Photo: Harlem Capital Partners co-founder Henri Pierre-Jacques
Henri Pierre-Jacque, one of the most prominent U.S. startup investors, tweeted over the weekend that he “just had a Founder say ‘F**k you'” via email after the venture capitalist decided not to invest in the company.
While he said he deleted the tweet, Pierre-Jacque wasn’t ready to let it go. “Some forget how small this world is and that no’s aren’t personal. I deleted and will let karma do the reply,” he added, with this warning for startup founders:
“Founders, do not make the mistake of writing your emotions in an email. There is ZERO upside and ALL downside.”
Pierre-Jacque co-founded Harlem Capital in 2015 with the goal of changing the face of entrepreneurship by investing in 1000 diverse founders in 20 years. Just 2.6 percent of VC funding goes to Black and Brown founders.
In March of 2020, Harlem Capital closed a $134 million round for its second fund to help make its goal a reality — truly an accomplishment for a Black-led VC firm while only 3 percent of investment partners are Black, Tarik Moody said while interviewing Pierre-Jacque in 2021 on Radio Milwaukee show, “Diverse Disruptors.”
Harlem Capital invests $1 million to $2 million into early-stage diverse-led startups based in the U.S., Africa and Latin America.
Black startup founders continue to struggle to raise funding in a challenging environment for venture capital.
Valuations are sinking, exits are down and VCs are looking for options to give their investors or limited partners liquidity, Fortune reported. The liquidity issue is “more severe than the last two downturns” because of how much capital was raised and how many companies were invested in during this past bull run, said Ravi Viswanathan, founder and managing partner of NewView Capital. NewView specializes in buying stakes of companies from other VC firms or companies themselves, in addition to funding new rounds and follow-on investments.
Not all companies and VC firms will survive, Viswanathan told Fortune. He predicted that “mortality rates of companies and firms are going to increase in the next three to five years, pretty significantly.”
Crunchbase data showed that Black U.S. startup founders raised around $264 million out of the total $33.6 billion in venture capital allocated in Q4 2022. That’s an increase from the $178 million — or 0.43% — the group raised in Q3.
In total, U.S. Black founders raised an estimated $2.254 billion out of the $215.9 billion in U.S. venture capital allocated in 2022. That’s about 1 percent — slightly less than the 1.3 percent raised in 2021.
“When the macroeconomic environment tumbled, the investors that were preaching D&I disappeared, and their implicit bias became more apparent,” said investor De’Havia Stewart in a Crunchbase report.
In a 2020 podcast, Y-Combinator partner and CEO Michael Seibel and his brother Jason had a lot say about founders protecting their reputations and being persistent if at first they don’t succeed.
Second-time founders tend to have an easier time fundraising, even if their first startup was a failure, the Seibels said. On the second attempt, they’re “a little bit de-risked. I know they’re not going to take the money and do something bad with it. I know they can at least hire a couple of people. I know they can at least launch something. And so on the flip side, I think people are too hyper-focused on executing on their current company and they’re not thinking about this as a life decision where maybe it’s their second or third or fourth company that’s going to be the one that really makes it.”
“But if they destroy their reputation, they’ll never have the chance to do two, three and four. And it’s scary because like, man, this thing stretches over years.”
