I want to invest in startups with underrepresented founders.

Arlan
Arlan
Sep 17, 2015 · 7 min read

Now I can. With great excitement and pride, I give you…

My new AngelList syndicate!

…that all accredited investors can participate in RIGHT NOW! With it, I will be backing high-potential startups who have at least one founder who is of color, female, or/LGBT. I will share my deals with syndicate backers (you?) who can invest as little as $1,000 per deal. Sooo excited! The first company will be announced shortly to syndicate backers only (so sign up today!) + I will soon explain more about AngelList syndicates to those who aren’t familiar in a separate post.



Why underrepresented founders?

I have access to all types of great founders and all types of awesome deals. But I believe that there is a unique opportunity to fund high-potential companies led by underrepresented founders who are of color, female, and/or LGBT (and I am proud to be all 3!). Companies founded by white males have historically received ~92% of all venture capital funding. Diversity has proven to be lucrative, yet traditional VC pattern-matching is leaving billions of unrealized returns on the table.

In my blog post ‘Dear White Venture Capitalists’ that went viral this summer, I posited that anyone who can, should write more checks to high potential underrepresented founders if they’re interested in more returns. The response I received was astounding and really made me feel so much hope for the future. Hundreds of founders, investors, consumers, and allies reached out.

In the past few weeks we’ve seen Google Ventures add two black investment partners, the White House held its first Demo Day and a ton of VC firms pledged to invest in more diversity there, the Kapors committed $40mil to invest in diverse founders, and Intel continues to be a strong leader. Several companies like Airbnb, Slack, Twitter, Uber, and Dropbox are divulging more stats and hiring people to lead diversity initiatives that speak to the culture of their companies in an effort to retain, and (hopefully) not just bloat their employee statistic numbers or meet a quota.

Though a natural skeptic (what great emerging investor isn’t?), I am hopeful.

So I asked myself: “What can I do to make a clear and present impact and be part of the change I wanted to see, and NOW? And also…make a ton of scrilla cause diversity is LUCRATIVE…” I have no personal wealth and breaking into the venture world is so highly competitive. I did receive a couple of interesting offers after my blog post in June, but to be frank, even the serious ones weren’t offering a salary, so I had to turn them down in order to eat. Girl needs her string cheese, ya feel me?

So I decided to do a major hack and carve out a role for myself via Angel List. A lot of people (like mega-investors Paige Craig, Dave McClure, etc) think that crowdsourced equity is the future of venture capital. I believe that at the very least it’s going to radically disrupt it and shake things up in the next few years. It also allows for a lot more transparency, access, and inclusiveness in investing, which are all things I stand for.

“Deal flow” is KING (or ya know…QUEEN).

In Silicon Valley and other tech hubs, there’s a lot of capital flowing, but deal flow trumps all. If you have a pipeline of solid founders and branded investors bringing you the best deals and companies in the land AND you’ve got great negotiating chops and a fine nose, you’re essentially doing better than the person next to you who has $10mil ready to spend but no access to deals. It’s not easy to get great deal flow because it takes years to build the pipeline and learn what to do with it once you have it.

I have some pretty awesome deal flow. It comes from a combination of being lucky and working really hard to build my network and be a value-add over the last 3 years. I try to be a good listener (still working on it) and help founders whenever I can, and as my friend and advisor Susan Kimberlin says, “do no harm” in the process. I respect entrepreneurs and relate to their hopes, struggles, insecurities and unique challenges. I’m excited to now be able to work with founders in a more official capacity and have some skin in the game while doing so.

Training ground…

On a personal note, it could provide a really wonderful training ground for someone like me with a…let’s say…‘unique’ background:) It’s true: I don’t have an investment track record. I will be learning and growing while building my syndicate.

The next few days, months, and years will certainly bring new challenges. I will be humbled more than a few times. But I’m up for the challenge, incentivized to succeed in this space (if I do well, others do well, and vice versa), and am beyond excited to see what this journey will be like. I’m fortunate to have dozens of people who are in tech and venture helping me learn along the way and providing a real world education for me daily.

If you make at least $200k/year or have $1mil in wealth (not including your main home’s value), you are considered an accredited investor in the U.S. and you can sign up to invest as little as $1k (or as much as $100k+) in my syndicate even if you’re new to investing. In addition, if you are from a VC firm, a traditional LP entity, or an active angel who wants a simple way to test out the investing thesis I proposed in my viral blog, this could be a really interesting way to see some cool deal flow from all corners of the country. I’m bursting at the seams to share with you the deals in the pipeline…can not WAIT.

