Investor Spotlight - AIN Ventures
NAME: Sherman Williams, Co-Founder & Managing Partner
COMPANY: AIN Ventures
HEADQUARTERS: New York, NY
TECHNOLOGY VERTICALS FOCUS: Space, Civic Tech, Healthcare, Sustainability, Disaster response, and Defense. Industry agnostic with regard to veteran-led startups.
PREFERRED ROUNDS: Seed - Series A
CHECK SIZE: $250,000-$750,000
NOTABLE INVESTMENTS: Orbit Fab, Zeno Power, Climate AI, Lux Semiconductors
Sherman is a co-founder and Managing Partner of AIN Ventures. He has an extensive history investing in dual-use technology sub-segments such as space and healthcare. Sherman has been a venture capitalist (VC)-in-residence to several Techstars programs and is also a Kauffman Fellow (‘26). Prior to becoming an early-stage investor, Sherman gathered six years of financial transaction experience as a healthcare technology mergers and acquisitions (M&A) investment banker. Sherman served in the military as a Naval Intelligence Officer. He holds a Master of Business Administration from the University of Chicago and a Bachelor of Science from the United States Naval Academy.
Q: AIN Ventures has an interesting approach to sourcing and syndicating investment opportunities. It’s similar to a typical Venture Partner network, but AIN specifically partners with Service Academy Graduates (SAGs) to support its deal flow. What led you to that approach?
First, I want to point out that there is a difference between AIN Ventures and the Academy Investor Network. AIN Ventures is our venture fund and the Academy Investor Network is our syndicate.
Answering your question directly, the Academy Investor Network’s approach is to harness the collective power of service academy graduates. The rationale behind bringing together this specific group is that it is the most entrepreneurial group amongst <a href=https://www.cnas.org/publications/reports/veteran-tech-entrepreneurial-ecosystems> U.S. military veterans </a>, and we believe that the entrepreneurial spirit of this group will be helpful guiding other military entrepreneurs on their journey. Another important factor here is that as veterans ourselves, who have gone on to start companies and work in finance, we want all veterans to consider entrepreneurship as an option, irrespective of service academy-affiliation or whether they were an officer or enlisted. We believe that there is robust entrepreneurial talent at all levels of the U.S. military. What this talent lacks is the combination of network, mentorship, and capital that can help them get their ideas off the ground and onto a successful path. The Academy Investor Network syndicate exists to fill that gap by providing a trusted network of the most entrepreneurial veterans, providing mentorship, and ultimately investing in veterans. I want to be clear that we intend to invest in all veterans, officers, and enlisted.
Members of our syndicate are also exposed to and have the opportunity to invest into non-veteran-led companies that the AIN Ventures fund has previously invested into. All of these companies exist at the intersection of dual-use and deep technology. Companies that sit at this intersection either have or will have involvement with the DoD; therefore, our network of service academy graduates can provide a unique perspective to these non-veteran-led companies.
Q: How does AIN Venture’s approach for sourcing, vetting, and investing in companies give you a unique advantage when reviewing dual-use and defense investment opportunities?
The advantage that we have lies in the breadth of our network that can assist dual-use and defense companies. A unique element that we bring to the table is our hyper-focus on the quality of the founding team and our ability to vet these founders. We place the majority of our investment rationale on team quality, vetting them for leadership, determination, grit, and founder-market fit. My co-founder Emily McMahan and I have extensive backgrounds in leadership roles, entrepreneurship, finance, and early-stage investing, and we leverage those experiences in order to assess these teams.
Additionally, Emily and I are able to leverage our already extensive networks and unique relationships and combine that with the networks of our syndicate members in order to support our portfolio companies. Our fund will invest in companies and when we feel that the company is successfully developing over time, and once the company is conducting another investment round, we will supplement our fund’s follow-on investment with capital from our syndicate. We leverage our syndicate members having “skin in the game,” to source help from them in supporting our founders.
Q: Are there specific attributes acquired through military education and service that you think lend themselves directly to success as an early stage investor?
Leadership, leadership, leadership. The military places you in leadership roles starting from non-commissioned officers (NCOs) up to flag officers. Believe it or not, civilians do not often get leadership opportunities, particularly at an early age in life. This is unique to military service, not to mention the gravity of military service positions relative to positions held in the civilian world. We value leadership over all other attributes when it comes to assessing a company, and our past experiences with leadership helps us with that.
