Synergist Senior Sound Bites - July 2020:
Patricia Kemp

Background
Patricia F. Kemp is a Co-Founder and Managing Partner of Oak HC/FT where she focuses on growth equity and early-stage venture opportunities in fintech. Patricia currently serves on the Boards of Duedil, FastPay, Feedzai, Insureon, Kasisto, NextCapital, Rapyd, Trov and Urjanet. Prior to co-founding Oak HC/FT, Patricia served as a Venture Partner at Oak Investment Partners which she joined in 2002. Patricia has also previously held positions at Cendant, Hewlett Packard, and Merrill Lynch. Patricia has appeared on Institutional Investor’s FinTech Finance 40 list and PaymentSource’s Most Influential Women in Payments list. Patricia received a Bachelor of Arts degree and an MBA degree from Stanford University.
 
You’ve had an incredible career in investing that evolved from Venture Partner to Managing Partner and Co-Founder. What originally led to you making the move into investing?
In simplistic terms, venture investing is having an opinion on a market and making bets on companies using that view. I spent 13 years in an operating role within financial services and knew that market inside and out. And this was before the term ‘fintech’ existed. A number of the products I worked on, including card programs for travel and shopping rewards, warranties tied to your transactions, etc. were completely new. I was working on products that were part of the advent of what would become fintech. From that vantage point, I was in a position to understand the key trends and see ahead of the curve on where the industry was going over the next 5 - 10 years. Venture investing was an opportunity for me to leverage that knowledge in a unique way.

Reflecting on those first years with Oak Investment Partners as a Venture Partner, what were some of your key takeaways from the experience, and what were some of the important factors in your success?
It all starts with having an area of focus, which for me, was fintech. The landscape of technology investing is so broad, from enterprise applications to social networks to cyber security, and so on. There are some investors who have been successful investing in a large array of industries and verticals, but that’s rare and very hard to do well. With my experience in fintech, I had a perspective, but also a network within the industry from working with some of the largest players like First Data and TSYS. In that way, I could provide tangible value to the companies we invested in.

I can definitely see how that experience adds value to the companies you work with. Were there any other skills you developed during your time as an operator that you find yourself leaning on today?
Coming from an operating role, you have a better sense of what it takes to actually build a business day-in and day-out. It’s one thing to tell a company that we need to drive sales, but another to understand the mechanisms that make that happen from the inside. This ability to understand internal dynamics and talk to a CEO on a tactical level allows me to be a better board member and partner. Second, you just have greater empathy. Living in the operating world, you understand how hard it is to get things done - how many little pieces have to come together to create a great product or close a deal. Selling to large enterprises can be an exercise in patience and grit, and requires careful tact and strategy. Understanding where a CEO is coming from and relating on that level has been extremely valuable.

You launched Oak HC/FT with your co-founders, Annie Lamont and Andrew Adams. Could you tell us a little bit more about the process and experience of starting a fund?
First and foremost, you have to have passion about what you’re doing and believe that you are uniquely positioned to be successful. Our LPs range from traditional institutional investors to pension funds for public sector employees. So, from both a business and personal perspective, you want to achieve the goals you set when investing these groups’ funds. We believe wholeheartedly that there are significant tailwinds behind healthcare and fintech and that we are the best people to find the breakout companies and support those entrepreneurs.

Why healthcare and fintech? What about those sectors is particularly compelling from an investing perspective? Has COVID changed or impacted this view?
Heathcare and fintech are both massive, highly regulated, and complex industries. As you peel back each layer of the healthcare or financial services stack, the amount of complexity becomes more and more clear, which we see as opportunity. However, because of that, experience is critical. Andrew, Annie, and I combined have a wealth of experience in these verticals, understand how they operate, and what models will be successful in disrupting them. We’ve seen these models work over the last few decades, and still see incredible runway for innovation over the next few decades. Both industries have a long way to go, but we have a real belief that there is going to be meaningful, transformational change in a relatively short period of time and are excited to continue to back the companies that make it happen. When it comes to COVID, some of this change has been accelerated - telehealth transformation happened over the course of a week rather than over the next few years. Overall though, COVID has largely heightened our thesis on these spaces: better quality, and better care for more people within healthcare, and more distributed, low-cost, automated, and accessible financial services within fintech.

Oak HC/FT has made 47 investments to date, 19 in fintech specifically. Given the tremendous success you’ve had, can you give us some insight as to what gets you excited about a company? 
It always comes down to the team. What this looks like though, can change based on the stage and type of company. For example, for an early-stage company it might be an A+ CEO who can sell customers and attract new team members, but for a growth-stage company, the abilities of the entire management team plus the CEO’s ability to manage people and react quickly might matter more. Second to the team, is traction. This is a combination of looking historically to see how much traction the company has seen to date, but also looking forward and understanding the ‘why now’ for any product.

Looking back on your time at Oak Investment Partners and six years with Oak HC/FT, how has your view on investing evolved over time?
When I began investing in fintech in the early 2000s, ~75% of payments were made in checks and cash! Looking ahead, we could see the writing on the wall for those payment methods losing ground, and made investments in companies like GreenDot (IPO) and TxVia (acquired by Google) as a result. To identify trends, you have to participate in the industry versus being an observer. That means networking, talking to people, going to conferences, talking to your companies, understanding what vendors they work with, etc. What you end up seeing over time is the manifestation of pattern matching and your knowledge building. Similar to the decline in cash and check, we’re now seeing the beginning of a decline in card, with the adoption of mobile payments. Ultimately, with these trends, you often are watching the same show, just different seasons.

Thank you so much for your time today, Tricia. As a closing thought, is there any advice you’d give to women pursuing a career in finance? What do you wish you had known at the start of your career?
First, good opportunities are more rare than people think, so when something that looks like opportunity comes along, take it. Second, craft your specialization. Especially when you’re less experienced, finding an area where you can add unique value to a firm, person, or conversation will give you an edge.

Thank you for your time, Patricia! To learn more about Oak HC/FT, click here.