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Social capital for emerging entrepreneurs
PitchBlack, Backstage Capital, Peaches Monroe, and the community activity supporting growth and equitable funding for Black-owned startups.
When it comes to accessing resources and equitable funding for Black-owned startups, the ecosystem is in need of disruption.
And not just when it comes to the process of identifying businesses with lucrative valuations or the most potential for upside. Rather, disruption by way of an old school concept that’s been around since the beginning of time—authentic human connections and support networks.
With just one percent of VC funding going to Black founders, it’s of critical importance to have safe spaces where these entrepreneurs can be heard and for their ideas to be validated. And the need isn’t just aspirational, but structural, if we want to capitalize on the gains within our communities. Remember, Black women remain the fastest-growing population of entrepreneurs in the country.
“There’s a need for founders to cultivate social capital,” says economist and entrepreneur Stephen Green. Green is the founder of PitchBlack, a competition that gives Black entrepreneurs a platform to connect with the larger startup ecosystem, while also awarding them with cash prizes.
When it comes to the funding gap, it’s clear that Black startups need more capital, but the lack thereof isn’t due to a shortage of investment money in our economy. In fact, US venture capital funding reached an all-time high in 2018, and has since maintained that trajectory. So what’s the hold-up?
“The biggest thing that holds people back from investing in Black founders is their perspective,” says Green.
With 71% of white men leading VC firms, implicit bias plays an inherent role in decision making—that is, the unconscious preference for or aversion to certain groups. These biases are usually influenced by upbringing, social influence, popular media, and stereotypes, ultimately playing out in the deal flow of many capital funds.
There’s also the myth that the lack of investment in black entrepreneurs is a pipeline problem. But Backstage Capital’s recent Accelerator Cohort Report challenges that notion by presenting information that boasts the program’s representation of people of color at over 4x that of industry standards. In response to suppositions that there simply aren’t enough new businesses founded by people of color, Backstage’s General Partner Christie Pitts told Supermaker, “There are thousands of talented and qualified underrepresented founders who are building startups today. At Backstage, 1900+ applied for Accelerator in six weeks. If an investor lacks diverse deal flow, and is willing to change, we can help.”
Green’s suggestion? “Start with the thought that [Black founders] exist and combat that implicit bias.”
Since 2015, PitchBlack has cultivated and fostered community for Black entrepreneurs in cities across the country, including Portland, Seattle, and Austin. PitchBlack offers an authentic way for the local startup community to cut through the bias and directly connect with regional Black entrepreneurs. Since its inception, PitchBlack presenters have also benefited from $75,000 in prize money, and gone on to raise more than $32M for their businesses.
“Social capital and confidence come out of participating,” says Green. “The pitching is secondary to the connections that happen.”
Social capital is a vital part of securing funding for Black founders. However, in our hyper-connected world, we’re often more connected online than in real life. Spending time in the same room has been usurped by phones and social media, says Green. He thinks we’re losing the ability to communicate with other human beings. “We need to have spaces to engage in person,” says Green. “This is one of the many spaces I hope to create to fill that need.”
The connections made at Pitch Black have been game-changing for 2016 participant Damola Omotosho, Co-founder of The Cut Up, a digital platform that helps barbers and stylists connect with clients to provide services. “PitchBlack provides one of the best captive audiences to share your idea with,” said Omotosho. “The audience is geared towards you, regardless of what the product is.”
Omotosho credits PitchBlack with exposure and connections that landed him a role as an Entrepreneur in Residence at Jaguar and Range Rover’s recently announced incubator. He says participating in the competition made him realize how important it is to tell the story behind the start-up by giving him a chance to share his own. Plus, it gave his company the capital and momentum to push through to the next stage of business. “The money helped us build out our mobile app which was huge for us as a bootstrap company. You get great feedback, great experience, great opportunity, and great connections.”
Those connections also played a role in the investments PitchBlack alumni Jelani Memory of Circle has received. An anomaly and example to other participants, Memory has raised an astonishing $30M over the course of four years.
Memory represents the heights of Black excellence that entrepreneurs can aspire to reach. When asked how he did it, Memory credits his success to a focus on product development. “Place a huge focus on building something amazing and make it so good that people can not overlook investing in your company.”
This year’s PitchBlack was held August 14th in conjunction with Portland’s Sneaker Week, with many of the entrepreneurial concepts centering around ideas of Black culture, and spaces for Black people to call their own.
At the end of the day, the idea that took home the most votes was an intellectual property protection concept called #Tag pitched by Renee Allums, with the aim of revolutionizing digital ownership through blockchain technology.
Allums opened her pitch with the history of the phrase on fleek, which was made famous by Kayla Newman (aka Peaches Monroe) in a viral 2014 video describing how good her eyebrows looked.
The catchphrase has since been used to sell music and fashion, and even appeared in advertising spots by restaurants like IHOP and Taco Bell. Meanwhile, Newman hasn’t made a dime off the viral catchphrase that’s still in today’s youth lexicon. In an interview with Teen Vogue, Newman said, "I would definitely have made sure I was more aggressive if I had known that the video would blow up to be this big. I would have had a team of lawyers with me as well."
Unfortunately, this is nothing new. “Independent black creatives are exploited all the time,” Allums observed.
She went on to describe a process called “Twitter mining” in which writers and television producers troll the interweb of #BlackTwitter swiping ideas. Allums wants to help Black creatives and independent artists trademark and receive proper payment for their contributions.
As one of fourteen participants who pitched, Allums found out about the competition a mere five days ahead. “My friends pushed me to sign up,” explained Allums. “It felt like a now or never situation.”
That leap of faith paid off. When it came time to vote, Allums took home an overwhelming 36% of the votes and emerged as the clear winner. “I couldn’t ask for anything else. I felt safe, comfortable, seen, and validated,” Allums said. A rare sentiment coming from Portland, where safe spaces for Black people are not widely available.
Allums split a cash prize of $12,000 evenly between entrepreneurs who pitched the top four ideas. When asked how she would use her winning prize money, Allums said she is first going to invest in protecting her idea. Perhaps not an unsurprising first act, coming from the founder of an intellectual property protection startup.