Determination and grit are other attributes developed via military service that lend themselves well to successful early-stage investing. When vetting companies, we are assessing the determination and grit of the founding team. The journey from a startup to a viable and profitable growing company is a long one and can often take 10 years or longer, and this is especially true for dual-use and deep tech companies. There are ample opportunities to quit and go do something else. The ability to be uncomfortable, and at times downright miserable, yet still push through to get a job done, provides an investor with pattern recognition abilities as well as determination and grit when making investment decisions. Further, experience with these difficult situations enables investors to have a high degree of empathy when advising founders post-investment as they work to build their companies.
Lastly, a large component of military experience is being able to rapidly learn a skill, train incessantly and execute that skill under pressure. The gravity of many jobs in the military demands the ability to execute no matter the circumstance, and the inability to do so can have dire consequences, which develops attributes such as sharpness, focus, and urgency. Each of these attributes are important when starting a company. Being immersed in this environment enables early-stage investors to rapidly understand if a startup team is capable of executing.
Q: Black and Brown investors and founders are consistently underrepresented in the venture capital community. How does diversity fit into AIN’s investment strategy? Does AIN’s ties to the military give it an advantage in sourcing more diverse founders in which to invest?
Black and Brown founders have collectively raised less than 2% of VC funding the last several years. After a slight uptick between 2020 and 2021, there was mean reversion for Black founders specifically in 2022, back to raising approximately 1% of all capital invested. First, I want to acknowledge the VC community is dealing with legacy effects of societal failures. Ultimately, I do not see the numbers improving until more investors of color operate within the ecosystem. At AIN Ventures, diversity of the founder – black, brown, indigenous, and/or female – plays a part in our investment decision-making process. We recognize that founders that have come from these backgrounds may have had a harder road to get in front of us. Perseverance is something that we look for in founders no matter the background, so we actively and intentionally seek out minority founders who have demonstrated high levels of perseverance.
Our ties to the military definitely provide us with an advantage in sourcing diverse founders. The federal government is the largest employer of African-Americans in the U.S., and the DoD is one of the single largest employers of minorities, particularly minority men, in the U.S. Further, African-Americans and Latinos are overrepresented within both the military and veteran population relative to their presence in the wider population. We firmly believe that anyone that is making a serious effort to invest in Black and Brown founders must intentionally reach out to this population. The advantage that we have is that we come from this population and we understand how to reach out to this population and support them as they work to build their companies.
Q: Where do you think there are opportunities to improve diversity within the dual-use/defense investment community?
We have researched this, and the dual-use community actually does slightly better than the wider VC community when it comes to investing in minorities, particularly with companies that go on to raise significant amounts of VC funding. The more time we spend on this issue the more I believe it involves heavy doses of hard work and intentionality, there is no “secret sauce.” Investors must go the extra mile both figuratively and literally, traveling outside of traditional areas to find founders. Specifically, this means attending pitch competitions and accelerator programs directly targeting minorities. Many entrepreneurs do not realize that their technology has a dual-use purpose. Further, investors should target minorities working at leading academic institutions, networking with these individuals in order to diversify their ecosystem. We have discovered that this is an untapped resource, and minorities at these institutions can be a great source of deal flow.
Another factor at play is simply being present and announcing the intention to invest in minorities. Outside of the dual-use community, we have seen successful examples of an increase in minority investors leading to an increase in minorities being funded. This is because investors default to their network when it comes to finding investment opportunities. We need more minorities of color investing in the dual-use segment, and there will likely be a correlation with them identifying founders of color building within the sector. Further, when minorities see investors (both minority and non-minority) that are intentional about investing in dual-use it increases the likelihood that they will pursue building a dual-use company.
Q: What are some common traits you have seen in the most successful dual-use companies, within or outside your portfolio?
We have published a few thoughts on our website. The most common trait we see is a team that has already onboarded the technical talent necessary for the company to be successful. The exception is if the founder is a second-time VC-backed founder and they have demonstrated the ability to surround themselves with complementary talent in the past. In addition to this, I can confidently state that the founders that fit within our portfolio have past examples of leadership and grit, and these attributes were heavily taken into consideration when making our investment decision. The ability to gather and inspire talent while laying out a vision for the direction of a company are key traits that we see among dual-use technology founders.
Q: If you could give dual-use and defense-focused entrepreneurs one piece of advice, what would it be?
Understand the voice of the customer for whom you are building. Everyone has a “boss,” and yours is the customer. If you do not fully understand them, and develop a purpose-built solution, you will be fired.