A few years ago, my former colleague Ebony Pope wrote a blog about a Black entrepreneur who had an investor pull out of a potential investment. By way of explanation, the investor sent an email that included the line “If we see that the demographics of founders that give us the best return are white men in their late 20’s/early 30’s, you can expect the choice of management team who we invest in [to reflect that].”It’s a fact: if you’re Black in America, you’re way less likely to get venture capital funding; you’re less likely to get a bank loan; you’re less likely to have the “friends and family” money to open a business in the first place. The reality is, and has been, what you look like and where you come from has a direct impact on how you’re treated and what doors are open to you.
Silicon Valley - and the tech and VC ecosystem more broadly - has finally begun to admit that the limited amount of venture funding – at less than 1% of total capital – going to Black founders is problematic, and over the past few weeks, I’ve received a dozen emails and seen even more tweets from VC funds who are now pledging to invest in more Black and Brown entrepreneurs (if you’re looking for Black founders to invest in, reach out!)
But that won’t change much until we change how those investment decisions are made. Raising a philanthropic DAF, for example, to invest in underrepresented founders is an important first step – I don’t want to suggest otherwise – but it is also not going to change venture capital’s systemic exclusion of founders of color.
Doing that will require changing the process of investing – looking outside of the predominantly white, predominantly Ivy League investment committees to a more diverse set of viewpoints. Village Capital has one way of doing this through peer-selected investment, but there are so many other solutions out there which are needed to yield systems-level change.
One of the most effective things any of us can do: we can support the Black-led community organizations that are working on the local level to help Black business owners build financial and social capital. Our partner PayPal recently announced a $530 million commitment to support Black businesses, including a $5 million fund to resource these local leaders – like MORTAR, a hub in Cincinnati that helps Black founders who don’t have access to a “friends and family round”. We also work with several community-based organizations that deserve attention, including WEPOWER in St. Louis, Goodie Nation in Atlanta, Black Men Talk Tech in Miami, and MetaBronx in New York.
I’ll leave you today with a few other organizations in our network that deserve your support:
Black Girl Ventures is the largest pitch program for Black and Brown women in the world, with $500,000 raised by their alumni. They operate in 12 cities; find out if they’re in your city here.
New Age Capital is a seed-stage venture capital firm and lifestyle company investing in tech and tech-enabled startups founded and led by Black and Latinx entrepreneurs. They provide loads of free resources to founders, including virtual office hours, which you can sign up for here.
Black Women Talk Tech is a support group for Black women building high-growth businesses. They’ve set up a relief fund that is offering microgrants to Black women-owned businesses impacted by COVID-19. Learn more here.