Browse Tag

venture capital - Page 9

Published on
1 min read

Black Owned VC Firm in London Is Raising £100 Million to Invest in Black Founders

Black Owned Venture capital Firm

Recent reports have found that less than 1% of venture capital is invested in Black businesses in the US and the number for the UK is no better.

London based, Impact X Capital Partners is a Black owned venture capital firm that is raising £100 Million ($131 million) to support underrepresented entrepreneurs within the entertainment, media, tech, health, and digital industries.

We spoke with Ezechi Britton. Founding Member, Principal & CTO in Residence at Impact X Capital about several topics including:

  • The need for diversity in the tech industry
  • The importance of investing in Black founders
  • How entrepreneurs can position themselves to be attractive to investors

Don’t forget to LIKE the video and SUBSCRIBE to the channel!

Tony O. Lawson

Subscribe and Follow SHOPPE BLACK on Facebook, Instagram & Twitter

 Get your SHOPPE BLACK Apparel!

You might be interested in

Published on
7 mins read

One of the Largest Black Owned Venture Capital Firms Just Doubled in Size With a $250 Million Round

black owned venture capital

One of the largest Black-Owned Venture Capital Firms just doubled in size. Two years after closing their debut fund of $150 million, Base10 co-founders Adeyemi Ajao and TJ Nahigian are back with a $250 million investment fund and a sense of vindication for their thesis of investing in startups making automation for the people.

For Ajao, an immigrant who grew up in Nigeria and Spain before moving to the U.S., the new fund is a confirmation that even without having an explicit focus on minority investments, it’s possible to create a portfolio led by a diverse mix of founders. Indeed, roughly 60% of the firm’s investments have been into companies led or co-led by women or minority founders.

Part of the firm’s diversity simply comes from the geographic diversification of the portfolio, said Ajao. “We like to invest in Latin America [and] we like to invest outside of Silicon Valley… We have always had the knack of look where others are not looking.”

And as part of that commitment, the firm is making a diversity pledge, including doubling-down on a commitment to diversity through its investment process, hiring practices and bias training; and a commitment of 1% of the firm’s profits from its management company and another 1% commitment of its carried interest to support organizations fighting for inclusion and racial equality.

Ajao and Nahigian have already enlisted firms like Precursor Ventures, Illumen Capital, and Plexo Capital in the new commitment.

Drawing on Ajao’s connections in the Spanish and Latin American community of entrepreneurs has meant that Base10 already has a geographically and racially diverse portfolio. Latin American companies account for about five of the firm’s 28 publicly listed portfolio companies, with other portfolio companies coming from the Netherlands and Germany.

Ajao and Nehigian have also spread the wealth pretty broadly across the U.S., with companies in Atlanta, Austin, Los Angeles, Stamford, Connecticut and Seattle, in addition to the traditional startup hub of San Francisco.

At Base10, the typical check size will remain in the $500,000 to $5 million range and the focus remains on experienced founders in industries as diverse as agriculture, construction, waste management, shipping and logistics.

Investments include Cottage, which is building adjacent dwelling units for the California market; Faber, which provides staffing for commercial construction; the Mexico City-based digital freight forwarder, NowPorts; birth-control delivery startup The Pill Club; on-demand staffing company Wonolo and TokenSoft, a platform for compliant token sales.

The new capital is a huge vote of confidence in both Nahigian, a Los Angeles native who spent years as an investor at Summit Partners, Accel and Coatue Management before founding the mobile job platform, Jobr; and Ajao, who only began working in venture as a corporate investor with Workday Ventures.

Previously, the serial entrepreneur launched several companies, including Identified, which was sold to Workday, and Tuenti, which Telefonica acquired for $100 million back in 2010. Ajao also has the distinction of co-founding Cabify, which raised at a $1.4 billion valuation back in 2018.

And he was Nahigian’s first investor in Jobr. The pair stayed in touch, discussed startups and potential deals, and ultimately decided to go into business together back when the firm was first getting off the ground.

These days, Ajao believes the public’s fears of automation coming for people’s jobs have been replaced with a realization that automation is “essential to survival for millions of people and small and medium businesses” looking to stay afloat amid the wave of economic shocks caused by the COVID-19 pandemic.

“Moreover, with issues of racial, economic, and gender inequality front and center, it is evident today more than ever that we have a collective responsibility to focus on urgently solving problems that are actually important for 99% of people,” Ajao wrote in a blog post announcing the new Base10 fund.

