Arlan Hamilton is the founder and managing partner at Backstage Capital. The views expressed are her own.
Around 2012, I was working in live music as a production coordinator for different artists, and I was on and off tour. I started noticing that a lot of people like Ellen, Guy Oseary, Scooter Braun, Ashton Kutcher, and Troy Carter were putting $50,000 checks in startups in a place called Silicon Valley. I was really curious as to why they were doing that, and what the appeal was.
I knew some of these companies. I had heard of Airbnb and Warby Parker. But I didn't understand why these people who were in entertainment were interested in investing now. So I did a lot of research, and that research turned into a passion for learning about the startup ecosystem, landscape, and founders. What I learned about founders was that I felt a kinship with them because they were building something out of nothing. I had always felt like an entrepreneur, but it never really led anywhere.
I had ups and downs, and failures, and thought of myself as a failure in business. When I discovered Silicon Valley and all that went with it, it reminded me of myself, and it felt very natural to me. So I started reaching out to all sorts of people — investors and founders — and over time, I would lend as much help as I could to both. That turned into connecting people and companies with funding. What I started noticing was that any of the companies that had a woman of color, or a Black man, or even a white woman, would just get overlooked.
This was a pattern that was very weird, and I thought, "Well this probably means that these white male investors don't feel comfortable investing in these companies, because they don't really think that the founders understand the market." It's kind of a cop out, you know, a code word for just not being interested. And so, I thought, "If there were someone who was only investing in women and only investing in people of color, that could be really interesting." In June 2015, I wrote a blog post called "Dear White Venture Capitalists," and then I started going around asking people if they wanted to be part of a fund. I just kept asking and knocking on doors, and I was able to start a fund in late 2015.
But the current state of VC funding still bothers me. It just feels like things are going much slower than we'd hoped. There are improvements in some cases, but for women of color, it's still really difficult. And that's a bummer, because it doesn't seem like we should have to prove ourselves so much. It feels like we've been proving ourselves for years, and still not getting as far as our counterparts — our white, male counterparts. It's not a level playing field.
"What I started noticing was that any of the companies that had a woman of color, or a Black man, or even a white woman, would just get overlooked."
Arlan Hamilton, founder and managing partner at Backstage Capital
On the other side, the people writing checks do a lot of talking, but not enough action. I've learned from Black women who are leading startups that it's hard out there. It's not a pretty picture, and as much as there's celebration about forward movement and forward thinking, about getting money to Black women, very little is really happening. At Backstage Capital, we do our best to source Black female founders across the country. We know that they exist. We've seen thousands and thousands of companies in the past three years, and 40-50% of those were led by Black women. So, you can't tell me that they don't exist, and you can't tell me that the hundreds of them across the country are not viable for investment. That's just a myth, and it's lazy thinking. We have to do better.
If people are not getting hip to this, and not understanding that they need to widen their horizons and be smarter and more strategic in their investments, Black women are just going to go get it for themselves. If you are an investor who doesn't think that this affects you, and you go numb when you hear the word diversity, it's going to affect you soon. You're going to start seeing it in your pocketbook.
You can avoid all that. You can do some more research just like you would research cryptocurrency or blockchain or AI, or anything that you didn't completely understand and that was a little frightening to you. Why not do the same thing when it comes to people who don't look like you or who don't run in the same circles as you? The more you know, the more you can react, and you can participate, and you can be the front-runner in investing in these innovative people who have simply been underestimated.
You don't have to be afraid, and you don't have to look the other way. You can use your experience and your influence and your resources to help herald in a new group of people. Imagine what great things your capital could do for an entirely new group of startup founders, and you would have a part in that.