Black Enterprise — May 2016
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Small Biz

Who Runs The World?

Black female founders and venture capitalists are turning the white investment world on its head

THERE IS A LOT OF TALK THESE DAYS ABOUT GETTING more women and minorities into the tech pipeline, from sponsoring programs to teach girls to code to ensuring recruiters seek out African American candidates. Nowhere is the diversity issue more evident than in the venture capital industry, which is dominated by white men who fund very few startups founded by women and minorities.

African American men receive 2% of the VC funding other startups get, while black women get a tiny fraction of that. According to DigitalunDivided’s report, The Real Unicorns of Tech, VC firms lend white men $1.3 million on average even if their startup fails, compared to $36,000 for black women. In the past five years, black women received a negligible amount of venture capital funding— just 0.002%—while the number of black women starting their own businesses has more than tripled. There are only 11 startups founded by black women that have raised more than $1 million in VC funding, including Black Enterprise 2016 Techpreneur of the Year nominee Jewel Burks, co-founder and CEO of Partpic, an Atlanta-based visual recognition startup.

“Years of institutionalized racism, sexism, and classism, as well as the pressures of being the ‘representative’ of an entire culture of people, has made failure a costly proposition to many potential founders of color, especially black women,” the report states.

Last year, the National Venture Capital Association pledged to increase its diversity efforts and the dollars invested in startups with black and female founders. A small number of black investors in Silicon Valley include Y Combinator's Michael Seibel, Precursor Ventures' Charles Hudson, EchoVC's Eghosa Omoigui,'s Clarence Wooten, Bronze Investments' Stephen DeBerry, Base Venture’s Erik Moore, Intel Capital’s Lisa M. Lambert, and Laurence “Lo” Toney from GV (formerly Google Ventures).

The disparity in funding has given rise to African American w om en venture capitalists looking to back diverse startup founders w ho could turn into tomorrow ’s high-powered CEOs. Monique Woodard recently joined the San Francisco-based accelerator 500 Startups, as its first African American venture partner, to increase the firm’s investments in black and Latino tech entrepreneurs. She will continue to run Black Founders as executive director of the national organization representing tech professionals and startup executives.

500 Startups has $250 million in assets under management and has made investments in a number of companies with minority founders including Tristan Walker of Walker & Co., maker of the Bevel shaving system, and Diishan Imira of Mayvenn Inc., which helps stylists to sell hair extensions.

"I am actively investing out of our funds right now, and some of those companies will go through our accelerator program,” says Woodard. “We invest in early-stage startups so our check size is $75,000 to $250,000. For me it is really a market-driven opportunity. Combined black and Latino consumer spending power is roughly $2.5 trillion and by the year 2044 people of color will be the majority in the U.S.,” she explains. “Unfortunately a lot of Silicon Valley venture capitalists are disconnected from African Americans, Latinos, and other people of color.”

Backstage Capital, the bootstrapped $12 million nano-venture capital fund founded by Arlan Hamilton, is dedicated to minimizing funding disparities in tech by investing $25,000-$100,000 in pre-seed and seed stage startups led by high-potential founders who are people of color, women, and/or LGBT. Hamilton entered the venture investing world from an unconventional path. As a band tour manager w ho’s worked on shows with Pharrell and Justin Timberlake, Hamilton started thinking about the venture industry after seeing others like Ellen DeGeneres, Troy Carter (John Legend’s manager), and Scooter Braun (Justin Bieber’s manager) investing in startups.

Hamilton is a rarity, as an African American lesbian to start a venture capital fund and the first black woman to lead an AngelList syndicate last fall. She describes her fund as "VC money with an angel vibe.” She has seen firsthand how minority funders don’t getinvitedto meetings by white Vcs. "We don’t get the opportunity to fail the same as a 25-year-old white male,” she says, ‘‘For us it’s all or nothing.” She believes white Vcs often have a “blindspot” or “unconscious” bias that they can make money off of products or services spearheaded by women or people of color, leaving billions of unrealized returns on the table.

Since November 2015, Backstage Capital has invested in companies with diverse founders, including Kairos (racial recognition software), TextEngine (text message app) and Nailsnaps (personalized nail art). Currently, Backstage Capital’s roster of investors includes individuals such as Marc Andreessen, Susan Kimberlin (formerly of Salesforce), Leslie Miley (formerly of Twitter), and Lars Rasmussen (co-creator of Google Maps).

“The people investing in me are angels, which is very different from other venture funds. For instance, with a $50 million fund you are talking institutional investors, endowments, and high net worth individuals. That fund is going to be looking to write $5 million checks,” she explains. This year, Backstage Capital is on track to see pitches from approximately 1,000 companies, of which 75%-80% will have at least one underrepresented founder, Hamilton projects.

