In 2020, venture capital funding boomed—but women’s share shrank. Startups, overall, raised 13% more from venture capitalists in 2020 than in 2019, but female-founded companies raised a staggering $190M less in 2020 than in 2019.
As the founder and managing partner of Backstage Capital, Arlan Hamilton aims to turn these discouraging stats around. Her mission is to minimize venture capital funding disparities by investing in minority founders.
Since she founded the firm in 2015, Backstage Capital has raised more than $15 million (!) and invested in more than 180 startup companies.
At our recent Money Moves Digital Summit, Salah Goss, SVP of Center for Inclusive Growth at Mastercard, sat down with Arlan to chat with her about her incredible career and gain her insights into how entrepreneurs can perfect their pitch, attract investors, and raise money for their businesses.
ICYMI, we’re sharing a few of the highlights from the conversation below.
Let’s start at the beginning – you have a very untraditional background compared to the traditional VC world–how did you break into the industry and set yourself up for success?
I think what actually helped me break into the industry was the fact that I was different. I’m a woman, a person of color, LGBTQ, I lived in Texas at the time, outside of the major markets, I did not go to college, I didn’t have any sort of formal financial education, I did not have any contacts in Silicon Valley––and the list goes on and on. Often, I think the qualities that make us special or different that help us find success, but it takes curiosity and strength to actually lean into them.
I was interested in starting my own company at the time and excited about the prospect of fundraising until I came across some staggering statistics, including the fact that 90% of venture funding goes to white men. Demographically speaking, that means 90% of venture funding goes to a third of the country. It didn’t make sense to me. I began to ask, what if there were funds that did the opposite?
Over the next three and a half years, I had the patience to talk to people–founders, investors, etc. I received as many ‘no’s’ as one human can get in a lifetime but I kept digging into that question, ‘what if’? I began investing in women, people of color and LGBTQ because that’s what I knew. Over time, we’ve expanded our reach, but there are millions and millions of potential people in this demographic alone.
How do you choose which businesses to fund? What do you look for in a business and/or an entrepreneur?
It’s a bit of a moving target because I feel that I continue to evolve as a persona and as an investor, but the one thing that has remained the same–from the time I was homeless and on food stamps and had no money to invest, to investing in almost 200 companies later–is this spark when I look across the table and see someone who reminds me of myself. I look for an entrepreneur who is what I call hungry not thirsty: there’s a passion without desperation.
As far as the companies and ideas themselves go, if it’s something that would take me a decade or more to even hope to accomplish then you have my attention.
It’s safe to say you have been privy to a lot of pitches and pitch decks—What are three crucial elements everyone should include in a pitch deck when raising money and why?
That’s a lot of what we’re doing at Backstage and hopefully we’re one of many. It has to start with a global conversation and understanding that when companies are backing black women, they’re also backing a progressive infrastructure, they’re backing healthcare, they’re backing all sorts of innovation. It’s not just what the country can do for black women to repair damages, it’s also what black women are going to do for the country–and what they have been doing.