Hillside Announcements
UConn Students interested in learning more about VC, introductory topics, and how to deal source can register for the course Introduction to Venture Capital. The course can be found in the student administration system as MGMT 4895 - Section 001 and will take place on MW from 12:30PM - 1:45PM in Fall 2021.
Diversity in Venture Capital
As a first-semester analyst, I was very excited to explore the world of VC and gain first-hand exposure to the early stages of startups. Being a part of Hillside Ventures has allowed me to become familiar with an assortment of new, innovative companies that have the potential to significantly influence their respective industries. However, I soon came to the realization that there is a notable disparity within VC—more specifically, which companies ultimately receive funding. To my dismay, this problem is the result of a larger, underlying issue within the industry.
Historically speaking, minority and women-founded companies have been severely underinvested in, with this trend only exacerbating over the years. COVID-19 has caused disruptions across many business sectors. With the enforcement of gathering restrictions, companies have been forced to either shut down their businesses or adapt their current operations. State-mandated regulations have disproportionately affected minority-owned and women-owned small businesses. We have, however, witnessed a surge in corporate advocacy during the year 2020. Reputable companies such as Paypal, have pledged to invest millions of dollars into minority and black-owned businesses in support of various social issues.
Despite this, there still lies a large gap in funding for these demographics. In 2020, women led-startups only accounted for a mere 2.3% of the total VC funding, a 0.5% decrease from the previous year. As of October 2020, minority-founded startups consisted of only 2.6% of the total VC funding for the year.
Ultimately, there is a persistent struggle amongst minority-owned and women-owned startups to gain sufficient capital to grow their businesses. Today, I would like to use our platform to highlight three VC firms that are working to bridge the gap of inadequate funding for minorities and women startup companies.
The Artemis Fund is a Houston, TX-based VC firm that invests in seed-stage, female-founded companies innovating in fintech, caretech, and consumer tech across the country. Founded in 2019 by Stephanie Campbell, Leslie Goldman, and Diana Murakhovskaya, TAF hopes to use its investments to drive forth real solutions to real problems.
During the semester, I’ve had the pleasure of connecting with Juliette Richert, a junior analyst at The Artemis Fund. During our initial conversation, it was clear to see that she is passionate about The Artemis Fund and its goal of empowering women founders. In early 2020, only 12% of decision-makers in VC were women, double the percentage of 2016. More than half of VC firms in the US don't have any female decision-makers. Juliette notes, “Because this is such a male-dominated industry, I count myself lucky to be surrounded by female leaders. Working with other women has all sorts of positive social-psychological impacts on individual growth, access to resources and support, and fewer encounters of bias.” She goes on to say, “TAF's founders are incredibly supportive of my growth. I think this is because they are working to transform VC into an industry with gender equality, instead of the homogenous industry it is today. I am excited every day to speak with so many female founders and support other female investors however I can.” (Juliette Richert, Junior Analyst).
Harlem Capital is an early-stage VC firm, that focuses on investing in minority-owned and women-owned startups. The firm was founded at the end of 2015 and has made 24 investments to date. On March 31, 2021, Harlem Capital announced that they have raised a total of $134m for their second fund. Harlem Capital Partners Venture Fund II will allow the firm to invest larger amounts into startups, moving them closer to their goal of, “... building an institution and platform to support diverse founders for many generations” (Henri Pierre-Jacques, Managing Partner).
Harlem Capital has five main pillars:
We invest in founders from all backgrounds, genders and walks of life.
Not only do we aim to invest, but also seek to develop an ecosystem of diverse founders, investors and companies.
We believe good investments are often simple solutions to difficult problems.
We are industry agnostic because we believe the majority of early-stage companies have similar development areas.
We strive to provide the most value-add per invested dollar by leveraging our various backgrounds and network.
Some companies within their portfolio include Dexai Robotics— a AI automated robotics company looking to disrupt the food industry, Pangaea— a e-commerce incubator, Shine— a self care app, and Stuf— a tech-based self-storage startup.
Backstage Capital is a seed-stage VC firm that was founded in 2015 by Arlan Hamilton. Acknowledging the many barriers of entry women, minority, and LGBTQ+ founders face, Backstage Capital works to actively serve these underrepresented communities. The firm is stated as being one of the first VC firms that specifically focused on investing into underrepresented founders and continues to be a trailblazer within the industry. As of March 15, 2021, Backstage has raised a total of $2.3m through crowdsourcing—with the goal of reaching $5m, the new crowdsourcing limit enacted by the U.S. Securities and Exchange Commission. Backstage Capital’s portfolio contains companies such as Edlyft— a digital platform helping students navigate through STEM-related material and Career Karma— an app dedicated to connecting people to career advice and job training resources.
Main Takeaways
There are many obstacles women and minority founders face alike when seeking out investors. This has ultimately resulted in the estranged relationship between VC firms and these companies. We have a long way to go and by no means will this problem be resolved overnight. However, with the support and advocacy of these founders from VC firms, we will begin to see a shift towards a more equitable environment for all founders.
ByAliyah Hayes, Analyst at Hillside Ventures