Fund Me: Black Female Founders Raise An Average $36K. Failed White Male-Led Startups Raise $1.3M
In an industry that’s known for its bro culture and hostility to black people and women, Ashlee Ammons and Kerry Schrader are looking for visibility, common ground, and ways to start a conversation.
They founded Mixtroz, an app designed to help people connect at conferences and they are looking for people to invest in them.
In a Forbes report, the mother-daughter team said they’ve “learned to be forward almost to a fault,” and this means wearing T-shirts at tech conferences that bear the words, “Black Female Founder. Fund Me.”
Black women make up 7 percent of the female U.S. population, but just 4 percent of the estimated 2,200 women-led tech startups.
The average amount of funding a black female founder gets is $36,000. By comparison, the average failed startup — generally founded by white men — raises $1.3 million, CNN reported.
Yet women-led startups that receive funding generate a 35-percent higher return on investment and generate 12 percent higher revenue than men, according to TechCo.
Black female founders made up just 0.2 percent of all venture capital deals from 2012 to 2014, according to #ProjectDiane, a new research study led by digitalundivided about the state of black women in tech entrepreneurship in the U.S.
Many of the findings in the study were disconcerting, said Kathryn Finney, founder of digitalundivided,
The study of more than 60,000 start-ups found that just 88 had black female founders, and of those, 11 had raised more than $1 million in VC funding, NYMag reported:
Venture capitalists are the gatekeepers to Silicon Valley and whoever they choose to fund gets into the kingdom. Certainly, it’s difficult to get funding, period — whether you’re a man or woman. One VC has said that for every 10 investments his firm makes, they meet with around 1,200 companies. But that doesn’t explain why so few of the investments they do make go to women: as of last year, only about 3 percent.
Women say they’re often accused of being pushy if they’re too direct with investors, while the same confidence and assertiveness would be considered an asset in a man, NYMag reported. Brooke Wentz, who founded a music supervision and licensing company called Rights Workshop, shared what happened when she disagreed with an investor. He said he wasn’t going to invest because Wentz was “too defensive, too hard-core.”
“When you’re dealing with people who do not know your line of business and are assessing you by either your tone or your overt strong knowledge about something, you get pushback. On the other hand, if I was a guy, this guy would be literally writing me a check.”
Black women are starting businesses at rates that far exceed black men. There are 1.5 million businesses in the U.S. owned by black women — a 322-percent increase since 1997. By comparison, businesses owned by black men, grew 93 percent in the same time period, CNN reported.
But at the top three tech companies — Twitter, Facebook and Google — there is only one black employee for every 47 white employees, according to a Day News report.
Pitching for black women in tech
Monique Woodard is partner at 500 Startups, where she launched a campaign to invest $25 million — a “microfund” by Silicon Valley standards. The money will go to 100 black and Latino-led early-stage startups.
“I very specifically wanted to work at the early stage when founders need the most help and the most support,” Woodard told USA Today. “That’s where you can make the most impact for black and Latino founders.”
She is working to increase the number of successful black entrepreneurs in technology.
Atlanta-based Cherae Robinson, who founded the Africa-travel-curation site and app Tastemakers Africa, describes being a black woman founder as “a double negative.”
“As a black person, as a woman, I don’t have the connections to these networks of white males who are writing the checks,” she said in a NY Mag interview.
Stephanie Lampkin, who founded Blendoor, has raised around $150,000 in outside capital — a figure that she says pales in comparison to her white male peers in the same space. She also found that raising money from people of color had not gone as well as she’d hoped. “That was a big revelation — that I’m not going to get support from the people who are most obvious. I do think my biggest check is going to come from an old random white guy somewhere who’s just sick of investing in the same people all the time.”
For some women, the whole sector feels so stacked against them and so saturated in sexism that they just want to have nothing to do with it, NYMag reported. Even women who say they didn’t regret (tyring to get funding for a tech startup) joked about having PTSD. Hardly a ringing endorsement of the system.
There need to be more female investors, period. There also need to be more men taking chances on women, so that the few women who are in venture capital don’t feel like they have to always be the ones to invest in other women. Even if more women start flooding venture capital, ultimately things probably won’t change until mostly male VCs realize that there’s money in diversity — racial, gender, ethnic, and age.
Meanwhile, some female VCs, like Tracy Chadwell of Greenwich-based 1843 Capital, have figured out how to make money from male VCs’ poor understanding of the marketplace.
“The perception-distortion field has left some really amazing female-founded companies that are available for me to invest in,” Chadwell told NY Mag.