do without?
I can no longer live without ChatGBT. We’ve nicknamed it “Chaz”. The ability to upload data and receive trends and considerations for additional analysis/metric assessment saves me time, and prompts for other approaches/considerations – especially for an investor with less than institutional-level access to investment resources. AI is making my go-to tools, like Excel and news searches, sharper – which makes me smarter.
Q. What is your advice to younger women in finance/VC?
Think big, act big, and do the hard work, but be ready to prioritize how you spend your time to find balance.
Thank you, Erika, for sharing your investing insights and advice, your outlook for the future, and your contributions to the founders and the VC community, especially your work in elevating women leaders and people of colour!
Stay tuned for more interviews with female investors, managers, founders, technologists, etc. coming your way and subscribe to my newsletter to get them in your inbox when they come out. I also write a Weekly with relevant links about investing, wealth, living and other wellness stories!
