Black and Brown Techpreneurs Forced to Take Different Path to Success
Melissa BradleyMelissa L. Bradley is co-founder and managing director of Sidecar Social Finance and a tri-sector leader with more than 20 years of entrepreneurship, investment, and leadership experience. Since 2012, she has been a professor of practice at Georgetown University’s McDonough School of Business, where she serves as an expert lecturer on impact investing, social entrepreneurship, peer-to-peer economies, and innovation.
Catch Melissa Bradley at the 2017 Future of Wealth Summit, April 26-28, 2017 .
On April 13, 2017, I had the pleasure to co-host an investor-entrepreneur breakfast in Washington, D.C., with 30 attendees. The purpose of the event was to understand the challenges and opportunities related to investing in Black and Brown entrepreneurs. While many investors are being encouraged to look beyond major urban markets and traditional “investment heavy” cities, I am concerned that many good deals by diverse entrepreneurs are being left behind. Moreover, with the focus on the “rise of the rest” in terms of new geographic areas – and not diversity with respect to new demographics of entrepreneurs – I fear that future investments will remain homogenous and White. Many of these concerns are highlighted and addressed in the Center for Global Policy Solutions’ report,“The Color of Entrepreneurship: Why the Racial Gap among Firms Costs the U.S. Billions.” The breakfast earlier this month reinforced my fears but also offered some rays of hope.
Black and Brown Entrepreneurs are bootstrapping their businesses. Hearing and experiencing the dearth of early-stage investments by diverse entrepreneurs, attendees noted their laser focus on building a business and not raising venture money. With the desire “to not waste time fundraising,” diverse entrepreneurs are working in the gig economy, staying at their current jobs to earn money and skills and/or building a revenue-generating business and living off their earnings. While some would say this is time consuming, it could actually serve them well. First, they are able to generate revenue quicker, thereby, increasing their potential company valuation. Second, it allows them to gain traction, which is a primary driver for investment dollars.
Black and Brown Entrepreneurs value sector and technical mentors more than VCs. During the breakfast in D.C., local entrepreneurs noted that venture capital is merely a means to an end. The entrepreneurs are much more interested in securing non-financial support in the form of sector and technical mentors. Such relationships provide them with a competitive advantage in terms of building a team and allow them to position themselves more competitively at the onset – as opposed to wasting venture dollars trying to “buy” the right management team and advisors.
These two lessons highlight the even greater value that can be found in diverse entrepreneurs. While their trajectory diverges from that of White entrepreneurs, the dearth of traditional funding for diverse CEOs has put them on a fast track to revenue. Coupled with their desire to assemble a dynamic team at the onset, diverse entrepreneurs are poised for greater sector growth and traction. Instead of being upset with the lack of capital from VCs and relying on outside investors to validate them and their ideas, Black and Brown entrepreneurs are going straight to market and retaining customer validation. In the end, this makes diverse entrepreneurs even more attractive investment targets to venture capitalists.