Fundraising Insights for Black Founders

In nearly a decade of being in the entrepreneurial and venture space, here’s what I’ve observed about Black founders who successfully raised significant fundraising rounds. When I say significant, I mean $1M+.

If I had known the fundraising landscape when I started my first tech startup at the young age of 23, I probably would have chosen path number 4. Perhaps this can help young Black founders today think more strategically before embarking on that bold vision. It’s rough out there if you don’t step back and take a panoramic view. Unfortunately, your non-Black counterparts don’t have to do the same, but it’s better to be wise than stubborn in this venture space.

99% of Black founders who successfully raised a significant round of funding used one of these four methods:

• Path 1: A Non-Black Founder Pulls You In as a Cofounder
  It doesn’t matter how many cofounders there are, as long as you’re not at the front of the fundraise. The non-Black founder raises millions for the company, and you’re along for the ride. When you’re ready to strike on your own, you’ll have plenty to brag about—“part of a founding team that raised $20 million, $40 million,” whatever the number is. If you’ve had an exit, even better. Even if you only had a tiny equity percentage, the bragging rights will be far more valuable than any windfall you might have had at this point.

• Path 2: Join a Venture Studio
  You probably shouldn’t go in hot with an idea already in mind. Be open-minded about the idea they might assign you. Right now, there is high sympathy for Black founders starting in the gig/creator economy (anything wealth-gap closing) or healthcare (expanded in path 3 below). Anything else, and you might be considered outside the bounds, making it tough to raise money. Here, you offer help, collaborate, and develop an idea together. You become the CEO/cofounder to lead an idea, and the funding follows. Best to work with them to pick something together.

• Path 3: Raising During or After #BLM, Focused on Gig/Creator Economy or Healthcare
  Anything outside of these two themes, and you become too exoteric for investors. Investors have had a heightened focus on these areas post-#BLM, so aligning with these themes increases your chances.

• Path 4: Start with a Non-Black Cofounder/CEO from Day One
  If you weren’t lucky to follow paths 1, 2, or 3, you need to be strategic and seek out a non-Black cofounder right away. Even if you aren’t heavily visible in front of investors, you’ll still be building an amazing company and creating generational wealth for yourself and your family.

That’s what I’ve seen. The minuscule percentage that raised significant rounds without following one of these four paths are truly edge cases. They are the unicorns of the Black founders raising colossal amounts of funding—you rarely see them.