How to Raise Venture Capital As a Black Female Founder

• The venture-capital space isn’t the most welcoming environment for Black women. 
• As of 2020, only 93 Black women had raised $1 million or more in venture funds. 
• Black women who have achieved this feat gave advice for others looking to do the same.

Tanya van Court noticed immediately that white male investors weren’t backing her business.

Van Court, who is Black, launched the app Goalsetter in 2016 to teach children how to invest and save money. After raising her first $1 million in venture capital in 2018, she noticed almost 90% of her investors were from marginalized communities. Today, Goalsetter, which uses gamification to teach children healthy financial habits, has 367,000 users and received a $1 million investment from Nike in February.

She recalled white investors telling her Goalsetter was “uninvestable” and kids’ fintech “wasn’t a thing.”

Then, she’d see those same investors fund a similar startup created by a white founder, she said.

This cycle continued until the murder of George Floyd. Then, people started paying attention to Black-owned businesses, she said. In January, her company closed a $3.9 million seed round that included the basketball stars Chris Paul and Kevin Durant as investors, and to date, her company has raised $6 million in venture capital.

The number of Black women like van Court who are raising $1 million or more in venture capital is increasing but still small — 93 as of December, up from 34 in 2018, according to the demographic study ProjectDiane. One founder said investors tended to fund people who look like them, and 70% of venture capitalists are white — according to 2019 data from Richard Kerby, a cofounder of the venture fund Equal Ventures, only 2% of venture capitalists identified as Black men in 2018 and 1% as Black women.

Recall the question of who gets to be an entrepreneur in the first place. Research has found it’s those born into wealth.

To be a Black female founder is to be doubly minoritized in a highly homogenous space. And — like in corporate America — these Black women must navigate structural barriers, closed networks of contacts, code-switching, racialized expectations, and the norms of the majority group to succeed and receive investment.

Insider spoke with van Court and six other Black female founders who’ve raised more than $1 million in venture capital to find out how that feat could be accomplished. The resulting guide contains their insight on choosing the right investors, pitching prospective funders, and building positive relationships with other entrepreneurs.

As the responsibility for change doesn’t lie solely on the shoulders of the marginalized, the women also shared their thoughts on what venture-capital firms could do to bring more equity to the world of venture.

Here are the best practices, according to them.

Come ready with numbers

As of 2020, according to ProjectDiane data, the median seed round for Black female entrepreneurs was $125,000, compared with the national median of $2.5 million. And alongside Latina female founders, the two groups received just 0.43% — or $715 million — of the $166 billion in venture-capital funding raised in 2020, ProjectDiane found. 

This not only leaves Black female founders with less money to scale their businesses but also forces them to raise smaller amounts in shorter intervals. Being in a constant state of fundraising is stressful and steals time from other vital duties, like the product development of their companies, van Court said.

When it’s time to pitch your business — whether for a pre-seed or Series D round — it’s essential to have a presentation filled with numbers that showcase details like revenue growth and overall market potential of the brand, van Court said.

Britney Winters, the founder of the custom-wig shop Upgrade Boutique said one of her biggest mistakes early on was not spending enough time educating white investors on the Black beauty industry, which was worth more than $2.5 billion in 2018, according to the research firm Mintel. 

It doesn’t matter if other people don’t need those milestones in order to raise money. Black people get funded based on proof, period.

Adding more data to her pitch deck helped show where Upgrade Boutique could fit within the multibillion-dollar market, which helped convince more investors as her journey continued, she said. Her company closed a $1.7 million seed round in May led by Mercury Fund and the Artemis Fund, which brought her total amount raised to $2 million since she launched the business in 2019.  

Rachael Twumasi-Corson and Joycelyn Mate, the cofounders of the hair-care line Afrocenchix, also used numbers to educate their white investors. While they highlighted important factors like strong customer-retention rates, they also used data when investors questioned the accuracy of their growth. But that didn’t shield them from racist questions, they said. 

“We had someone ask, ‘Why are you talking about Africa?’ and make jokes about Africans being poor,” Twumasi-Corson, who raised $1.2 million in June in a round backed by Google, said. “When you’re talking about white investors, they might not care about Black stories, so you have to give them this data.”

