It’s no secret that many Black entrepreneurs are left with no choice other than to…
A Guide for Black Founders Seeking Capital
The word entrepreneur or founder conjures up plenty of imagery. For instance, there is that entrepreneur with a laptop and a dream. He is laser-focused on making a huge difference in our world. That entrepreneur starts working in his garage, hires a team, raises capital, and before he knows it, is ringing the opening bell on the New York Stock Exchange.
These types of stories aren’t just legends. There are cases where that solo entrepreneur started out with a garage and a dream. That being said, these examples are mostly relevant to privileged, white creators who have the resources and backing to take a risk.
Raising outside capital to scale the business is mostly catered to one racial group. The data is revealing. In Silicon Valley alone, 91% of venture capitalists are men. 98% of Silicon Valley VCs are white or Asian. And as you can guess, 90% of Silicon Valley VC funding goes to companies led by white males.
As a Black entrepreneur, finding investors for your startup is difficult, but not impossible. In the past few years, there have been some VC firms, black angel investors, and accelerators that fund Black entrepreneurs. But with George Floyd’s recent death and the #BlackLivesMatter movement gaining significant traction, the VC and investor communities have been more vocal in supporting African-American founders and Black-owned companies.
Opportunities for Black Startup Funding
Whether you are a Black entrepreneur who just started your business or are looking for funding to scale your rapidly-growing business, there are opportunities to get funding. You just need to know where to look.
While you can look at a longer list of VC firms and investors at the bottom of this post, we want to spend some time highlighting eight of those investors. Even if you aren’t currently looking for capital, it is a great idea to network and start building relationships with these investors and/or accelerators. It will make the fundraising process much easier when you actually are looking for outside funding.
– MaC Venture Capital: MaC Venture Capital is a seed-stage VC firm that is based in Los Angeles. Headed by Marlon Nichols, MaC invests in technology companies “that create infectious products that benefit from shifts in cultural trends and behaviors.” The firm understands that an increasingly diverse global marketplace requires talented entrepreneurs of color. So far, it has backed startups like Pipe, Ryff, Ready Responders, AirSpace Technologies, and Caffeine TV. Ultimately, Marlon has a long track record on focusing on diverse founders and giving them the opportunity to scale their businesses.
– Backstage Capital: Backstage Capital has a strong history of investing in underrepresented founders, including African-Americans. Specifically, the firm has invested over $7 million in more than 130 companies led by underrepresented founders with big ideas. Managing Partner Arlan Hamilton says that “We invest in the very best founders who identify as women, People of Color, or LGBTQ. I personally identify as all three.” Startups in Backstage Capital’s portfolio include Color Farm, Journey Foods, Career Karma, Akash Systems, and Promise. Arlan has even written a book to help underrepresented founders called It’s About Damn Time.
– NewME: NewME was one of the first accelerators that provided support for entrepreneurs of color in America. Specifically, it is an entrepreneurship program that serves early-stage business founders and their teams. Not only does NewME provide mentorship and specialized curriculums, but the accelerator helps diverse founders obtain more than $47 million in VC funding. It can be a great option for underrepresented founders who are just getting started with their businesses.
– Harlem Capital Partners: Harlem Capital is a well-known VC firm based in New York City. Its mission is clear. It wants to provide venture capital for black entrepreneurs and 1,000 other diverse founders over the next 20 years. Specifically, the firm focuses on minority and female founders in the U.S. Harlem Capital currently has 20 investments that span cities like New York City, Los Angeles, Baltimore, Salt Lake City, San Diego, and more. Startups funded by Harlem Capital Partners include PreShow, Moving Analytics, GovPredict, and Dexai Robotics.
– DiverseCity Ventures: DiverseCity Ventures is an impact-oriented VC firm. It has an extremely clear thesis. It is to back companies with “both positive social / economic / environmental impact, and high potential for outsized returns.” The firm is looking for companies that harness the power of diverse perspectives derived from things like ethnicity, nationality, gender, culture, and domain expertise. Based in Sheridan, Wyoming, DiverseCity Ventures is headed by Mariah Lichtenstern, who was named to Pitchbook’s list of one of the 27 Black founders and investors to watch in 2019.
– Precursor Ventures: Precursor Ventures defines itself as a “classic seed stage venture capital firm investing in long-term relationships with founders we believe in.” One of the firm’s pain principles is holding itself to a high standard in terms of the diversity of founders that it supports. Precursor Ventures is focused on investing in startups’ first institutional round of investments. In other words, it wants to be part of the company as early as possible. Because of this, it is willing to back unproven, first-time entrepreneurs.
– Hillman Accelerator: Hillman Accelerator is another terrific resource for underrepresented founders who want help growing their businesses. The mission of Hillman Accelerator is to operate “an inclusive entrepreneurship education program.” Those entrepreneurs accepted to Hillman Accelerator can capitalize on everything from outstanding mentorship opportunities to partnership and capital investments. The program takes place for 12 weeks and participants are required to live in Cincinnati. The founder and CEO of Hillman is Candice Matthews Brackeen, and she is passionate about bringing together founders who need help growing and scaling their businesses.
– Founder Gym: Finally, Founder Gym is an online-only training program that helps underrepresented tech founders to raise funds and scale their startups. Founder Gym offers six-week online cohorts, where founders complete structured exercises and receive training from investors and expert founders. Compared to other online accelerators programs, Founder Gym has an explicit focus on fundraising and does not take any equity. It can be a great option for underrepresented founders who are looking to grow their businesses, build their networks, and access financing opportunities.
Additional Resources for Black Entrepreneurs
These are just eight accelerators and investment firms that can help Black founders grow their businesses. Especially if you are in the early stages of your business, it’s worth your time to complete your own due diligence on these firms. You may find that they can significantly help you grow your startup and accomplish your business goals.
Beyond the eight firms listed above, there are other accelerators and VC firms that can specifically help provide funding for Black founders. They include the following:
– Black Girl Ventures: A firm that creates access to capital and black angel investors for Black and brown female entrepreneurs.
– Code Fever: An organization that works to increase the innovation of Black students, startups, and communities.
– DivInc: One of the top accelerators for black founders and underrepresented entrepreneurs for accessing resources to launch and scale their businesses.
– Valence: A new tech platform and community focused on connecting Black professionals globally with mentorship, job opportunities, other black angel investors, and capital in order to create massive economic wealth and social progress.
– Code 2040: A nonprofit that focuses on activating, connecting, and mobilizing the largest racial equity community in tech.
– The Fearless Fund: A fund that invests in women of color who are seeking pre-seed, seed level, or Series A financing.
– Black Angel Tech Fund: A collection of Black angel investors who make “fearless investments” in Black tech.
– Global Eye Entrepreneurs: Championing male entrepreneurs of color, connecting them to world-class resources and accelerating their businesses.
About Early Growth:
Early Growth is the largest national provider of outsourced CFO & accounting services in the venture capital space. For over 10 years, Early Growth has been providing finance & accounting, tax, equity management, and fund accounting services to startups at all stages. Early Growth is a strategic partner handling your finances so you can focus on your business, customers, and team.