What is the long-term plan? I typically buy and hold for many years. I need to see a vision of where the company will be in 10, 15, or 20 years. I suppose this is also a function of leadership with a vision. I mentioned that I made investments in the early stages of the cannabis industry. These were companies with a long-term vision of a future where the product would be legalized, regulated, responsibly used, and socially accepted. I don’t know if that has been fully realized yet, but it is making progress and these investments are performing well.
As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Mr. Danilo Diazgranados.
Since leaving his native Venezuela more than a decade ago, Danilo Diazgranados has been a successful independent investor, with a focus on the food, beverage, hospitality, and banking sectors. His current portfolio includes wineries and breweries, financial institutions, sports teams, and hotels and restaurants around the world. With a deep sense of responsibility to “pay it forward,” Danilo mentors young entrepreneurs, supports vocational culinary/hospitality education programs, and contributes his time, expertise, and resources to a variety of other philanthropic pursuits.
Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?
Thank you for having me. I was born and grew up in Venezuela and I inherited the entrepreneurial gene from my father. He was a physician and founder of Metropolitan Polyclinic, a health care organization in Caracas. I came to the states to study finance at the University of Miami, where I started my first business. The University had many students from Latin America, like myself, who needed help making reservations to return home for holidays, so I started a travel agency on campus. It took off, so to speak.
My work in finance began in the 90s, first at Banco Unión. It was about this time that I also began making personal investments, acquiring shares in insurance companies and public debt. These transactions ultimately provided me the seed capital for additional investments.
Today, my focus is on businesses and industries that I have a personal interest or passion for, such as gastronomy, hospitality, sports teams, real estate, and, of course, finance. I live today in the Dominican Republic, and invest in companies in the Americas and Europe.
Having grown up in Venezuela — a beautiful country, but one that is plagued with tragic poverty — I am always mindful that investing is not just about stocks, bonds, or companies, it’s about people. I look for opportunities to support young, disadvantaged, and minority entrepreneurs and causes that can make a difference in communities and the lives of people. I have been very fortunate, and I intend to use that good fortune for a purpose greater than myself.
Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?
Many books I’ve read over the years have left a lasting impression on me. And, of course, there have been books dealing with professional business management, team building and impact investment that have influenced my career and growth strategies. Ray Dalio’s “Principles.” Peter Thiel’s “Zero to One,” and Dov Seidman’s “How” all fall into this broad category.
But, if I think of one book that has had the longest and most significant impact on my personal and professional development, it isn’t non-fiction but rather a classic novel — Hermann Hesse’s “Siddhartha.”
For those who haven’t read “Siddhartha,” and I strongly recommend it, it is a mythical story of a young man centuries ago who goes on a physical and spiritual journey that leads to ongoing self-discovery.
Initially, Siddhartha renounces his worldly possessions and orients his life around specific teachings. But those teachings fail to account fully for his own personal experiences and uniqueness, so he ventures further.
He then takes a lover and, to maintain the relationship, he enters the world of business. Yet at the height of his success, he finds the sole pursuit of pleasure and financial reward unsatisfying. So, he abandons both and connects directly with nature.
The closest Siddhartha comes to “enlightenment” is in realizing that there is no single path to our goals, whatever they may be. We are part of a larger and changing whole. While there is often this internal drive to alter our circumstances, we also must learn to accept and appreciate the beauty of the world as it is.
There have been many chapters of my own life — whether as a young man making his way, as a husband, as a father, as a businessperson, as a global citizen — where I paused to think of Siddhartha. What are my beliefs and goals at this time? Have they changed for the better? Have I made an impact in my community and allowed my community to impact me?
I may be far from anything that can be considered “enlightenment.” But, as the saying goes, it is the journey and not the destination that matters.
Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?
I have many. But as I’ve been discussing “Siddhartha,” one of my favorite life lesson quotes, which comes from the novel, is:
“I can think. I can wait. I can fast.”
Many times in life and in business we are confronted by challenges that catch us off guard and seem initially insurmountable. We become lost.
Now many people when they’re lost will start running aimlessly in one direction or another, typically ending up in a loop. It is the wise person who resists the urge to run, who kneels instead, takes the time to gain his or her bearings and only then proceeds forward in due course.