Connect with other founders 

Every Black female founder needs a support group to help her navigate the venture-capital landscape, Tiffany Dufu, the founder of the networking app The Cru, said. 

Her company raised a $2 million seed round in July 2020, led by Bloomberg Beta and Alpine Meridian.

“One of the most important things you can do is collaborate, communicate, ask for help, and be vulnerable with a group of women who are going through the same thing,” Dufu said. These women “can help hold you accountable but also remind you that you’re not going crazy,” she added.

Joanna Smith, the founder of the educational company AllHere, echoed Dufu’s advice. She joined a support network for Black women in tech, Visible Figures, to discuss topics such as hiring and fundraising.  

“Never go it alone,” said Smith, who’s raised a total of $12 million in venture capital since she launched AllHere in 2017. “There’s a community of women who have raised and who are eager to share what worked for them and what didn’t.” 

Research and link with prospective investors early

When seeking investors, be sure to research the venture-capital firm, its founder, and the ethos of the company, Smith said. This ensures more than just capital is exchanged in the relationship.

“Capital is the least of what you get from a great partnership with a VC or institutional investor,” she said. “They’re going to be the people you turn to when things are going great and when they are not.”

Edna Martinson follows a similar philosophy. She looks at a firm’s portfolio, the industries it invests in, and how it typically works with founders before pitching them. So far, she’s raised $2.07 million for her learning platform, Boddle.

Meanwhile, Yelitsa Jean-Charles, who’s raised a total of $1.5 million in funds, works only with investors who understand her perspective as an entrepreneur and respect her as a business owner. In 2015, she founded Healthy Root Dolls, a company that hopes to use dolls to teach natural-hair care to young children of color. 

“Be mindful of how much time you have,” she said, “and the most valuable way to use it.”

Incubator and accelerator programs can provide funding, but proceed with caution 

Tiffany Kelly, the founder of the video-creation platform Curastory said programs such as the 2021 Techstars Sports Accelerator helped her explore fundraising methods and expand her network. What’s more, it helped her raise a $2.1 million pre-seed round in September.

But certain accelerators she attended were led by white men who gave fundraising techniques she had already tried as a Black female founder to no success.

While Martinson gained traction through pitch competitions and accelerator programs, she found it disappointing that women had to constantly use these methods to prove themselves. 

“It’s almost like you need that to validate yourself before venture capitalists start looking at you,” she said, “whereas some of your other counterparts are able to go in with an idea and they are able to raise venture-capital funds all of a sudden.” 

But remember, the responsibility isn’t all on you 

While these women provided advice for maneuvering the venture-capital scene, they stressed that the systemic hindrances and institutional structures within Silicon Valley had to change for any equitable progress to be made.

“You would have to undo a lot of bias,” Jean-Charles said. “Until those people are willing to put themselves in different spaces and look outside what they know, it’s not going to happen.” 

Smith said it was imperative for funds to mentor and invest in historically underrepresented founders, as it’s a key way to remain competitive. And within that, Twumasi-Corson, the cofounder of Afrocenchix, wants to see more transparency among backers.

“Investors could make this fairer and increase their returns if they set out clear, transparent success metrics and stuck to them,” she said, “even when the founder doesn’t look like Mark Zuckerberg.” 

You would have to undo a lot of bias. Until those people are willing to put themselves in different spaces and look outside what they know, it’s not going to happen.

Van Court, meanwhile, said venture-capital firms should meet specific diversity standards if they planned on receiving public and corporation pension funds. Some venture-capital firms get funding from government grants, as well as private entities such as university endowments and pension funds.

Van Court would also like to see firms implement a policy similar to the NFL’s Rooney Rule, which requires teams with head-coach vacancies to interview people of color for the open position. But even after the murder of Floyd, she said she and many of her peers were still experiencing the same roadblocks many in the sector promised to abandon. 

“The proof in the pudding is going to take more than six months or a year to see,” she said. “It’s going to be what happens over the next five years, then what happens over the next 10.”

Miranda Perez contributing reporting.