As the co-founder of what is one of the largest Black-led venture funds, with $400 million in assets under management, Ajao is taking this moment to situate his fund in a place that supports the development of technology for the 99%.

Examples of portfolio companies stepping in to solve real business problems abound, writes Ajao in his blog post, from a family-owned restaurant in San Francisco using Virtual Kitchen Company to transition its operations to a full-service delivery model; to restaurants across the Southeast using PopMenu. There’re also newer portfolio company investments like AMI, a Salesforce-style software platform for direct marketers.

As employers responded to the economic slowdown caused by the COVID-19 epidemic by slashing jobs, many laid-off workers turned to direct sales to support their families, Ajao said. Tools like AMI are helping these stay-at-home entrepreneurs continue to make money as their main source of income.

New investments in the firm’s second fund include companies like Wise, which gives online storefronts and gig economy workers a way to set up bank accounts online easily; Mimic, which is building a distributed kitchen network for Brazil; and Lana, the financial management service for gig workers in Latin America.

These new deals illustrate the firm’s belief that “the tech industry’s collective responsibility [is] to focus on the problems that affect 99% of people, and to work in tandem with communities, governments, and existing Real Economy companies to solve these problems.”

Ultimately, Ajao and Nahigian are attributing their success to what amounts to the old (and overused) investment cliche that investors go where opportunities are going to be.

“If the VC industry as a whole is overlooking minorities, you can generate alpha by simply taking steps to ensure that you don’t have this same blind spot,” Ajao writes.

 

Source: Tech Crunch

 

 

 

You might be interested in

Published on
3 mins read

Squire, A Black Owned Barbershop Scheduling App, Raises $34 Million

squire

Squire is a business management platform for barbershops. This software has the capability to serve independent professionals, stand-alone locations, and multi-location franchises, with tools such as Point of Sale, Scheduling, Payroll, CRM, and a host of other features.

squire
SQUIRE Founders Dave Salvant (L) and Songe LaRon (R)

The company just announced a Series B round that includes $27 million in equity financing and $7 million in debt financing, bringing the total raised to $46.2 million for the tech startup. This investment round aims to assist the growing company as it adds financial services to its already functional digital platform.

Squire provides barbers and shop owners with the ability to operate their businesses with cashless and contactless pay transactions, thereby streamlining service interaction and helping them earn and retain loyal clientèle as a result.

“Barbershops have been forced to modernize overnight, where scheduling and digital payments have become imperative to their operations and livelihood. And thankfully for shop owners, they have Squire to enable their expedited digital transition,” says Reid Christian, General Partner at CRV. “From an investment perspective, backing Dave and Songe with their unique perspective on the industry, coupled with the underlying structural shift in how consumers expect to interact with businesses, made this a unique opportunity to revolutionize an entire market.”

squire

With new regulations regarding social distancing practices and mandatory appointments amid the COVID-19 pandemic, Squire’s technology will continue to perform, and help shop owner’s organizational structure, with the goal of assisting them in reclaiming some of their losses during the global crises and increasing their overall revenue afterward.

“Small businesses are hurting right now. Fortunately, barbershops are well-positioned to thrive in an economic downturn since people will always need haircuts,” says Songe LaRon, co-founder, and CEO  of Squire. “We’re focused on providing the payment infrastructure and financial services that will help barbershops reopen successfully and excel post-COVID. This investment will help us scale and execute on our goal of becoming the industry standard for barbershops.”

“Our goal has always been to put our customers first and be a resource in times of need,” says Dave Salvant, co-founder, and President.

Funds from this round will also be utilized to assist and educate barbershops; equipping them with the necessary tools to function in a post-pandemic society while providing training and access to digital practices that will aid them in operating a seamless business.

 

-Tony O. Lawson

Subscribe and Follow SHOPPE BLACK on Facebook, Instagram &Twitter

 Get your SHOPPE BLACK Apparel!

You might be interested in

Published on
1 min read

Serena Williams Invests in Mahmee, a Startup Fighting Maternal Mortality

Serena Williams

After Serena Williams gave birth to her daughter in 2018, she shared the life-threatening complications she experienced—and how, as a Black woman, she was three times more likely to die from pregnancy or childbirth-related causes.

Now Williams—through her firm Serena Ventures—has invested in digital maternal health care company, Mahmee.

