Start-ups of black women begin to change Silicon Valley

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SAN FRANCISCO – In the early days of Zume Pizza, visitors to Julia Collins' robotic food pre-factory in Silicon Valley sometimes greeted her at the door and said, "Can you get me a water? I'm here to meet the founder." When placing her company with investment partners in venture capital companies, Collins was almost always the only woman and always the only black person in the room.

At the end of last year, a hair crack appeared in the invisible but apparently impenetrable barrier that limits the access of blacks to the technical world. An investment of $ 375 million gave Zume Pizza a value of $ 2.25 billion.

It was not only the company that she co-founded that achieved the status of unicorn. Collins also acted as the first black woman whose business is valued by investors at $ 1 billion or more. Now that she is working on a new startup in regenerative agriculture, investors call her.

Tens of billions in revenue generation, black women are the fastest growing demographics of the nation's entrepreneurs. But for decades they have been underestimated and overlooked on the nexus of money and power in Silicon Valley. Research shows that black women have the least chance of having controls cut off by venture capitalists. There are so few funds for venture capital that the percentage is statistically close to zero.

The vast majority of entrepreneurs who apply for venture capital funding are white men, just like the financiers who distribute it. Venture capitalists often place their bets on people who are already successful or who remind them of the people who do.

So black women fight that pattern deal with a whole new pattern: Good ol 'boys' network, meets black girl magic.

There is Morgan DeBaun, who was only 24 when she created Blavity, a popular digital media hub for black millennials. At the age of fifteen, Stephanie Lampkin was a web developer and, with degrees from Stanford University in California and Massachusetts Institute of Technology, Blendoor, she runs a startup that uses technology to combat bias in hiring. Kellee James, who worked for the first market to trade carbon credits and advised the Obama administration on the environmental market as a White House colleague, stands behind Mercaris, a futures market for organic and non-GMO raw materials.

Now this small but growing wave of black, female entrepreneurs ventures open doors for a new sisterhood in technology.

"Although I acknowledge that I am the first," says Collins about becoming a unicorn, "the thing I think of most of the time is how I can make sure I am not the last or the only one."

Black women encounter the least risk capital

Black women face significant roadblocks in Silicon Valley – insular networks, negative stereotypes, overlapping discrimination based on gender and race. Nowhere are they more under-represented than on Sand Hill Road, the green strip in Menlo Park, California, where venture capitalists are accumulating, just a few miles from the headquarters of some of the world's most powerful technology companies.

Jessie Woolley-Wilson, CEO of the educational technology company DreamBox Learning and the daughter of a Haitian immigrant, remembers that she was asked to make coffee in anticipation of her business in 2012.

"I turned around and said," I do not know where the coffee is, but if you find it, do you mind to bring me something? I take it black, "she replied." I laugh about it now, but I said it with a tense jaw. "

Since then, little has changed for black women trying to tap the Silicon Valley machine, says Woolley-Wilson.

"People with a good heart still believe that I am an anomaly," says Woolley-Wilson, who raised $ 170 million. "What they do not realize is that there is already this rich, promising talent that will help them become more successful and create more solutions and products that are relevant to an increasingly diverse market."

Turn the tables around for investors

Phaedra Ellis-Lamkins is at the forefront of those who commemorate the image of black women of Silicon Valley. Her technical startup Promise is a staircase in a historic 19th century building in Oakland. The airy, luxurious offices with visible masonry and piping are below street level. Ellis-Lamkins jokes that it's a garden & # 39; level.

Her brown hair retreated into a bun, Ellis-Lamkins moves the day in a staccato rhythm and does not let herself be fooled as she meets one after the other with the cool efficiency of an air traffic controller.

Promise, graduated from Y Combinator, the hotshot incubator in the form of Airbnb and Dropbox, works on decarcation & # 39 ;, in which people – usually poor or color – are kept out of jail that do not have to to be. And she has secured $ 12 million and the trust of venture capitalists, including First Round Capital and Jay-Z & # 39; s Roc Nation.

From the beginning, Ellis-Lamkins was picky about whose money she would take. "I felt like I was interviewing them: who could help develop the vision that I wanted, that could give me the capital I wanted," she says.