“I can think. I can wait. I can fast.” I can be the person who doesn’t run away from the challenge. I can think through the problem. I can wait until the time is right to act. And I can fast, meaning I can conserve my resources and limit my downside until the upside opportunity presents itself.
How do you define “Leadership?” Can you explain what you mean or give an example?
Leadership starts with very clear core values and a well-defined vision of what success looks like. In my opinion, great leaders and their teams are driven by what matters. They know their values and how to express them. There is no ambiguity as to what their priorities are. Underpinning all of this is a culture that fosters accountability, trust, and respect.
I can always spot how a company is led by how candid, passionate, and committed the people are to their shared purpose. Are they willing to challenge one another for the good of the cause? Are they courageous in their actions? Do they identify and act on priorities based on the greater goal or are they merely working in ways that support their own agendas?
And finally, I subscribe to the wisdom of Lao Tzu; “A leader is best when people barely know he exists, when the work is done, the aim fulfilled, they will say, ‘We did it ourselves.’”
How have you used your success to bring goodness to the world?
I have a passion for investing in things that bring happiness to the world: Food, wine, entertainment, and hospitality, for example. I have invested in vineyards in both Spain and Oregon that produce very fine wine. I appreciate good wine and get great satisfaction in knowing that my investment is contributing to the happiness of other wine lovers. I also only invest in sustainable vineyards, because fine wine and environmental responsibility must go hand in hand.
But I also invest in these industries because they create jobs and income for many people at the lower economic strata. One vineyard can employ hundreds of seasonal farm workers, for example. The hospitality industry employs many entry-level and service workers who learn job skills that enable them to move up the economic ladder.
So I would like to believe that my investments contributed to a better life for producers and consumers — people on both sides of the transaction.
Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?
Thank you for this question. This is an issue for which I have a lot of passion. The discussion that is taking place about race and equity is long overdue, but I am hopeful that we are now beginning to see meaningful change. Until recently, because many companies paid lip service to diversity, consumers thought it was not really a problem. They now are beginning to realize that was a false assumption. It was — and remains — a problem.
But now, companies are beginning to take societal issues much more seriously. They are changing their hiring and recruiting practices, the composition of their boards, and they are rethinking their businesses with a new focus on minorities, women, and LGBTQ individuals. Just look at print and broadcast advertising. You are seeing more diverse people and multi-racial families.
Are they doing this because they have had an awakening and they are rethinking their responsibility to the people and world around them? Or are these hollow gestures and they are merely responding to the latest trend? I would like to think it reflects something more meaningful.
In my home country of Venezuela, I’ve seen so many people with incredible talent who didn’t have access to the resources needed to build a business due to their socioeconomic status, their sex or ethnicity. Today, when making VC investments, I seek out companies that have diversity in their leadership and enlightened approaches to promoting and hiring. I believe this is not only my responsibility, but I find it personally rewarding to help someone that more traditional sources of capital might overlook.
I have also found over the years that the companies that I have invested in with the most diverse leadership teams often deliver the greatest returns. I don’t think that is a coincidence.
Can you share a story with us about your most successful Angel or VC investment? What was its lesson?
As cannabis started to become legal, regulated, and more socially acceptable, I was an early investor in Canadian and US companies. These companies are well managed and responsible and have done extraordinarily well.
As a result of these investments, I now look for early signs of shifts in trends, not just in products but in social norms. Here is another example: The way people view food has changed radically over the past 20 or 30 years. Consumers now care about how their food is produced, the purity of ingredients, sustainability of the packaging, and how the workers are treated. I was young and had no money to invest when this shift was beginning, but it’s indicative of the kind of change I look for today.
I believe similar shifts are happening today in the way people look at fitness and wellness. Many of these changes started before COVID, but the lockdown has definitely accelerated them. There are many opportunities in this space.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
It is the very nature of venture funding that you have failures. It is far riskier than private equity and some other kinds of investing and I have had investments that did not work out. I have learned different lessons with each. In general, because I am a passive investor with a stake in many companies, I take the time to do my due diligence so I am not surprised by anything that I could have uncovered before putting money at risk.
With investing, instinct is important. But without having all of the information, relying on your instinct is tantamount to guessing. So, I don’t trust my instincts until I am confident that I have all of the facts.
Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.
My general approach to investing involves extensive due diligence before I commit to funding, make sure it has the kind of management team that I believe will allow the venture to reach its potential, and then stay out of the way. Having said that, I stay in touch, mentor when asked, and provide whatever support I can along the way. When I do help, it generally involves connecting people in management with other people I know who have a particular expertise or perspective. In my years of venture and angel investing, I have learned that my rolodex is often as important to help companies to succeed as my capital.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
I have declined to invest in enterprises that went on to become very successful. But I try not to have regrets. When you spend too much time second guessing past decisions not to invest, you run the risk of investing in companies that you shouldn’t in the future.
Here’s the way I look at it: Warren Buffett declined to invest in both Amazon and Google and, last I checked, he turned out ok.
Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.
For me, it’s a pretty long list, but here are my top 5:
- Never fall in love. Venture investments should be based on facts and data, and not emotion. I want to see sales, projections, marketplace data, people, and business plans. Sure, everyone has an occasional passion project. I invest in my share of restaurants, for example. Generally, restaurants are a terrible investment, but I love food and wine and fine dining, and I like to support talented people in the industry. But I don’t think of those as part of my venture portfolio. These are interests of mine outside of my fund that I do not generally expect a return on.
- Get to know the leaders…very well. Businesses generally succeed or fail because of people. Period. I take the time to develop a relationship with the leaders, understand their backgrounds, and get to know what makes them tick. This takes time, but it is essential. I also look for diversity in the leadership, in terms of ideas, backgrounds, race, and ethnicity. I do this because I feel that I have a responsibility to use my resources for something good in the world, but I also firmly believe it makes for more successful businesses.
- What is the long-term plan? I typically buy and hold for many years. I need to see a vision of where the company will be in 10, 15, or 20 years. I suppose this is also a function of leadership with a vision. I mentioned that I made investments in the early stages of the cannabis industry. These were companies with a long-term vision of a future where the product would be legalized, regulated, responsibly used, and socially accepted. I don’t know if that has been fully realized yet, but it is making progress and these investments are performing well.
- I always ask myself what would happen to the business if I didn’t invest? If they need my investment to get off the ground or survive, I typically am not interested. Solid business models and good leaders can generally attract the capital they need. I’d prefer to be grateful to them for the opportunity to invest, and not the other way around.
- If the company succeeds, will the world be a better place. This isn’t one that they teach you in business school, but at this stage in my life, it matters. I am committed to doing well and doing good. The vineyards I invest in all use sustainable farming practices, for example. I am always looking to support entrepreneurs who come from challenging circumstances. I also believe that unhealthy lifestyles are contributing to unhealthy communities, so I am currently very interested in innovative, accessible, and affordable fitness products.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
First, I do not necessarily think that you must have wealth to have enormous influence. Often, it comes down to the strength of the idea, which Malcolm Gladwell labeled the “Stickiness Factor.” Does my idea have intrinsic appeal and resonate in the current environment? And then there is the ability to communicate the idea effectively.
If I were to inspire a global movement around an idea, then the idea I would want to promote and share is sustainability. Sustainability is often viewed through the narrow prism of the environment, but the word has a broader context.
Sustainability requires that we use present means to ensure future needs. Whether we are deciding and acting at home or at work — for ourselves, for our friends and families, our colleagues and partners, our fellow citizens — do we have what it takes now to get to where we want or need to go? Or do we need to beg, borrow, or steal from future generations to get there?
I’m not saying that we should never draw down from the future to get there. But we should be mindful when, as a society, we lack the current resources to achieve our goals. Businesses that must depend on constant future borrowing without a clear path to eventual profitability are not ones that I develop or invest in.
That being said, when I reflect on sustainability, I remain bullish about the years and decades ahead. Never discount human ingenuity and the ability for individuals to rise above and create bold positive solutions.
We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂
That’s easy: Chef Jose Andres. He is an extraordinarily successful entrepreneur who, through his nonprofit World Central Kitchen, uses his influence to nourish people in need. I also admire how he has used his influence to motivate others to do the same. I also have a passion for Spanish food, and he is a brilliant chef.
This was really meaningful! Thank you so much for your time.