Mahmee  uses predictive analytics to provide personalized, on-demand support to new mothers and infants. Mahmee members can book appointments — both in-home and virtual — with a growing network of highly-qualified postpartum care providers, including registered nurses, board-certified lactation consultants, registered dietitians, certified massage therapists,  and more.

Mahmee also features a private messaging hotline, online support groups led by experts, and a personalized dashboard of content and advice that evolves with mom and baby through every age and stage.

Mahmee, Co-Founder & Chief Executive Officer Melissa Hanna

About 700 women die from pregnancy-related complications in the United States every year, according to the Centers for Disease Control. Three in five of those deaths are preventable, and one-third of those deaths happen up to a year after the birth.

Williams was joined in the $3 million funding round by angel investor Mark Cuban, as well as  Arlan Hamilton of Backstage Capital.

 

 

You might be interested in

Published on
1 min read

This Black Venture Capitalist sold his former company for $100 Million

Black Venture Capitalist

Adeyemi (“Ade”) Ajao is co-founder & Managing Partner at Base10 Partners, an early stage venture capital fund.

Ade Ajao

Black Venture Capitalist

Base10 recently made news for raising $137 million, the most money ever raised by a Black-led  venture capital fund.

Before Base10, Ade was a co-founder of Tuenti (The “Spanish Facebook”). He launched Tuenti in 2005 and in 2010, it was acquired by Spanish telecommunications giant, Telefonica $100m.

Black Venture Capitalist

Ade was also co-founder of Identified (acquired by Workday in 2014 for an unspecified amount) and a founding investor of Cabify, the largest ride sharing company in Latin America. Cabify is currently valued at over $1 Billion.

As an angel investor, Ade has participated in more than 40 deals including companies like Dollar Shave Club (acquired by Unilever), RelateIQ (Acquired by Salesforce), Jobr (Acquired by Monster), Instacart and Reflektive.

Joaquin Ayuso de Paul, Ade’s co-founder from Tuenti once stated, “He is the guy that trusted me to be his copartner on Tuenti.com project. He is the mastermind behind the social network idea and concept.”

Ade volunteers with CODE2040 to create access, awareness, and opportunities for gifted Black and Latin engineering talent.

 

-Tony O. Lawson

Subscribe and Follow SHOPPE BLACK on Facebook, Instagram &Twitter

 Get your SHOPPE BLACK Apparel!

You might be interested in

Published on
10 mins read

Nichole Yembra: Managing Partner of One of The Largest FinTech VC Firms in Africa

fintech

One of my goals is to invest in many startups here and on the continent. The African Fintech (Financial technology) sector is one that’s always been interesting to me because of its potential to solve many social and economic issues.

According to a recent report from Disrupt Africa, the overall startup funding from venture capitalists jumped by 51 percent to $195 million from 2016 to 2017, with fintech funding accounting for one-third of the funds.

One company that specializes in financial technology is GreenHouse Capital. This Lagos based VC firm is assembling the largest portfolio of FinTech companies in Africa.

fintech
Nichole Yembra, MP – GreenHouse Capital

We spoke with Nichole Yembra, Managing Partner at GreenHouse Capital for more insight. Nichole is the local partner for foreign investors eager to transform African technology startups.

How would you describe the startup scene in Nigeria?

Over 40% of Nigerians identify as entrepreneurs; whether that is a one-woman store selling sweets and household items to series B tech companies getting international buzz. This spirit of hustle and solving every day Nigerian problems runs at the core of who we are.

While there are plenty stories of those who have started, we don’t yet have enough tales of exits which holds the Nigerian startup scene back compared to Kenya and South Africa. For the first time in 2017, Nigeria raised the most money on the continent and H1 2018 is already ahead of that trend.

Both domestic and international investors are backing really brilliant ideas, and this is setting up the ecosystem for much needed success stories.

What do you look for when deciding to invest in a company?

At GHC, we actually have a 10 item criteria, but the most important is the team. We need to know that they are resilient, flexible enough to pivot, technologically sound, and have the right set of morals.

Nichole Yembra

A great team will weather all the challenges thrown at them from both the macro and micro level and we honestly want to invest in people that we simply enjoy being around! We only invest in post revenue companies, so someone out there has to be willing to pay for your product.

Other areas including having at least one technical co-founder, assessing whether the timing is right for this product to enter the market, and modeling scalability.

