Backstage Capital is 7 Years Old

We’ve been investing in underestimated founders for 7 years!

Today is Backstage Capital’s 7th anniversary. We’re proud of what we’ve accomplished. We’re reflecting on what we’ve achieved so far, and what we see in the industry today. We’ve seen the conversation shift dramatically in the venture capital ecosystem, and there is still clear work to be done.

Let’s dive in:

Backstage was one of the first venture funds to invest in founders based on their demographics, and is a pioneer in investing in Black, Latinx and LGTBQ+ founders.

When launching Backstage Capital in 2015, many in the industry doubted that there were enough women, people of color, or LGBTQ+ founders building high growth businesses ripe for VC investment. At the time, the numbers clearly showed a lack of interest in funding companies led by underestimated founders.

After evaluating 10,000+ companies, and investing in 200 companies, it is clear that there is no lack of potential from founders that have been overlooked and undervalued by this industry for so long.

Highlights:

Underestimated founders are creating value.

Backstage’s portfolio companies represent billions of dollars in total enterprise value and employ thousands of people. We have one of the largest portfolios of underrepresented founders in venture.

Underestimated founders are resilient.

About 90% of Backstage Capital portfolio companies are still active, and many are winning in the market. We invested in the following companies in their first round (pre-seed stage), and in 2022 they hit big milestones. These milestones represent a small sample of the progress we regularly see across our portfolio:

• Career Karma $40M Series B led by Top Tier Capital, other investors include Initialized Capital, Softbank, GV.
• CareAcademy $20M in new strategic financing, led by Goldman Sachs.
• Mahmee $9M Series A, led by Goldman Sachs.
• Goodr $8M Series A, led by Precursor Ventures.

Our thesis has gained institutional recognition.

Backstage Capital now has over $20M in assets under management with significant institutional backing in our newest fund from organizations including Bank of America, Comcast, First Close Partners and more. Where roughly 2% of Venture capital goes to either Black founders or Latinx founders, 72% of our founders are people of color.

At Backstage, we are keymakers, not gatekeepers

Over the years, we have created ways to provide access and knowledge to venture capital for community members and investors of all levels.

Highlights:

• In 2018, we announced that we had invested in 100 companies. Later that year, we announced the Backstage Accelerator. In March 2019, we opened in four cities: Detroit, Los Angeles, Philadelphia, and London. We invested in local teams and founders in each city, and 24 companies comprised a global cohort of underrepresented founders. We worked in concert with local ecosystem organizers to bring additional investment dollars, mentorship, and community to each ecosystem.
• In 2020, we launched Backstage Crowd to share access to our deal flow, allowing individual investors to invest alongside us. We’ve raised more than $3M in more than 20 deals with Backstage Crowd.
• We executed a groundbreaking equity crowdfunding campaign in spring 2021, bringing more than 6,500 retail investors into the Backstage family. Anyone — accredited or not — could participate with as little as $100. Today, our Republic investors are part of a thriving community, supporting our Headliners and each other.
• One of the underlying reasons for the lack of diversity in venture capital investing is the lack of diversity among the people who are making investments. In 2021, we provided a pathway into a venture capital career with the Backstage Apprentice program, where 20 aspiring venture capitalists joined us in community to learn about our company selection process, due diligence process, and advocate for a deal.
• In addition to the Backstage Apprentice Program, we partnered with PledgeLA and HBCU.VC in 2020 and 2021 to source summer interns, and were glad to work with bright students from USC, Cal State Los Angeles, and Howard University.

An Evolution in Venture Capital

Over the past 7 years, the landscape has shifted, and we’ve started to see progress in key areas.

Highlights:

• There are many more venture capital firms investing in companies based on founder demographics today. There are firms focusing on women founders, LGBTQ+ founders, Latinx founders, and Black founders. Communities supporting founders from all backgrounds are thriving. There are many more resources available today than in the past.
• Corporations are also investing in underrepresented founders, ecosystems, and fund managers. We’ve been glad to partner with organizations like Google, which recently finished deploying $100M to Black VC Fund managers, and has provided equity free funding to founders via their Black Founders Fund and Latino Founders Fund.
• We’re also excited to see outstanding Black fund managers raising excess of $100M+ funds. We loved the recent announcement of $126M from Kapor Capital. It’s also fantastic to see sector-specific firms like women’s health-focused firm SteelSky Capital raise a $72M first fund.

Yet, more needs to be done.

• With greater awareness, programs, and dollars available at the earliest stages, more underrepresented founders are getting the support they need to start their companies. However, even with the growth of these initiatives, there are still only a fraction of founders who are successfully raising early rounds. More needs to be invested to continue to make progress in this area, and there needs to be an emphasis on serving their unique needs.
• Across the ecosystem, there is a lack of support of underrepresented founders post-seed stage. We are addressing this for the Backstage Capital portfolio with our Opportunity Fund I, which is a $30M fund to support outlier companies from the Backstage Capital portfolio. We are working towards a future where anyone — regardless of their demographics — can access venture capital, lead, and grow their company to IPO.
• Until we are able to shift the dollars post-seed, we will continue to see abysmal fundraising statistics for underrepresented founders. In 2021, Black founders raised about $1B in VC dollars per quarter, which was strong progress. For perspective, the average Series D round in 2021 was $109M. It’s critical that our ecosystem supports underestimated founders beyond the seed raise, and helps them grow their skill sets — and their valuations — to match their potential.

We’re proud of what we’ve accomplished over the past seven years. We’ve shifted the conversation around the importance — and value — of investing with diversity in mind. We’ve achieved this in community with others, and and we’re glad to see the progress that’s being made in the ecosystem as a whole. We’re excited to continue to support our founders as they grow, and motivated by the work that lies ahead.

Arlan, Christie, and Brittany