GCV Powerlist 2018: Natalie Hwang

Natalie Hwang is the managing director of Simon Ventures, a multi-stage corporate venturing unit oriented towards innovation for “the future of retail and commerce” on behalf of parent corporation Simon, a Standard & Poor’s 100 company and one of the largest real estate enterprises in the world.

Currently a one-person investment team following the departure of founder Skyler Fernandez last year, brings its share of frustrations as well as positive moments. Hwang described missing out on smart home system Ring because it was sold to Amazon before closing the second tranche of a round earlier this year.

But the opportunities of running the corporate venturing unit of a Fortune 500 company while in her 30s has been good and impressed her peers. In a keynote debate at the GCV Synergize conference in New York City in the autumn, Nicole Quinn a partner at VC firm Lightspeed Ventures, said: “I totally respect Natalie’s vision when we’ve been looking at opportunities. She really understands the increasing speed of retail, such as the use of SMS [short messaging services] to order product.”

Hwang graduated with honours from Duke University – awarded Best Honours Thesis in her class for public policy studies. She went on to study at University of Virginia Law.

She started her professional career at law firm Simpson Thacher & Bartlett, which later helped her dive into the world of venture investing. At the time she was involved in “a lot of deals, including private equity and hedge funds investments as well as M&A side work, many of which were highly-publicised transactions”.

Subsequently, she joined alternative investments manager Blackstone Group. She said for last year’s GCV Powerlist profile: “I had the good fortune to study the art of business building with some of the best professionals at Blackstone.”

She also ran, “on her own time”, a personal early-stage fund focused on retail and commerce, “leveraging a lot of the insights from my experience there to making early-stage investments in the next-generation commerce and retail tech space, and participating alongside top-tier VCs like Thrive Capital.”

Today she directs a corporate venturing unit with a clear preference for enterprises from those fields, albeit at a later stage of development. Simon Ventures’ investment philosophy places a substantial weight on the financial side.

Hwang says that “the capitalisation needs, growth horizons and liquidity profiles of companies that are building businesses across various verticals within the world of commerce differ from traditional technology companies. We believe that each company and funding situation requires a fresh perspective and approach.” Simon Ventures is committed to supporting a range of capitalisation strategies that are personalised to the needs of a company, including alternative financing solutions that apply across the capital structure for proven growth companies that are looking for less dilutive options.

The role of financial returns is, undoubtedly, pivotal for Simon Ventures. The fund’s risk-adjusted approach to venture capital investing inclines them to target companies that share certain attributes. Hwang says that “our companies are driven by forward thinking and dynamic founders who are disciplined in their approach to efficient entrepreneurship. Our management teams have focused on driving accelerated growth while also applying equal focus to achieving sustainability.”

To date, Hwang has scaled the portfolio to seven companies. She notes that these companies are unique in their ability to either cultivate a unique brand proposition, operate a specialised distribution, experiential or relationship driven business model or build technology that carries with it the potential to impact the quality of consumer experiences. These companies include Grailed (a peer-to-peer curated community marketplace for the resale of designer men’s clothing), Dirty Lemon Beverages (a next-generation beverage platform that distributes exclusively through SMS text), FabFitFun (a women’s lifestyle media brand and product discovery platform), MeUndies (a direct to consumer ecommerce company), Bird (an electric scooter ride-sharing company) and Appear Here (a marketplace connecting businesses with retail real estate).

Simon Ventures’ ability to motivate investments in such competitive companies is due in part to their ability to provide strategic value. As the venture industry continues to grow increasingly competitive, capital alone is insufficient to the effort of navigating towards successful outcomes. Hwang is investing time and resources to working with founders to identity opportunities for leveraging Simon’s extensive resources to build a community and ecosystem around their businesses. She remarks: “Our roots as a venture capital fund are richly steeped in retail given Simon’s sponsorship and role as a market leader in establishing the backbone infrastructure of physical commerce. As a capital partner, we believe that we are uniquely situated to provide our founders with resources that can provide them with a distinct edge in creating impactful change. We do this while offering the best possible incentive alignment structure for partnership.”

She adds that “there are a number of levers we can pull to provide value added services, all of which can be considered a form of non-dilutive capital that comes at no additional cost to founders’ equity and require no incremental tradeoff in terms of incentive alignment.” These levers include access to the most extensive footprint of retail real estate in the world, relationships with brands and Simon Ventures’ broader network of connections in real estate, technology, finance, media and entertainment, which can provide significant advantages to founders in their path to scale.

Looking ahead, Hwang is optimistic that the value exchange being offered in the context of the relationships that are forged between corporate ventures and emerging companies will positively impact the perception of CVCs. “As corporate venture capital activity becomes increasingly widespread and as new fund models like ours emerge to challenge the notion of how a CVC typically operates, traditional viewpoints will evolve to reflect the realities of this dynamically evolving industry. Simon Ventures, for instance is operating a model that combines the disciplined approach of an institutional investor with the differentiated insights, access and operational support of a strategic partner.”