Currently, your portfolio consists of mostly Fintech startups. What makes this such an attractive sector?

Fintech as we define it is the solution for so many issues on our continent. The most important thing we are looking for is data and a whole lot of it! Data allows everyone to make better decisions and innovate much faster.

For all the hundreds of payment companies, we still simply find it hard to move money across Africa and targeting the large percentage of the unbanked. Let me take one small aspect of fintech—inbound international remittances. In 2017, Nigerians (or others) in the diaspora sent $22 Billion dollars to friends and family in Nigeria. Nigeria’s entire 2017 oil revenues were $20 Billion.

fintech
Bunmi Akinyemiju, MP/CEO of Green House Capital

That’s right; inbound remittances were larger than all of Nigeria’s oil revenue. Furthermore, the average fee on those transactions is 10% meaning $2.2B for fintech companies moving foreign currency into the country.

Fintech’s are prominent throughout every fiber of society; from getting accurate patient records to track illnesses and medications to understanding why African aviation runs at a loss compared to its global counterparts.

Fintechs provide increased transparency and improve predictability. Any business that wants to make money needs to be plugged into a payment system, therefore permanently increasing the need for innovative fintechs.

Kunmi Demuren – Founding Partner, Greenhouse Capital

Congratulations on the launch of Vibranium Valley. What is the mission and vision behind it?

We’ve actually only completed phase 1 of Vibranium Valley now which houses Venture Garden Group’s 7 companies and the HQ for our investment arm GreenHouse Capital’s 14 companies.

Vibranium Valley launch day with Nigerian Vice President Professor Yemi Osinbajo (center)

We will also hold the 8-12 companies we are choosing for GreenHouse Lab, our all female tech accelerator. Once the full project is completed, we will have space for not just long term resident companies, but also those with budding ideas.

The mission is to enhance the tech ecosystem by fostering collaboration. Let’s say one company is trying to provide banking solutions to a state government and their primary system requires microfinance or commercial bank accounts, but the state wants to also incorporate the unbanked.

Vibranium Valley

That company can reach out to other fintechs that help cooperatives or have agency networks to partner with eachother rather than building that aspect of the solution from scratch. Vibranium Valley also serves as a central point for international investors and companies looking to better/more quickly understand the Nigerian investment landscape.

Vibranium Valley

If you have a question about a tech company in Nigeria, someone on our team most likely knows the answer or can easily direct you to someone who does. Being this ecosystem connector and helping shine the light on tech successes in Nigeria are the reasons why Vibranium Valley had to exist.

In your opinion, why is it important to support Nigerian and African startups in general?

Because nobody else can solve our problems for us. Developed countries like Japan, the US, and Germany have median ages between 46.9 and 37.9 years old; whereas the median age for the African continent is 19.5 years old with Nigeria averaging 18.3! Africans are not just the future, we are the now!

Garden Women’s Network

These young minds are growing up intrinsically connected with technology and innovation around the world and still hungry and imaginative enough to create both enabling and disruptive solutions to our nations’ problems.

We have already begun outsourcing our brain power to Silicon Valley companies with entities like Andela and countries looking to increase their global foothold can only come here for expansion. Given the large number of infrastructure and systemic issues around power, education, etc., there is not a shortage of problems to solve and the impact can be more immediate and widespread.

What is your advice for a foreigner investors that are interested in investing in Nigerian startups?

Come on over, we’re waiting for you. The beauty of investing here is that it naturally has a societal impact and given the perceived high risk, much higher returns.

I’d advise that you do your homework by engaging someone like us at VGG and always have a local investor in your round that can keep an eye on things on ground.

The biggest point of advice though is don’t come here trying to structure a silicon valley type deal; bring in global best practices, but be willing to localize and always search for context.

GHC CEO, Bunmi Akinyemiju, Managing Partner, Nichole Yembra, and Executive Director, Kunmi Demuren

Where do you see the company in the next 5 years?

Hopefully as a billion dollar company! For the new age unicorn definition, no African company has yet reached this milestone and we hope to be amongst the first.

We have deployed our fintech solutions across aviation, power, education, banking, and social investment while investing in companies addressing financial inclusion, renewable energy, healthcare, and so on.

With this connected ecosystem, we hope to increase not just our net worth but create a new class of tech millionaires and billionaires who are impacting millions of lives across the continent.

