For 10 years now I’ve been telling people, "I came for the cake, not the crumbs."
I’ve been beating this drum and shouting this out ever since I first read about the abysmal amount of funding being allocated to founders who are anything other than the traditional founder – white, male, well educated,(opens in a new tab) and often already financially well off(opens in a new tab).
I started my investment fund, Backstage Capital(opens in a new tab), specifically to invest in those founders who were underestimated by venture capitalists. I invest in female founders, people of color, and those who identify as LGBTQ+.
This is not a charity. It is a for-profit investment fund, which is intended to make me — and others — very wealthy. I started Backstage Capital not only because I truly believe that great ideas come from every part of society, but also because I wanted to create a blueprint that could be followed. I wanted to prove it could be done, that there were plenty of incredible, innovative, smart, underestimated founders who were struggling to get a foot in the door.
When I said I would invest in 100 companies that fit my investment thesis, I was laughed at by those who said there just weren’t that many underestimated founders out there. I invested in my 100th company back in 2018, two years before the deadline I had given myself. I’ve now invested in more than 200 companies led by underestimated founders.
There have been times when Backstage Capital has been the first investors secured, the first "yes" on a founder’s journey. Sometimes we’re the first investors to even take the founder seriously. For example, we were the first outside investors in CurlMix(opens in a new tab) and Amp Beauty LA(opens in a new tab), both of which are thriving.
Career Karma(opens in a new tab), who Backstage proudly invested in, raised $40 million in their series B round this year. Julia Collins became the first Black founder of a unicorn company — a privately held startup with a value over $1 billion — in 2018 with her company, Zume. Since then, companies founded or co-founded by Black founders that have achieved unicorn status have included Incredible Health, Calendly, Esusu, Flutterwave, Zepz, Chipper Cash, Interswitch, and more. These are just some of the companies that have already hit that milestone, but there are also plenty others on their way there, including several in our portfolio.
How many success stories do we need before we’re seen as a worthy competitor? We don’t want handouts, we want to stand next to you at the same starting line.
As 2023 begins and we look to the year ahead, what has changed over the past decade? As far as I can see, not enough(opens in a new tab). We came for the cake, but we’re still getting crumbs. We came for the cake, but once again we’re leaving the table hungry.
2021 was a great year in venture capital for fundraising and the deployment of funds. In comparison, 2022 was a shock to the system. Now, in a tenuous environment with increased interest rates, the potential of a recession looming(opens in a new tab), and layoffs in the thousands, some are even predicting an influx of “zombie” VC firms(opens in a new tab), or stagnant investment groups no longer able to generate returns.
So, as investors grow wary and risk-averse, they return to their old favorites: White men! A decrease in the overall amount of funding being deployed in the ecosystem has hit Black founders hardest, according to TechCrunch(opens in a new tab). Of the $43 billion deployed in Q3 of 2022, just 0.43 percent went to Black founders. This isn’t good enough.
I could understand the turn toward “safer bets” during this economic downfall, if I wasn’t also seeing big firms backing founders like Adam Neumann. Andreessen Horowitz invested $350 million(opens in a new tab) in Adam Neumann, a founder who, as CEO of WeWork, was found to have created a toxic workplace and plummeted the company’s value — from a peak of $47 billion to a $4 billion valuation by August 2022(opens in a new tab).
How can it be that someone like Neumann is worth the risk, but underestimated founders aren’t? I’m tired of investors framing Black founders as needing a helping hand, being down and out, a charity case. We aren’t there for you to give your spare change to in a booming economy, and then to forget when things get hard.
As an investment fund, Backstage Capital is industry-agnostic because underestimated founders have proven they can succeed in a variety of sectors. In healthcare, we were some of the first investors in CareAcademy(opens in a new tab) and Mahmee(opens in a new tab). Akash Systems(opens in a new tab) convinced us to invest after seeing what they could do with satellite communications.
Healthy Roots(opens in a new tab) gave us the opportunity to invest in the empowerment of young girls of color through their dolls that celebrate diversity. Assemble(opens in a new tab) had us interested in streaming, Goodr(opens in a new tab) won us over with their commitment to fighting hunger and food waste, and Planet FWD(opens in a new tab) is challenging climate change through sustainable food products.
All of these companies have Black founders or co-founders, and all of them are well on their way to greatness. Black founders should be taken seriously in all industries.
In service of this belief, Backstage Capital is proud to partner with AnitaB.org(opens in a new tab), a global nonprofit focused on intersectional gender and pay parity in tech, to host the 2023 PitcHER competition(opens in a new tab). Women and nonbinary entrepreneurs are invited to apply by April 14(opens in a new tab) to secure $100,000 in investment capital for their early-stage technology startups in any industry. The 2023 PitcHER competition will culminate in pitch presentations and awards taking place Sept. 26-29 at the Grace Hopper Celebration 2023(opens in a new tab) in Orlando, Florida. Backstage Capital is proud to co-host the PitchHER competition — and even more excited to provide investment capital to staggering talent.
As we look forward to 2023, consider this an opportunity. If you’re looking for resilient, smart founders who know their customers and know how to bootstrap, invest in Black founders. Invest in underestimated founders. Invest any decent amount of capital and resources in us, sit back, and let us do our thing: outperform.
Brittany Davis, General Partner, Backstage Capital, contributed to this column. Mashable Voices columns reflect the opinions of the writers.
UPDATE: Feb. 27, 2023, 4:13 p.m. EST This column has been updated to add information on the 2023 PitcHER competition.