One investor with FOMO (fear of missing) pursued her relentlessly and then began the meeting by asking her to pitch him. "Pitch you?" she answered. "You asked me to meet you."

No one in this data-driven industry quantified the lack of black, female technology entrepreneurs until Kathryn Finney, an epidemiologist trained at Yale University, funded a research initiative named ProjectDiane, named after the civil rights leader Diane Nash of the 1960s. Her first report in 2016 showed that only 12 startups, led by black women, had raised more than $ 1 million in funding. Two years later, almost three times the number of founders of black women – 34 – exceeded that threshold.

Yet progress is frustratingly slow for those who are trying to reverse fixed patterns of exclusion. From 2009 to 2017, black women raised $ 289 million, or 0.0006 percent of the total of $ 424.7 billion of venture capital they had raised, ProjectDiane discovered.

"Every black woman I know, whose credentials are just as good as mine, has had trouble collecting money," says Lisa Gelobter, a former technical manager at BET Networks and chief digital service officer at the Ministry of Education of the Obama administration.

Her Oakland startup tEQuitable, which proactively helps companies and employees to tackle problems at work, such as discrimination and intimidation, raised $ 2 million, but did not always have the easiest time to do it. She was told by an investor in Silicon Valley, where technical expertise is appreciated, that Gelobter and her co-founder & # 39; too technical & # 39; to be. Other experiences have also made them feel uncomfortable in ways that were hard to pin down, let alone to prove.

"It is difficult to distinguish between people who do not want to invest in me because they do not think the company is good and do not want to invest in me because of who I am", says Gelobter. "That's the treacherous thing."

Black women adhere to higher standards

A recent Morgan Stanley report found that investors see fewer pitches from women and minority entrepreneurs and, if they do, they keep those entrepreneurs in higher standards.

Before Melissa Hanna could start her presentation at a company a few years ago, she was grilled for twenty minutes about her background, where she earned her MBA and law degree, even where she went to high school.

Hanna, co-founder of Mahmee, a technology company based in Los Angeles that works with healthcare systems and insurance companies to give women access to maternity care, thought nothing of that, until her chief technology officer Sunny Walia told her: "I have never seen that before. "" Do you realize how many questions they have asked about you? " he told her. "How many things have they challenged about your background?"

"As long as investors sit on the other side of the table of someone who is different from someone they have invested in before, she hears who they really are and she says:" Wow, you have the potential to become a company of millions to lead dollars or billions of dollars, & we're not going to change the numbers & # 39 ;, says Hanna.

& # 39; As a slap in my stomach & # 39;

About the life of her company, an online marketplace that compares homeowners and small businesses with audited general contractors for major renovations, says Jean Brownhill that she has thrown 350 investors. The idea for Sweetening came from the troubled renovation of her house in the wood frame from 1800 in the Bedford-Stuyvesant district in Brooklyn. She developed the concept during a Loeb Fellowship at the Graduate School of Design at the University of Harvard. More than $ 1 billion of residential and commercial construction projects went through the platform.

Two years after the start of Sweeten, in the summer of 2013 Brownhill walked through the door of a coffee house in Greenwich Village, New York, to pitch a leading tech investor. One of his first questions drew her attention. He wanted to know if her father had been around when she was growing up. "It felt like a slap in my stomach," she recalls. "On the outside everything I did was smiling, I remember making a joke and taking a picture of my father on my iPhone."

Ten minutes later, the conversation ended and they shook hands. "The first thing I did when I returned to the office was washing my hands," says Brownhill, "and going back to work."

Nowadays the controls are simpler. While she presented at a recent meeting held by one of the limited partners of her investor, she peered at the sea of ​​mainly white men over 50 and she now realized that she had access to a professional network of investors that for years seductively out of reach.

"There are not many opportunities for us to build that kind of meaningful personal connections," she says, "and that makes it more difficult in every way you divide it."

Create alternatives for risk capital

So difficult even that most black women do not raise any venture capital at all. That is increasingly due to the design. They boot their companies or explore alternatives such as smaller local funds or family funds. Crowdfunding and initial munitions – a form of crowdfunding that deals with cryptocurrencies – have also penetrated.