 

-Tony Oluwatoyin Lawson (IG @thebusyafrican)

You might be interested in

Published on
2 mins read

NAS Venture Capital Firm Invested in Online Pharmacy Bought By Amazon for $1 Billion

When it comes to having an eye for startups, Nas knows how to pick them. PillPack, a door-to-door pharmacy service backed by the rapper’s venture capital fund, scored big last week when Amazon acquired the company for $1 billion.

Amazon shared the news on June 28, with plans to finalize the deal as soon as this fall. PillPack was founded by TJ Parker, a second-generation pharmacist and Elliot Cohen, a computer scientist, the Chicago Tribune reports. The company ships consumers their medications across the country.

Nas’ Queensbridge Venture Partners was an early investor in 2014. Fox Business reports the fund raised $8.8 million for the startup. Since then, the company raised a reported $118 million in private capital before Amazon’s acquisition. This marks the second time Amazon purchased a company supported by the rapper. In March, Amazon acquired Ring, a smart doorbell company for $1 billion. The rapper made $40M in the deal.

nas

“PillPack’s visionary team has a combination of deep pharmacy experience and a focus on technology,” Jeff Wilke, Amazon CEO Worldwide Consumer said in a press release.“PillPack is meaningfully improving its customers’ lives, and we want to help them continue making it easy for people to save time, simplify their lives, and feel healthier. We’re excited to see what we can do together on behalf of customers over time.”

The owners raked in $100 million each in the deal. There’s no telling what Nas and his company scored, but we’re sure it’s another pretty penny.

The Queensbridge Venture enterprise has great taste in startups. Nas has placed investments in companies like Genius (formerly Rap Genius), Lyft and SeatGeek.

Source: VIBE

You might be interested in

Published on
1 min read

Backstage Capital Launches $36 Million “About Damn Time Fund” for Black Women Founders

backstage capital

Venture capital firm, Backstage Capital recently announced that it has launched a $36 million fund that will invest in Black women founders.

backstage capital

The “It’s About Damn Time Fund” as it was called by founder, Arlan Hamilton, will help address the funding gap that exists between investors and Black women in the VC landscape.

backstage capital

 

A 2015 study by First Round Capital suggested that only 0.2% of all funding went to companies run by women of color. It went on to say that the “lack of outside investment is a major barrier for many aspiring female entrepreneurs, especially in the technology sector.”

“It is my firm belief that because Black women have had to make do with far less for centuries, equipping them with early stage capital that is on par with their white male counterparts has the potential to lead to outsized returns,“ Hamilton said in a recent interview.

Backstage Capital founder – Arlan Hamilton

Backstage Capital plans to invest $1 million checks into 15-20 companies over the next three years, with the remainder of the fund reserved for future financing.

Currently, the firm has invested in more than 80 portfolio companies, and Hamilton expects to make two or three seed investments out of this new fund by the end of the year.

 

You might be interested in

Published on
8 mins read

Black Owned Venture Capital, Private Equity & Angel Investment Firms

black owned Venture Capital

Less than 1% of American venture capital backed founders are Black and the percentage of Black people in decision making roles within the venture capital arena is not much higher.

This lack of diversity within investment firms ultimately translates to a lack of diversity in the companies that they invest in.

The good news is that there are a growing number of Black owned venture capital and other investment firms run by people of color who understand that Black founders present a large and untapped market.

These investors make it a point to include Black startups in their portfolio, and in some cases, focus solely on underrepresented entrepreneurs.

Black Owned Venture Capital, Private Equity & Angel Investment Firms

Collab Capital is an investment fund leveraging financial, human, and social capital to help founders build sustainable, technology enabled businesses

Collab Capital Managing partners Barry Givens,  Jewel Solomon Burks and Justin Dawkins

Black Star Fund is an angel/venture fund that focuses primarily on early-stage technology companies.

Serena Ventures focuses on early stage companies and giving them the opportunity to be heard.

GenNx360 Capital Partners is a private equity firm that focuses its investments in industrial and business services companies in the U.S. middle market.

Daphne Dufresne-Managing Partner – GenNx360

Authentic Ventures is a seed and early stage Venture Capital Firm that believes that a strong, inclusive network of founders, operators, and investors can accomplish great things.


Lindsay Lee, Founder & Managing Partner of Authentic Ventures

Impact America Fund is an investment company that funds market opportunities that use technology to enhance the lives of all Americans.

