3 Tech Founders Share Their Experiences Raising Capital
Less than 1 percent of venture capital-backed founders are Black in the U.S., and the proportion of Black decision makers in VC isn’t much better. Pattern recognition helps venture capitalists to mitigate risk, but it also limits their profit and perpetuates bias. This bias puts up barriers to early-stage capital, ensures poor representation in investing, and for communities of color, it helps perpetuate racism.
Three Black tech founders talked about their experiences raising capital. All three were interviewed on the GHOGH podcast with Jamarlin Martin.
Everette Taylor is a serial entrepreneur and marketing whiz who built GrowthHackers, PopSocial, MilliSense and other tech companies. Taylor sold his first tech business at age 21.
His second company, GrowthHackers, raised about $7 million. “But that company, I had white male co-founders … which made raising capital a lot easier, especially because one of them (was) famous in Silicon Valley,” Taylor said. His third company, Millisense, was a marketing firm and didn’t raise any capital. With the fourth company, PopSocial, Taylor said he pitched it to a couple of investors and got shot down right away.
“That type of stuff puts a chip on my shoulder,” Taylor said. “I don’t have time for it. I’m like, look, I’m just going to put my own capital, hire my own team, take money out of my own account to build tech. I’m not gonna beg for you. I know how profitable this can be in two years. Now we’re an eight-figure company and highly profitable.”
PopSocial is the most successful company Taylor started, “and we’re profitable. We’re good. We don’t need any investors. But they would have seen a really nice return on their money. I knew with my audience, I knew with my understanding of people and what they want, who the hell doesn’t want more followers? Who the hell doesn’t want to build their audiences and get more engagement and things like that? People naturally want these things. Brands naturally want these things. Right? And this was an affordable option to spending thousands of dollars on Facebook ads or thousands of dollars on a marketing firm. I understood that. Sometimes people don’t see the picture.”
Taylor is in the process of starting two new companies, one of which he plans to bootstrap. “The other, I’m not sure, because it’s going to be capital intensive,” he said. “And so just the idea that I might actually have to play that game is not great.”
Rodney Williams is the founder and CEO of Lisnr, a resource for data over audio. He sells his technology to the biggest audio equipment companies in the world — like Bose Corp.
In 2015, Lisnr raised $10 million led by Intel Capital. When you raise a round, “you’ve gotta go through diligence,” Williams said, “and diligence is like someone walking into your room and digging through your closet.”
A VC or angel investor should apply thorough due diligence on any founder he doesn’t feel comfortable with, Williams added.
“I don’t think there’s nothing wrong with that,” Williams said on the GHOGH podcast. “I’m an investor now and … when I meet a founder, I’m mitigating my risk. So the only reason why I tend to invest in things that are familiar with me is ’cause I know it, right? So when a white investor meets a Black founder, this is very new for him. He doesn’t necessarily know much about him, his environment, where he’s from. So I think it’s only right that a person does a thorough check. And now I think as the founder on the other end, it’s only right that I get myself together if this is what I’m trying to go out and do.”
Delane Parnell is the founder and CEO of high-school esports company PlayVS, which recently raised a $15-million Series A round. He secured an exclusive partnership with the NFHS, which writes the rules for most high school sports, to introduce esports infrastructure to about 19,500 high schools across the country.
Raising money is difficult for all entrepreneurs, but especially if you’re Black, Parnell said, and that has resulted in missed opportunities.
“There’s been a bunch of times where Black entrepreneurs have been early to the party and haven’t gotten credit for it,” Parnell said on the GHOGH Podcast:
“There was this moment in time where there was this big wave around edtech startups, specifically startups that we’re teaching people how to code in three or four months. That wasn’t started by General Assembly. That was started by Code Academy, which became Starter League … they had to change their name to Starter League in Chicago … People give General Assembly credit and they give Dev Bootcamp and Hack Reactor, all of these guys, credit for creating that tech movement around teaching people how to code. But that was two Black kids in Chicago.”