Why the entrepreneurs of the future are coming from the margins

LaunchTN
LaunchTN
Jul 25, 2019 · 3 min read

Backstage Capital founder Arlan Hamilton takes us inside her revolutionary VC and explains why ‘underestimated’ founders are on the cutting edge of the entrepreneurial ecosystem.

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Anyone with their finger on the pulse of the entrepreneurial landscape knows Arlan Hamilton is a force to be reckoned with.

Hamilton advocates for what she calls “underestimated” entrepreneurs, believing they hold the most potential to lead the ecosystem in innovation. Since she founded Backstage Capital in 2015, Hamilton and her team have invested in 100 women, people of color, or LGBTQ founders, and together they’ve empowered a community of innovators to shape the future.

We caught up with Hamilton at last year’s 36|86 Entrepreneurship Festival, where she highlighted how VCs often leave untapped the entrepreneurs with the greatest potential, unpacked her own approach to venture capital, and shared her vision for the future of the ecosystem.

Fueling untapped innovators

Backstage Capital has proven that investment in entrepreneurs from the margins isn’t charity; it’s a smart business move.

“Your dollar goes further,” Hamilton said. “The founder is doing so much more with so little because they have to.”

Hamilton emphasized that, because the stakes are high for many of these founders, they are especially committed to realizing their vision. “There’s a drive that’s there,” she said. “There’s no safety net for the majority of these founders, so they’re in it to win it.”

This perspective is revolutionary in a venture industry that’s often reluctant to support founders from the margins. “A lot of people still think of putting any kind of capital behind non-white men as ‘a good thing that I’m doing, a philanthropic thing that I’m doing,’” Hamilton noted.

Investors tend to fail to recognize the potential of underrepresented entrepreneurs, and this mindset sets back founders and investors alike. “[Investors] are not thinking of it in a way that has an edge to it,” Hamilton said. “They’re thinking of it like everyone else.”

With this in mind, Hamilton urges investors to embrace the cutting edge and “think about being a catalyst.”

“That makes you part of history when you do that,” she emphasized.

Power to the founder

Just like entrepreneurs have to prove themselves to investors, Hamilton believes that investors should have to prove themselves to entrepreneurs — the center of authority needs to shift.

“I think sometimes entrepreneurs and investors give too much credit to investors, as if we are geniuses, or have some sort of key to something that they don’t,” she said. “It’s not true.”

The entrepreneurs Hamilton supports are acutely aware of both the struggle for funding and the potential for innovation at the margins, and Hamilton believes that the best thing VCs like hers can do is offer their full support.

“I don’t know if I have a ‘message’ for them, because they get it. They get it because they live it every day,” she said.

“It’s more like letting them know that we’re here, and that we understand them and believe them. We understand the struggle because we live it ourselves, and we also understand that, beyond the struggle, there’s so much more life.”

Planting for the future

The venture capital industry needs to evolve, Hamilton argues, and that evolution won’t happen overnight. It will take patience, persistence, and a community of entrepreneurs and investors that support each other.

“If I could leave anybody with a message, it’s that it’s not necessarily about what’s right in front of us,” Hamilton said.

She remembered some wisdom her mother had once shared with her on a road trip: “The seed doesn’t see the leaves.”

“That’s how I think about Backstage,” she explained. “If we think about it as ‘we’re all working toward this together,’ maybe every single one of us won’t get the check, but maybe what we’re doing is planting for an awesome future.”

Subscribe to Disrupt the Continuum wherever you get your podcasts, and join LaunchTN for 36|86, Aug. 28–29 in downtown Nashville.

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