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Investors are missing out on Black founders

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I’m a Black man in America — that’s hard. Black founders, and uniquely Black founders in tech, are facing insurmountable odds.

As the recipients of less than 1% of venture capital raise, institutionalized systems are visibly at play. Within almost 10 years of my entrepreneurial journey, I have encountered just as many setbacks and failures as I have successes.

However, I have pressed forward despite the disparities that often plague the Black entrepreneurial community. From imbalances in fundraising to minimal capital and access, Black brilliance and its cloak of resilience continues to rise.

Now, as a CEO who has ambitiously raised nearly $13 million for my current venture, against the odds, I posit that it is not the Black founders who are missing out the most — it is the investors who are at a loss, not comprehending that they have underestimated the power of these founders’ Black brilliance.

Black founders need to own their resiliency and leverage the power that has resulted from their unique experiences.

When you think about the intersection of venture capital and technology, and specifically how it works — it is being led from an engineering perspective. Developers and coders historically go to specific schools and colleges, entering a funnel that guides them to success.

Historically, many Black students (more so Black male students), are influenced by sports as a vehicle to higher education and not necessarily the institutions recognized for technological prowess.

Their parents and community encourage athleticism because that is the only thing they know — as an institutionalized mindset reinforced over time. Unless they are guided into the accepted foundations for technology, or get into a Cal Berkeley, Stanford or Harvard, where many of the technology companies are built, they are immediately funneled outside of the “circle,” which sets the first of many ongoing obstacles for a Black tech founder.

I offer, however, that these “obstacles” are not in fact barriers but the crucial catalyst for these founders’ superpowers.

Admittedly, there were no entrepreneurs in my family. I did not have access to information about the best colleges. Despite having great grades and graduating with honors, I was completely unaware of how valuable an Ivy League education could be.

As a star basketball player, with my skills and grades, I could have played and graduated from somewhere like Yale, Brown, Columbia or even a school like Southern Methodist University where I was offered a full scholarship. But because of the lack of knowledge that I could actually do so and benefit from being inside the Ivy League “circle,” I didn’t.

I was in college from 2000 to 2004. A lot of great companies were started at elite schools during that period. It is this institutional blocking of information from myself and many other Black students that molded our overall perspective and created our glass ceilings.

Breaking through that glass ceiling, overcoming these odds to press forward relentlessly, with unyielding focus, and to hold conversations with the types of investors I have had to sit in front of, with the type of company that I have built, takes a different level of brilliance that only the Black experience can provide. For 2021 and beyond, Black founders need to not only recognize, but unlock that power as they look to fundraise and catapult their tech companies to success. It would be smart, and incredibly beneficial for investors, venture capitalists and the entire entrepreneurial ecosystem to take heed.

For Black founders, a paradigm shift is evident, but it can only manifest if implemented in these five ways.

Black founders: Forget what you think works in fundraising

Black founders and specifically Black tech founders are fed a monotonous script of how to raise money “the right way,” in light of disparaging statistics highlighting a lack of funding — so much that there is a robotic approach to the process. They try to become this cookie-cutter entrepreneur that is designed to raise money from investors, with their playbook and by their rules.

Black founders capitulate and conform to what society has dictated as appropriate fundraising, often glorifying the investor with the fate of their startup in their hands, without realizing that they hold the negotiating power. Their playbook hasn’t won us any games. As of today, own your power.

Become an irresistible force: Leverage your expertise

Set the playbook aside and lean more into your expertise and uniqueness.

Years ago, Mark Cuban delivered a keynote address at Dallas Startup Week that chronicled his road to success. One of his main points was to “Know your business, and know your business cold.” It was so simple, yet so impactful.

Early on in my career, I learned about venture capital from my experiences working for a startup. While I did not know the area in depth, I referenced what little knowledge I had as I raised for my own company years later. Although I was limited in my dealings with venture capitalists, I was confident in my background and expertise (at that time as a payroll technology sales professional) to truly stake my claim and seat at the table.

So while they may have sold a company for $7 billion or have $35 billion AUM (assets under management), I knew that they were not as well-versed in payroll or payroll technology than I was. It was this tenacious mindset that made me look at investors, rather than up to them, thereby positioning us on equal footing.

