Every business has a story and the foundation of that story starts with money. Forbes Diversity & Inclusion reporter Ruth Umoh is often the one discovering these stories. During this quarter’s undivided We Rise Virtual Summit, she moderated a conversation with Co-Founder of the Fearless Fund Arian Simone, CEO and Co-Founder of Topicals Olamide Olowe, and Head of Partnerships at Republic, Bianca Caban to talk dollars and cents.
Diversity Is Needed In Financing Too
“Speaking to Black and Latinx founders, as far as raising capital and the discussion of money, I think it is very important right now,” said Simone.
She was drawn to financing through her own struggles securing funds. “I got into this space actually to solve a problem I was having myself,” she said. “I was raising capital as a college student at Florida University when I was 21. I told myself then that one day I was going to be the business investor that I was looking for.”
Simone’s Fearless Fund is one of a growing segment of organizations who are tired of traditional industry stop gaps, and looking to be the change.
“We’re the first fund that’s built by us for us. We are not looking to be the last,” she said. She pointed out that funds led by Black women are not just better at creating access, but they also lead to results.
“There are definitely strategic alliances and advantages that we do have currently at our fund,” she said.
Cashing In Doesn’t Always Equal Selling Out
Simone seeks to be the type of investor that goes out of their way to shut down stereotypes, including the recurring one that misleads founders to believe that selling their business makes them a sellout. “That’s the stigma in our community. It needs to be just demolished. It really does,” she said.
While White men get applauded for cashing in and becoming serial entrepreneurs, Black and Latinx female founders get shamed for moving on from their organizations.
“I think in our community, we see acquisition and we see I’m selling your company to a larger company as selling out or as you know, trying to jump ship or get rich, but really every single person who takes funding or has investors, the exit opportunities are exactly what your investors are looking for,” said Olamide Olowe, founder of Topicals.
“I think in communities of color, we haven’t seen exits, or we haven’t seen large acquisitions in the same way maybe other communities have seen. We should see acquisition as success and not as someone selling out.”
Arian Simone reminded the audience that acquisitions can prompt meaningful community investment.
“I hate when people romanticize about the business too much to where they’re just so in love with it, but I’m like at the end of the day, are you in love with this $10 million revenue business that you can’t even cut a $10,000 check for? Whereas if you had a $40 million exit, an acquisition for this business, you’re now in position as a person of color in your community to go and start another business and just do so much more,” said Simone.
She also reminded the audience that there’s more than one way to build a legacy.
“There are some businesses that will be legacy businesses, but at the end of the day, capital and cash is king and they are going to put you in a better financial place for your community, whether you’re running that business or having an exit, that puts you in a better position,” she added.
Start-Ups Require Some Studying
Bianca Caban used the opportunity to speak with the digitalundivided community to share vital information with founders. She is committed to “enabling founders regardless of where they are,” through her work at Republic.
As stated in ProjectDiane, “while there is a growing number of Black women crossing the $1MM venture threshold, a majority of Black women–led startups do not raise any money,” meaning that minority founders need access to as many resources as they can get.
Caban explained terms like bootstrapping, shopping, unicorns, debt-based financing and IPOs .
She then suggested founders look to the data available to pinpoint their strengths before reaching for outside investors who might want to speed up their exit timeline.
“Data shows that women are very good at storytelling and galvanizing supporters. And so equity crowdfunding is a really powerful way for women of color to do just that, to leverage their ability, to rally a community, to inspire, to influence and to leverage their near superpower in doing that to raise capital and receive the funding they need to get to the next stage,” she said.
“You just have to be mindful of what your business model is and what you need to support it in order to scale and grow at a rapid rate,” added Simone.
The panel advised founders to consider the limitation of certain funds before committing to one.
“The main question you have to ask yourself is, are you ready to lead an organization that has to one day either be sold or go public on the stock exchange?” said Olamide Olowe.
Arian Simone recommended that founders research the values of the funds they are courting.
“Make sure that your values fall in alignment with whatever that mission is for who you’re looking for funding from,” she said.
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