Kesha Cash – Founder and General Partner – Impact America Fund

645 Ventures is a seed to Series A VC firm that applies a data-intensive approach to investing in top software and Internet companies.

Nnamdi Okike, Co-Founder & General Partner – 645 Ventures

Backstage Capital is a venture capital fund that invests in new companies led by underrepresented founders in the U.S.

Arlan Hamilton –
Founder & Managing Partner – Backstage Capital

Harlem Capital Partners is a diversity focused venture capital fund that invests in early stage companies focused on tech-enabled services, retail, and real estate.

Harlem Capital co-founders, Henri Pierre-Jacques and Jarrid Tingle.

Precursor Ventures operates as an early-stage venture capital firm. The company invests in seed and early-stage consumer, digital health, education, Fintech, hardware, and SaaS companies.

black owned Venture Capital
Charles Hudson, Managing Partner and Founder of Precursor Ventures

KICVentures is an investment holding company that creates, invests and manages several portfolio companies in the health-tech sector.

Dr. Kingsley R. Chin — Managing Partner & CEO – KICVentures

Fairview Capital Partners is a leading venture capital and private equity investment management firm. They implement innovative fund of funds, co-investment, and customized investment strategies for institutional investors.

JoAnn H. Price – CO-FOUNDER / MANAGING PARTNER of Fairview Capital Partners

The Bronze Venture Fund makes and manages innovative investments that align strong financial returns with positive social impact.

Stephen DeBerry – founder and chief investment officer – The Bronze Venture Fund

DiverseCity Ventures (Sacramento, CA) invests in scalable, technology-enabled companies that have a social, economic, or environmental impact and high potential for outsized returns.

black owned Venture Capital
Mariah Lichtenstern, Founder and CEO -DiverseCity Ventures

Cross Culture Ventures  invests in and develops companies that fuel shifts in cultural trends and behaviors within an increasingly diverse global marketplace.

Marlon Nichols – Co-founder/ Managing Partner- Cross Culture Ventures

Vista Equity Partners is a private equity and venture capital firm focused on financing and forwarding software and technology-enabled startup businesses.

black owned Venture Capital
ROBERT F. SMITH, Founder & CEO of Vista Equity Partners

Base Ventures is a seed-stage fund investing in technology companies.

black owned Venture Capital
Erik Moore – Founder and Managing Partner – Base Ventures

Reinventure Capital is a growth-stage equity and debt investment practice focusing on founders of color and women.

Edward Dugger III –
founding partner and President – Reinventure Capital

Syncom Venture Partners is a leading venture capital firm primarily focused on growth stage investments in emerging and underserved segments of the media and communications industry.

black owned Venture Capital
Terry L. Jones, Managing Partner – Syncom Venture Partners

Cleo Capital is an early-stage venture capital fund that invests in pre-seed and seed stage tech and tech enabled investments. 

black owned venture capital
Sarah Kunst, Managing Director at Cleo Capital

CRE Venture Capital is a venture capital firm that invests in technology-enabled startup companies.

black owned venture capital
Pule Taukobong, Co-founder & Managing Partner at CRE Venture Capital

Plexo Capital is a hybrid venture capital (VC) firm investing both in emerging VC funds and in early stage companies.

black owned Venture Capital
Lo Toney, Managing Partner at Plexo Capital

Base 10 is an early-stage venture capital firm investing in the automation of the real economy.

black owned Venture Capital
Adeyemi Ajao, Co-Founder of Base 10

lllumen Capital is a venture capital firm that invests in early-stage and start up companies.

black owned Venture Capital
Daryn Dodson, Managing Director at Illumen Capital

 

Tony O. Lawson

Want to invest in Black founders? Please fill out this short form.

 

 

You might be interested in

Published on
8 mins read

Several Ways Black Businesses Can Attract Investors

investors

Black businesses generate over $180 billion in revenue each year and create over 1 million jobs.  Also, Black women are the fastest growing segment of new entrepreneurs in the US.

Unfortunately, establishments owned and operated by Black entrepreneurs are least likely to receive funding from investors.

Ade Omitowoju of Groundwork  chats with us about the state of the investment industry and what Black businesses can do to attract investors.

SB: What opportunities exist for investors that want to fund Black owned businesses?