Connect in the common goal of brilliance

As a Black founder in tech, I have encountered many injustices — from networking to fundraising to the game of business as a whole. Even among those sitting at the table, there is a plethora of worldviews, political preferences, religious propensities and more that create a melting pot of divisiveness. However, recognizing that the common thread between all of the players in the game is the desire to be part of the brilliant business opportunity at hand is what will ultimately prevail.

It served me well not to overindex whether the venture capitalists liked me or on our differences. Locking in on the ambition of my entrepreneurial spirit and focusing on my brilliance — my Black brilliance — made them want to invest in me. Simplistically, investors want to give their money to founders who will make them money — passionately and ambitiously. Be you and find the investor that appreciates you.

Get in front of as many investors as you can

Black founders are not getting in front of enough investors. Systemically, the venture capital landscape has marginalized this community and has failed to expand their network for inclusiveness. Currently, ethnic minorities are severely underrepresented in the venture capital industry. Eighty percent of investment partners are white, with only a staggering 3% being Black or African-American.

Regardless, Black entrepreneurs must press forward and still show up. The sheer number of people that entrepreneurs must face during the fundraising process is astronomical, so one must not be swayed by the disillusionment of opportunity.

Realistically speaking, it takes a long time to raise money. Period. I have talked to thousands of potential investors to raise nearly $13 million for my current company. If you are a Black founder, it is going to take you longer to fundraise and you are going to have to get in front of more people. So I ask, “Do you have enough oxygen in the tank to withstand the obstacles, for a long enough period of time, to attract the venture capital that you need?The wealth gap says no.

When I first started Gig Wage, the number one question I received from investors is, “How much runway do you have?” I would answer, “Until I get to where I need to get.” They would then rephrase, “How much money do you have in the bank? How long is your wife going to let you do this?” I would reply, “It does not matter how much money I have in the bank because I’m going to keep going until this happens.”

Discriminatively, there was this unspoken expectation that I lacked the financial wherewithal and stamina to withstand the fundraising process, and at times it was extremely discouraging — because to be honest, when I looked in the bank account, I realistically had about nine to 12 months of runway.

The reason Black people raise less than 1% of venture capital is because the racism weaved into the fabric of American society bleeds over into the entrepreneurial ecosystem. Despite it all, I took thousands of meetings. I was willing to endure with an ambitious conviction that I was going to win. Again, this is Black brilliance.

Own your resiliency, own your power 

As a Black man, I have personally endured challenges to build resiliency — mirroring similar realities of other Black men in America. Whether it was dealing with the police or witnessing men in my family struggle with drugs, violence, poverty or the like — I often think, “Why would I be intimidated by an investor meeting or a term sheet?” The construct of America has dealt me much worse.

Black founders need to own their resiliency and leverage the power that has resulted from their unique experiences. The victory mentality that ensues thereafter is the type of mindset that venture capitalists should want to invest in, and if they do not, they are undoubtedly missing out.

The unyielding focus of “The world is stacked against me but I’m not going to quit. I’m going to pivot. I’m going to be resourceful. I’m going to figure it out — even if I’m scared,” is a person you need to invest in. It is not necessarily that they have a groundbreaking business idea, but culturally, Black people have a passion and a perspective that is unmatched, with limitless possibilities that venture capitalists are overlooking.

So for 2021 and well beyond, Black founders, and those especially in tech, need to shift their respective paradigms, own their place within the entrepreneurial space, take back their power and continue to operate at the utmost in Black brilliance. It is the investors, not the founders, that are missing out. Be bold. Be courageous. Be audacious.

As for me, the best thing that I can do right now is to continue to drive the conversation, illuminate the disparities and be as successful for Black entrepreneurs, Black professionals and the world at large as possible. I am owning my power and I’m committed to epitomizing and evangelizing Black brilliance.

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Facebook will pay $650 million to settle class action suit centered on Illinois privacy law

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Facebook was ordered to pay $650 million Friday for running afoul of an Illinois law designed to protect the state’s residents from invasive privacy practices.

That law, the Biometric Information Privacy Act (BIPA), is a powerful state measure that’s tripped up tech companies in recent years. The suit against Facebook was first filed in 2015, alleging that Facebook’s practice of tagging people in photos using facial recognition without their consent violated state law.

1.6 million Illinois residents will receive at least $345 under the final settlement ruling in California federal court. The final number is $100 higher than the $550 million Facebook proposed in 2020, which a judge deemed inadequate. Facebook disabled the automatic facial recognition tagging features in 2019, making it opt-in instead and addressing some of the privacy criticisms echoed by the Illinois class action suit.