As I reveal deals, I’ll share with syndicate backers some info about the companies, teams, and whatever metrics the founders make available. You’ll then be able to decide if you want to invest on a deal by deal basis. Signing up to the syndicate costs nothing up front. It’s just a way to say ‘yes, I’ll back it for x amount if there are any deals I like.’

I will be investing money in every deal I syndicate (by definition and design), so I’ll have skin in the game, too. This will be a small amount usually equal to 1% of the total allocation, since under SEC regulations up to 100 people can invest in each deal. What’s in it for me besides the potential returns on the direct investment is that I get what’s called a “carry” or “carried interest” on anything that returns a profit to the syndicate.

I’m looking at this as a long-game play. Perhaps in 3–10 years I can make a significant amount of money off of carry in these early investments (again, this is all hope, since, you guessed it: investing is risky and unpredictable). So it stands to reason that I’m going to be looking for the best and the brightest founders and companies to raise my/our chances of a return.

Another thing to note is that as far as I can tell, I am the first black female to lead a syndicate on Angel List. It gives me goosebumps to just type that out. It’s both exhilarating and infuriating. I love being the first at almost anything cause I’m competitive as hell:) But I also hope to be one of dozens within a couple of years cause that’s insanity. Really? Why am I the only one? Also, who let me in here?

Let’s go!

So guys, let’s change the ratio. Let’s make some big moves. If you’re a dude, a chick, straight, gay, black, Latino, Asian, white, pink or purple (no serious, P!nk, call me!) accredited investor, and you want to see some checks written and capital pumped into a new and exciting ecosystem, and perhaps reap the rewards of doing so, join me. There are risks with any venture investment. Saying this over and over again so my lawyer doesn’t blow up my phone:)

If you’re not accredited (yet!) but still want to see the deals I bring in so you can check out cool companies with diverse founders, don’t worry! I will also try to do short interviews with founders of each of the companies after each deal, and will post them here. Feel free to share this post with anyone you think would dig it.

If you’re a founder of a company that you think I should be looking at, please send a presentation deck to the address below. You may not hear from me for a while or at all since I’m getting dozens of messages per day these days…but I promise to look at everything and reach out anytime something piques my interest. If I don’t respond, do NOT take that personally or to mean that your company isn’t on point. It can be any number of reasons that the company isn’t right for me at the time, and I’m just one opinion of millions. Keep kicking ass and prove me wrong. Make me wish I had responded. That’s what I’m doing right now with all the people who said ‘no’ to me or ignored my ideas;)

Shout out!

Shouts out to: Kesha Cash, Comcast Ventures, and Sarah Kunst who have been working on seed investments for minorities for a WHILE + Allyson Kapin’s WomenWhoTech, Wayne Sutton’s Tech Inclusion Conference, Leanne Pittsford’s LesbiansWhoTech, Golden Seeds, and a BUNCH OF OTHERS whom I admire and appreciate.

Also since this is my online Emmy speech apparently, I want to thank a few people who have been so helpful during my educational journey into venture: Jason Towns, Meredith Karazin, Susan Kimberlin, Kelli Newman, Joelle Emerson, Eric Burleson, Jack Altman, Jewel Burks, Lisa Nicole Bell, Danielle Strachman, Rebecca Goberstein, Allyson Kapin, Charles Hudson, Sean Percival, Linda Meapa, Divine, Richard Kerby, Mariah Litchenstern, Nell Watson, Mitzi Laszlo, Dave McClure, Bedy Yang, Sam Altman, Chris Sacca, Soaib Grewal, Craig Kuang, Christophe Fraise, Austin Clements, Bonny Lai, Kate Courteau, Hampus Jakobsson, Cairn Cross, Jannick Pedersen, Amma Asante, Martin Bjergegaard, and of course, San Sebastián.

If you want to check out my syndicate, visit:

https://angel.co/arlanwashere/syndicate

As always, feel free to reach out to me at ARLANhamilton@gmail.com and let’s keep the network strong and classy!

Have I mentioned: INVESTING IS RISKY…?

Update: The first 48 hours since launching my AngelList syndicate…

I’m the founder and managing partner of Backstage Capital, a seed investment fund that backs high-potential, underrepresented startup founders. I am also a tour manager, currently working with New Zealand Music Award winner Janine & the Mixtape.

For interviews or to set up one-on-one “office hour” sessions at your event, email ARLAN@BackstageCapital.com with the subject “interview request,” or “conference appearance request,” etc.

Female Founders

Women learning the hard way. Submissions to @angiecois http://hashtagfemalefounders.com/

Arlan

Written by

Arlan

Venture Capitalist + Tour Manager for Janine & The Mixtape www.ArlanWasHere.com

Female Founders

Women learning the hard way. Submissions to @angiecois http://hashtagfemalefounders.com/

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