In 2012, frustrated by her search for a replacement part to repair her grandfather's tractor while working for an industrial distributor in Atlanta, Jewel Burks developed Partpic software that allows you to point a smartphone camera on a piece of hardware to to find a replacement without knowing the name of the supplier or part. She struggled to get venture capitalists on board.

"They were struggling to match who I am with what Partpic was," she says.

Burks raised more than $ 2 million in seed financing and closed deals with distributors and retailers. She demotivated Partpic for former President Barack Obama. In 2016, Amazon turned to her and bought her business.

Today, an increasing number of diversity funds, including New Voices, provide a $ 100 million fund from Richelieu Dennis, sundial manager, Black's more options. And a new group of venture companies started by black men – Precursor Ventures & Charles Hudson, Equal Ventures & # 39; Richard Kerby and Cross Culture Ventures & # 39; Marlon Nichols and Troy Parker, who say they are investing in founders of all backgrounds without bias – are leveling the investment playing field even more.

Burks, a consultant and investor, says she is researching new funding models for women and people of color.

"I am personally more interested, not in a conversation about how we let traditional venture capitalists invest in more black-based companies," she says, "but how can those of us who care about creating new, inclusive models specifically designed for founders? whose companies have been undercapitalized in the past. "

& # 39; If there is someone we should pay attention to, then black women & # 39;

Of all those blockades and tackles for black women in tech, Arlan Hamilton is the most visible and vocal. Four years ago, this former music tour manager without a university degree bought a single ticket to San Francisco to support underrepresented entrepreneurs. She was so broke that she encountered technical investors at night and & # 39; at night on the floor of San Francisco airport, until one of them had cut her a check.

Of the 100 companies that Hamilton has funded, 38 are under black women. Last year, her investment firm Backstage Capital dedicated a $ 36 million fund exclusively to black women. She calls it: "It's about damn time."

They have to overcome so many obstacles and such long opportunities in Silicon Valley "if there is someone we have to look down on, they are black women," says Hamilton.

In December Hamilton joined tech entrepreneur Jeff Rosenthal for his podcast, Art of the Hustle. Rosenthal reminded an investor, when supporting a new company from him, to tell him: "If you lose my money, you will make me double for the next one." "Wow, great," Hamilton replied. "I have never heard those words in my life."

& # 39; That sense of privilege that Jeff felt is the same privilege that I try to offer for black women, & # 39; says Hamilton. "I try to put them in an Iron Man suit and let them fly."

In Atlanta, Finney & # 39; s digital divorced has the BIG Incubator program. "The goal is to get the Black and LatinX community into the start-up ecosystem," she says.

Many of the founders did not visit Ivy League schools. Some did not go to university at all. Few people come from the kind of generation that can sustain them until they are ready to bring their ideas to the attention of investors. So they keep full-time jobs, get their credit cards to the maximum or get out of their savings to tackle real problems that only they have the knowledge to solve & # 39 ;, says Finney.

Solving real problems

Jasmine Arielle Edwards was 15 when she had her first child in 2003. Everyone thought she would leave high school or sign up for an alternative school, but she graduated cum laude with two scholarships to help pay for the university. Since then, this mother has earned six three degrees.

A former replacement teacher, her startup, i-Subz, is a recruitment and placement marketplace for substitute teachers and schools serving low-income students. "I have worked to give students who experience hardships the opportunity to contact substitutes who understand their resilience," she says.

Each week she spent nine months traveling between her home in Tampa, Florida and Atlanta to take part in Finney's accelerator.

Increasing spending – rent, food, childcare, gas – stretches her husband's salary so thinly that they have put their belongings in custody and have moved to the house with two bedrooms from her parents, where she, her husband and their children together slept on air mattresses in one. room.

In November, with some help from the family of her husband and some savings, they rented their own house again, although it is smaller and cheaper than the previous one. And i-Subz is growing. It has launched a pilot at three schools with 20 replacement teachers and brought it on board from its first paying customer.

"To get money," says Edwards, "you have to build a makeshift bridge and hope you will not fall off."

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