The collective leading Founders of COlor SHowcase are honored that the exceptional advocate & writer, Geri Stengel published this article to discuss our 2020 inaugural showcase.
Written by Geri Stengel & published in Forbes on May 13, 2020
Forbes Contributor – ForbesWomen
I write about the success factors of women entrepreneurs.Evidence finds that minorities and women are most at risk of losing their jobs as a result of the economic crisis brought on by the coronavirus pandemic. Getting less attention is the similar pattern developing in venture capital. Concern is growing that venture capitalists will pull back into their close circles of trust, leaving minorities and women left out. Early data suggests that the modest gains made by female founders raising venture capital over the past decade are being wiped out.
The percentage of venture capital deals precipitously dropped from 7.1% in Q1 2019 to 4.3% Q1 2020 for all-female founder teams, according to PitchBook. “For first-time founders, it could take months or even years to see better fundraising outcomes, depending on how an eventual economic recovery goes,” writes Eliza Haverstock, a financial writer covering private equity for PitchBook. Data for minority men is not available.
To accelerate the economic recovery and ensure inclusivity, we need to focus on minorities and women. It’s where the growth is happening. Between 2014 and 2016, the rate of growth for million-dollar-plus employer firms was 12% for minorities, 11% for women, and 7% for men, according to the Annual Survey of Entrepreneurs (ASE) by the Census. Minorities represent 40% of the U.S. population and 15% of million-dollar employer firms, women 51% and 13% respectively, compared to men — 49% and 66%, respectively — according to Quickfacts and ASE by the Census. The U.S. would add trillions of dollars and thousands of jobs to the economy if minorities and women became million-dollar employer firms at the same rate as white men.
This makes the Founders of Color Showcase, produced by Next Wave Impact, of such importance. Talent is everywhere. Opportunity is not. Next Wave is an early-stage micro-venture fund driving social impact, as well as diversity, and inclusion. It encourages wealthy women to become angel investors with a learn-by-doing model, which is led by an experienced committee investors. One-quarter of Next Wave’s investors are women of color. On Monday, May 11, they produced the Founders of Color Showcase, ten semifinalists got a chance to present to investors virtually. Some presenters won one-on-one mentorship, training on financial modeling and financing, as well as one founder guaranteed an interview with Techstars, the accelerator program. The audience voted AgTools as the best investment opportunity and Flikshop as having the best pitch.
People in the U.S. are going hungry while food is rotting. The coronavirus has upended the U.S. food supply chain, making this a good time for companies like Agtools. “We are starting to receive more inquiries,” said Martha Montoya, CEO of Agtools. It is a SaaS food and agricultural supply chain platform, offering real-time intelligence for farmers and buyers to help them manage market volatility, increase profitability, and reduce the world’s food waste. The company has raised $710,000, including $200,000 from the Second Annual San Diego Angel Conference, announced on March 28, 2020. The pandemic is bringing the food supply chain front and center, and making Agtools more relevant than ever before. As a result, the sales cycle is shortening. Yet, VCs are focused on existing investments, which requires extra work to show the relevance of her solution.
When you are a Black founder with a felony conviction, it is particularly challenging to raise venture capital. Despite the challenge, he raised $335,000 from angel investors. “I thought that I would die in prison, but my mother’s letters and photos kept me alive,” said Marcus Bullock, CEO at Flikshop. “In prison, getting mail is like hitting the lottery!” Without diversity, the life experiences we bring to entrepreneurship is limited. His service helps families stay connected during incarceration by sending photos and messages via postcards. Few see the potential of the market. Yet, “sales are spiking,” he said. With prison visiting rooms closed, Flikshop offers families a meaningful way to connect. The Florida Rights Restoration Coalition is also using Flikshop to let people in Florida jails know their voting eligibility pre-trial. With social distancing recommendations, the company is also expanding into new markets, including nursing homes, hospitals, and families that have loved ones who are overseas.
For Christian Zimmerman, CEO at Qoins, the pandemic is just another reason for investors to choose not to invest in minority-led companies. He is concerned about valuations being lower, which favors the investor and not the founder. His company helps consumers pay off debt faster and has raised $750,000.
Possip routinely gets the insights, feedback, and information that schools need from families and staff. Especially during social distancing school closures, administrators and teachers need ways to engage families. Possip does that. The company is seeing growth and momentum build. Yet, market uncertainty makes investors more risk averse and more likely to rely on the familiar, commented Shani Dowell, the company’s founder and CEO. She has raised $1.1 million. Rather than promise unrealistic growth, such as being a billion-dollar company in three years, she is taking the opportunity to be more transparent, clear-eyed, and grounded about her projections. Dowell is focused on meeting the needs of the world right now and delivering social impact and return on investment that are appropriate for her customers, the community, and her investors.
Florence Furaha, founder and CEO at Meetcaregivers, is seeing soft commitments disappear and a drop in investment activity. She has raised $300,000. Her platform matches seniors with ideal caregivers and coordinates daily care activities. “It’s going to be much harder than ever for Black women to raise money during the pandemic,” she said. One silver lining: With the rise in virtual meetings, she sees an openness from investors to consider deals outside of their geographic area.
For Erica Plybeah, founder and CEO at MedHaul, the landscape for raising money before COVID-19 was stark. There isn’t any expectation that it would be any different now. Her platform connects healthcare providers to special needs transportation options making it easy to book rides for patients with special needs. She has survived and thrived by operating lean. On the bright side, there has been an uptick in interest in healthcare companies, including hers.
“Edtech is booming,” Andrew Hill, founder and CEO at LiftEd. The technology equips educators, specialists, therapists, and parents with tech tools and support to help the one in five students who learn differently, succeed in the classroom and life. For Hill, the pandemic has been a seesaw ride. Demand for his product has skyrocketed more than 500%, but investor opportunities are drying up among angels who are more susceptible to the stock market downturn. Company valuations are down. Interestingly, cold outreaches are more likely to get returned. Virtual meetings have opened unprecedented opportunities to meet investors that generally would not have given him the time of day. However, building rapport online is much harder than in person. He is delighted that organizations and individuals are doing a great job of calling out the inequalities that, during these times, are exacerbating fundraising disparities.
Neopenda develops innovative medical devices based on the needs of underserved populations. Sona Shah, the company’s CEO and co-founder, has raised the most money of the semifinalists to date — $2 million. She has also received recognition from Inc., Business Insider, Conscious Company Media, and Computing. COVID-19 creates new opportunities for its wearable vital signs monitor. However, it also presents a challenge. Investors are focused on supporting their existing portfolios. Even with a device that can help during the pandemic, Shah believes that, because of her lack of connections in this sector, it will take longer to raise money.
What’s your experience raising money in the age of the coronavirus?