Other black female Vcs include Kesha Cash, a founding partner of Impact America Fund in the Greater New York area, which invests in early-stage businesses operated by entrepreneurs of color. “I founded IAF on the belief that economically disadvantaged communities want and deserve quality products and services,” says Cash, a former Wall Street mergers and acquisitions analyst who grew up economically disadvantaged in Orange County, California.

Launched in 2014, IAF has since deployed $3 million across five companies that are improving quality of life for low- and moderate-income Americans: Mayvenn, Schoolzilla, ConnXus, HandUp, and PawnGuru. Since IAF’s initial investment, its portfolio companies have collectively raised an additional $17 million and created more than 50 jobs. “There is a racial wealth gap when you consider the role that high net worth family members and friends play as the first investors to fund a startup,” explains Cash. “Black and brown communities are clearly disadvantaged.”

—Carolyn M. Brown


Jamail Larkins

Larkins has been flying since the tender age of 16. In 2006, he started his company with just $5,000. Ascension Air took flight, offering services such as aircraft leasing, management, acquisition, and brokering. He was named the 2010 BE Next Company of the Year, with revenues topping $8 million. Today, the 30-year-olcl pilot is still flying high. Ascension is rapidly becoming a leader in general aviation. Ascension Air is the regional distributor for Cirrus Aircraft, a to p manufacturer of piston-driven panes. Most recently, Ascension has launched a revolutionary fractional ownership program for personally flown aircraft, since most pilots fly only four or five days a month. It's timeshare in the air.

5 Questions to Ask Before Creating an App for your Business

Here's what you need to know before investing time and money

THERE IS A SAYING—‘THERE’S AN APP FOR THAT’—THAT HAS become applicable to small businesses, as more seek to come up with mobile apps. Apps are for any business, social event, for-profit, or nonprofit organization. In many cases, all you need is an app, since so many people use theirwireless phone to access the Internet.

There are do-it-yourself application makers, such as Appmakr and ShoutEm. Appmakr is a DIY platform for creating native mobile apps for iPhone and Android devices, as well as HTML5 mobile websites (with no coding). Gaining in popularity, ShoutEm has monetization elements, such as its integration with Shopify and mobile advertising support.

Then there are developers such as Nuracode, one of the leading minority-owned tech companies in the nation. Based in the heart of Atlanta, Nuracode is a one-stop-shop for software and app development, digital marketing and strategy, analytics, and more. The firms have worked with a range of diverse companies; from large enterprises including Sprite, AARP and DreamWorks, to smaller urban companies like Trap Flix.

“When launching a successful app, execution is everything. Before you delve into development, ask yourself whether you're truly ready to guide developers as theybring your idea to life,” says Kuty Shalev, founder of Clevertech, a New York City-based firm that designs, develops, and deploys strategic software for startups. “It's your vision and your business on the line.” Shalev shares five questions entrepreneurs should ask themselves before investing time and money in a mobile application.

I Is it suitable for your business? A mobile app will allow you to quickly and easily communicate with your customer. With mobile apps, videos, fliers, and other marketing, materials can be pushed through to the public. Apps are useful for one -off events or conferences.

2 Can you afford it? TechCrunch found that the average iOS app costs $6,453 to build, but m ore complex or noteworthy apps can cost thousands more. Make sure you have the necessary capital up front. Your funding must match your ambition.

3 Can you do it yourself? If staff members don't have the necessary skills, you'll have to go to a development firm or rely on do-it-yourself platforms. In deciding to hire a developer, ask to contact form er clients about the quality of their work and ability to understand the business.

4 What is your customer profile? You need to understand the end user's journey—where and when he /she will engage with your app. Most o f all, your app needs to enrich lives by solving a problem.

5 What makes your app unique? An estimated 80% to 90% of apps are used once and deleted. Unless your app is for customers to interface and activate for a one-time event, it needs to provide a compelling benefit that will make people return again and again.


Take Advantage of Online Customer Referrals

Whether it has to do with haircuts, dining options, or legal help, people trust the people closest to them for recommendations. Word of mouth is a primary factor behind nearly half of all purchasing decisions.Turning your customers into advocates is critical to growing your business because they help send referrals your way. But you don’t have to do it the old-fashioned way: Signpost, Knexx Local, and Spot On are three marketing apps that help generate referrals and buzz online.

Price incentives alone may not be enough of an impact for a referral to happen. You have to create an emotional tie with your customers where they feel excited, privileged, or cool by sharing your business.You can still go the traditional route, which is to offer free products or services to consumers to ‘share’ with friends and family, and build loyalty and brand awareness organically. A word to the wise: lots of companies end up paying customers so much to refer people that they destroy their profit margin. Instead, offer your loyal clients supplemental services at cost for referrals.