It costs an average of $30,000 to start a business.
For a lot of entrepreneurs, much of that funding is scraped together through a combination of savings, family members, and friends, according to a report published by Village Capital. But, if an aspiring founder doesn’t have a wealthy network of family and friends, is building a successful business limited to those with the access to such capital?
Entrepreneurs of color often don’t have access to the network that helps most founders raise startup funding and get early stage investments. A recent report from the Institute for Policy Studies showed that between 1983 and 2013, the median black family wealth decreased 75 percent, while the wealth for the median white household increased by 14 percent.
Village Capital—a startup accelerator—noticed the wealth gap for black and brown founders created VC Pathways, a national initiative providing resources to Black, Latinx, and female entrepreneurs of high-growth companies helping them raise early-stage money.
Ebony Pope, Director of U.S. Ventures at Village Capital, interviewed founders and investors to better understand what the tech ecosystem looks like for underrepresented founders in Washington, D.C. and what can Village Capital do to support.
“I meet a lot of Black and brown founders who wanted to raise money, but these angel investors are outside of these founders networks,” said Pope.
VC Pathways and UBS piloted the program this year in Philadelphia, Chicago, and Atlanta focusing on cities with the capacity to support early-stage ventures with resources like a network of local angel investors. They target founders with a tech-enabled prototype or pilot across agriculture, energy, education, fintech, and health sectors.
The training program partnered with UBS, a Swiss investment bank with a history of promoting inclusive entrepreneurship, and local partners to provide guided support navigated the tech ecosystem in each city.
“The local partners are critical to the success of this program,” said Pope. “I created a basic framework for the program, but I know local partners have different strengths. We wanted local partners to take this and make it their own.”
Founders participate in the program for three months during which they are paired with an angel or local investor to help achieve their goals, and ultimately take them from the ‘friends and family round’ of funding to the venture-backable business.
“There is no shortage of potential among underrepresented founders,” said Aliie Burns, Managing Director of Village Capital, in a news release. “They have firsthand experience in solving critical issues faced by the majority of the US population.”
VC Pathways supported 30 early stage companies in 2018.
Village Capital is hoping to run the pathways program again. If diverse founders in Philadelphia, Chicago, and Atlanta are interested, please send questions to firstname.lastname@example.org.