‘Empowering People Who Look Like Me’: Arlan Hamilton At Black Tech Week
How are you using your platform to empower people who look like you?
That was the topic of a panel discussion at Black Tech Week Miami, entitled “Beyond Diversity: Empowerment For Black Tech Entrepreneurs.”
Derick Pearson, co-founder of Black Tech Week moderated the discussion. Panelists included Jamarlin Martin, founder and CEO of Nubai Ventures and Moguldom.com; Darlene Gillard, a founding member and partner at DigitalUndivided; and Arlan Hamilton, founder and managing partner of VC fund Backstage Capital.
This article focuses on Hamilton, who built Backstage Capital from the ground up starting when she was homeless in 2015. The fund is dedicated to minimizing funding disparities in tech by investing in high-potential founders of color, women and LGBT.
“Our fund is a boutique fund which is a special way of saying ‘very small,'” Hamilton said. “I started this while I was homeless and today have invested in over 80 companies in the last 2.5 years.”
Here’s an excerpt from Hamilton’s comments at Black Tech Week:
Speaking on the topic, “Beyond Diversity: Empowerment For Black Tech Entrepreneurs” at Black tech Week Miami 2018 are Derick Pearson, co-founder of Black Tech Week; Jamarlin Martin, founder and CEO of Nubai Ventures and Moguldom.com; Darlene Gillard, a founding member and partner at DigitalUndivided; and Arlan Hamilton, founder and managing partner of VC fund Backstage Capital. Photo: Anita Sanikop/Moguldom
Derick Pearson: How are you using your platform to empower people who look like us?
Arlan Hamilton: By leading by example. I started Backstage Capital because I couldn’t find enough of what I was looking for — people who looked like me, who were equipped or allowed to write checks. That’s not OK. I wanted more of that. Most of what I do is not about personal gain or personal wealth. It’s about setting examples so that it can be replicated by others over and over again so that in just a few years the word underrepresented won’t include black people. It’ll just be part of an equal playing field.
Derick Pearson: Arlan, you’re raising rounds. How are you dealing with major investors and hedge funds to fund people of color?
Arlan Hamilton: A lot of what keeps me up at night is balancing the fact that I’m trying to raise capital for black and brown founders and women. A lot of the capital I have to go to could (involve a conflict of interest). (A lot of what keeps me up at night is) figuring out my place in that, and my responsibility in that and how much of that I can put on my shoulders.
Jamarlin Martin: A question for Arlan: You have some high-profile investors, billionaires. One of the top brokers in Silicon Valley is Marc Andreessen. When I look at some of his comments and how he defines diversity, his backing of Peter Thiel, his comment relating to colonialism in India, (implying India is worse off without the British). It seems like you’re in a conflicted position. You’re doing things for the people but at the same time, you’re talking money from folks driving the problem.
Arlan Hamilton: I’ve definitely turned down half a million dollars from someone who was associated with Peter Thiel right around the time when he put $1 million into Trump’s campaign. It would have done everything for our fund to have that money but I just couldn’t do it. I could take days to describe the nuances of it. I think all the questions are valid. I also wonder what others would do in my place in a lot of these situations. It’s about timing in some cases. Sometimes things happen. If we get a $50K paycheck from someone and then they go out and do something, I’ll make the decision about whether I want to find (the money) from someone else and give that money back. I make decisions every day that are tough. For me, it’s more about can I get some more black and brown investors to take the place of those people? I have found it very difficult to raise from black investors for the most part with the exception of a few people.
Derick Pearson: Arlan is an investor in Kairos (Miami-based facial recognition firm owned by Brian Brackeen). Jamarlin as well. Brian and I just discussed an ICO for a fund. Have you considered (an ICO) Arlan?
Arlan Hamilton: Oh yes. We’re late to the game. We thought about it for about a year. People are asking about that. That would be a little bit like lasik surgery. Let some of the experimental white men do it first, see if they still have eyes in a few years. (ICOs are) the wild wild west. It’s going to become highly regulated. When you see a lot of success from it you may want to jump on it. Do your research like it’s your college thesis. I do think that it will change everything for us, us being black folk — black and brown. I’ve had so much trouble (with the fund). They told me at first — ‘can’t invest in you coz you don’t have a track record.’ So I went out and invested in six companies. Came back, ‘that’s not good enough.’ Then they said ‘come back when you have 20.’ I came back with 30. ‘That’s not good enough.’ Even though it seems like I had a lot of success really fast, it has been such a journey. Everything I do is about empowerment, ownership and legacy. I would say don’t be surprised if you hear something from us — some ICO fund-level stuff — because it’s definitely on our radar.
Jamarlin Martin: Have you thought about slicing up the equity of your portfolio companies and (finding) a medium to take it through a crowdfunding channel in terms of the people with smaller investment amounts?
Arlan Hamilton: Yes not only have I thought about it but I’ve tried it for three years. Another thing you may see from us — FCC regulation stops us from talking about it — is a syndicate that is not related to anything that AngelList (website for startups, angel investors and job-seekers looking to work at startups) ever thought about breathing on. I have gone through that before. Every company that does public crowdfunding has to be regulated in a different way than one that would do it privately. It’s not only about having a platform for it. We may or may not be called Backstage Crowd one day this year. What I have done and what I will continue to do is a fund that is raised by the accredited crowd. A fund that is raised by the non-accredited crowd? That is the biggest nightmare that I can think of when it comes to admin so I wouldn’t do that but there’s skirting around that. I was the first black woman to have (an active) syndicate on AngelList 2.5 years ago. I tried working with them for quite a while and that didn’t work out too well. I come from the bowels of the music world — the hard work of it. There’s a lot of non-celebrity black investors who are just kind of tight. They don’t want to be put out like that. I don’t know how that changes. I think that a lot of people feel like if they’re self-made (like I am becoming) they may feel like it can go away. So they don’t want to let go of it. So they hoard. That’s what I have seen from my experience.
Jamarlin Martin: There’s been a lot of talk about diversity and inclusion and over time, it’s become an ambiguous term. There’s so many different agendas and groups that are thrown into the concept of diversity. It’s like gumbo. Everyone’s talking about diversity and diversity has a something for everybody but I feel like the descendants of slaves, African-Americans, need something very specific. In terms of history in America, ours is very different than everybody else’s. When you put everything together you lose a lot of leverage, you lose a lot of focus. How do you feel about throwing the black empowerment/economic empowerment within the context of diversity and speaking broadly?
Arlan Hamilton: I have a lot of friends who challenge me. They’re hyper-focused on one thing — Black or LatinX. I think there needs to be those people. I think there also needs to be people like me who can travel in different lanes because the reality is for me that that’s what this world and this country is. I have threatened many times since Trump was elected that I would zip-line into a bunker and not come out again. I don’t consider Backstage to be a diversity fund. I was in the room recently where everyone was patting themselves on the back for the diversity in the room and I was the only black person in the room. In that room, their context was that they were empowered women. That’s something that half the people on this panel will not know what it’s like to be, black or white.