A cluster of lawsuits accused Microsoft, Google and Amazon of breaking the same law last year after Illinois residents’ faces were used to train their facial recognition systems without explicit consent.

The Illinois privacy law has tangled up some of tech’s giants, but BIPA has even more potential to impact smaller companies with questionable privacy practices. The controversial facial recognition software company Clearview AI now faces its own BIPA-based class action lawsuit in the state after the company failed to dodge the suit by pushing it out of state courts.

A $650 million settlement would be enough to crush any normal company, though Facebook can brush it off much like it did with the FTC’s record-setting $5 billion penalty in 2019. But the Illinois law isn’t without teeth. For Clearview, it was enough to make the company pull out of business in the state altogether.

The law can’t punish a behemoth like Facebook in the same way, but it is one piece in a regulatory puzzle that poses an increasing threat to the way tech’s data brokers have done business for years. With regulators at the federal, state and legislative level proposing aggressive measures to rein in tech, the landmark Illinois law provides a compelling framework that other states could copy and paste. And if big tech thinks navigating federal oversight will be a nightmare, a patchwork of aggressive state laws governing how tech companies do business on a state-by-state basis is an alternate regulatory future that could prove even less palatable.

 

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AWS reorganizes DeepRacer League to encourage more newbies

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AWS launched the DeepRacer League in 2018 as a fun way to teach developers machine learning, and it’s been building on the idea ever since. Today, it announced the latest league season with two divisions: Open and Pro.

As Marcia Villalba wrote in a blog post announcing the new league, “AWS DeepRacer is an autonomous 1/18th scale race car designed to test [reinforcement learning] models by racing virtually in the AWS DeepRacer console or physically on a track at AWS and customer events. AWS DeepRacer is for developers of all skill levels, even if you don’t have any ML experience. When learning RL using AWS DeepRacer, you can take part in the AWS DeepRacer League where you get experience with machine learning in a fun and competitive environment.”

While the company started these as in-person races with physical cars, the pandemic has forced them to make it a virtual event over the last year, but the new format seemed to be blocking out newcomers. Since the goal is to teach people about machine learning, getting new people involved is crucial to the company.

That’s why it created the Open League, which as the name suggests is open to anyone. You can test your skills and if you’re good enough, finishing in the top 10%, you can compete in the Pro division. Everyone competes for prizes as well such as vehicle customizations.

The top 16 in the Pro League each month race for a chance to go to the finals at AWS re:Invent in 2021, an event that may or may not be virtual, depending on where we are in the pandemic recovery.

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Free 30-day trial of Extra Crunch included with TC Sessions: Justice tickets

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TC Sessions: Justice is coming up on Wednesday, and we’ve decided to sweeten the deal for what’s included with your event pass. Buy your ticket now and you’ll get a free month of access to Extra Crunch, our membership program focused on founders and startup teams with exclusive articles published daily.

Extra Crunch unlocks access to our weekly investor surveys, private market analysis and in-depth interviews with experts on fundraising, growth, monetization and other core startup topics. Get feedback on your pitch deck through Extra Crunch Live, and stay informed with our members-only Extra Crunch newsletter. Other benefits include an improved TechCrunch.com experience and savings on software services from AWS, Crunchbase and more.

Learn more about Extra Crunch benefits here, and buy your TC Sessions: Justice tickets here.  

What is TC Sessions: Justice? 

TC Sessions: Justice is a single-day virtual event that explores diversity, equity and inclusion in tech, the gig worker experience, the justice system and more. We’ll host a series of interviews with key figures in the tech community. 

The event will take place March 3, and we’d love to have you join. 

View the event agenda here, and purchase tickets here

Once you buy your TC Sessions: Justice pass, you will be emailed a link and unique code you can use to claim the free month of Extra Crunch.

Already bought your TC Sessions: Justice ticket?

Existing pass holders will be emailed with information on how to claim the free month of Extra Crunch membership. All new ticket purchases will receive information over email immediately after the purchase is complete.

Already an Extra Crunch member?

We’re happy to extend a free month of access to existing users. Please contact extracrunch@techcrunch.com and mention that you are existing Extra Crunch members who bought a ticket to TC Sessions: Justice. 

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