AO: I think there is a massive opportunity with Black businesses.  The challenge however, is that a majority of these businesses are what we would consider to be micro-enterprises or companies that generate less than $100k per year.  So the question is, how do we grow these companies and help them sustain?  Few things:

Access to business mentorship – access to accounting, tax, and legal support are prerequisites to credit access.  Why? Because a better grasp and management of the company leads to reduced credit risk.  Guiding that sister with the organic food delivery service on how to build credit to then hire additional support would be transformative in three ways;

1) that credit will help her expand faster

2) she will most likely hire someone of color and

3) her success builds wealth.

Access to capital – easy answer but harder to tackle.  Black businesses have been historically shut out from capital due to various reasons including racist lending practices (whole different conversation) and lack of attention that banks pay to the unique needs of black businesses.  If that brother had a loan to purchase another car for his on-site car washing business, the sky is the limit but he needs that lender who is willing to take the journey with him.

Access to data – platforms like Shoppe Black are revolutionary by increasing awareness of the tons of black businesses out there doing amazing things.  No longer can there be the excuse that black businesses are hard to find.  Circulating the dollar builds black businesses and builds black wealth.  The internet has the potential to magnify the impact of the black dollar.  We’ve seen it in Mound Bayu MS, Tulsa OK and Georgetown DC.  You are the new Green Book and its dope to see the potential.

SB: What do yo feel a lot of startups do wrong when trying to raise money?

AO: Being Nigerian, I see entrepreneurship from two distinct angles.  Going to the Continent and seeing what these young entrepreneurs are doing with practically no capital makes me feel that we need to rethink the way we operate over here.  An idea doesn’t always need money first, sometimes, it needs a customer, who has money.

Over here, I’ve seen brilliant entrepreneurs start companies without validating the product/market fit.  This means that they are building something before validating there is a customer base.  In the investor space we call this “playing in traffic.”  With the internet, we have a wealth of information to prove out our idea before we experiment.

I think that when you raise money, you have to show a demonstrated ability to solve a distinct problem and inefficiency in the market.  Being passionate about your idea is one thing but you have to connect the dots between your idea and a large market opportunity.

You also have to demonstrate that you have gone as fas as you can by bootstrapping.  That shows the investor that you have the grit to make it through the complex early stages to “de-risk” your business meaning that you have found a market, people buy (or want to buy) what you are selling and with a little capital, you can knock it out of the park.

SB: What are three main factors that need to be in place for a startup to be attractive to investors? 

AO: Great question.  I’ll premise this with the fact that different investors look for a different mix of factors but holistically the below three would apply:

1) Team: Demonstrated industry knowledge and expertise, proven sales and product development skills, with strong understanding of market dynamics. Do you know your customer, have a vision for how you will solve the problem, and have the right mix of people to make it happen?

2) Value Proposition: Differentiated solution leveraging best-in-class technology with evidence of customer satisfaction and a well established brand. Many VC’s don’t invest in things that are “me-too” products.

If you say you are the “Uber of XYZ”,  that may not excite an investor but if you have an idea to enter the market that Uber has created by leasing iPads for drivers to offer in car entertainment, thats a different story.

3) Market: Large market opportunity with a potential for rapid growth and validation of pathway to positive unit economics. You gotta think in billions and not millions.

Think big, dream bigger and tell us how you plan to change the game with your product and how large that opportunity is.  Also make sure that you wont be like many of these startups (unprofitable) without having a pathway to making a profit).

Even when Black owned startups cover the above mentioned bases and more, why is it still such a struggle to attract funding? (racism, ignorance, a mixture of both, something else?) Yes, there are people who think that investing in a Black company means that they are sacrificing returns but let me tell you something:

  • 77% of VC dollars are concentrated in 3 markets (California, New York, and Massachusetts)
  • 99% of that capital goes to Whites or Asians
  • 75% of these venture backed companies fail!

So, a venture capitalist can’t argue that whites and asians make better companies and are smarter because three out of four of those companies fail.  What this means is that the venture capital market is inefficient, and there is a huge opportunity in investing in the next Maci Peterson, Jewel Burks, Rodney Williams, Zim Ugochukwu, Ama Marfo and many more.

Bottom line is that Black brilliance is coming for the crown and smart investors will see the trend.

 

Adeleke Omitowoju is Principal at Groundwork, an early stage venture capital fund and accelerator based in DC. He is a proud graduate of Florida A&M University and currently advises and advocates for early stage tech entrepreneurs of color. 

You might be interested in

1 … 7 8 9