Black and Latino entrepreneurs push an insular and often risk-averse industry in new directions. Ricardo Garcia-Amaya, Ella Gorgla, Harlyn Pacheco, Courtney Williams and Sulaiman Sanni are tapping into markets ignored by others.Photo: Buck Ennis In a city that is 27% Latino and growing, Ricardo Garcia-Amaya is a rarity. He's a tech entrepreneur who founded a venture-capital-backed startup.
"I find myself at the forefront," said Mr. Garcia-Amaya, whose company, DonorTap, uses data to help nonprofits raise money. It's a place he's gotten to by stepping beyond his Latino roots. "Within my immediate Latino community, there are no mentors, especially in tech in early stage," Mr. Garcia-Amaya explained. "In fact, forget about tech; just early-stage investment is extremely difficult. Throw in tech and it's a whole different ballgame." Black and Latino entrepreneurs are a small subset of Silicon Alley, where 83% of teams getting seed and Series A money are all white, according to 2010 research from CB Insights, with the all-white teams receiving a higher median investment from venture capitalists. Minority-led startups are addressing hot sectors like crowdfunding, fashion, finance and education. Some are serial entrepreneurs or accelerator alumni. Several are raising seed rounds or angel money. Like all entrepreneurs, they sweat money, time and tears to build their companies. But unlike their white or Asian peers, they've done it without connections to role models like themselves or significant support from the investment community, whose members often inhabit social, academic and professional spheres different from those of black and Latino entrepreneurs, according to these entrepreneurs and the few funds dedicated to supporting them. "Typical VCs explore their own networks, people who have returned capital before, schools they have in common," said William Crowder, head of Comcast Ventures' minority-focused Catalyst Fund and a partner at the DreamIt Ventures accelerator. "If those are the happy hunting grounds, then where do they intersect with the social, academic and business interests of an African-American or Latino entrepreneur? They don't intersect that often." The 2010 CB Insights analysis found that a mere 1% of seed and Series A funding nationally went to black founders. In New York City, that number was less than 1%. In the first six months of 2013, just 8.5% of entrepreneurs pitching to angel investors nationally were minorities, according to the University of New Hampshire's Center for Venture Research. About 15% of them landed money, versus 22% of all others. Centered on fashion Black and Latino founders in New York have a particularly strong presence in the fashion world. Ella Gorgla founded I-ELLA.com, a platform where people can sell or lend apparel and accessories. Tanya Menendez and Matthew Burnett started Maker's Row to connect designers of apparel and other goods with U.S. manufacturers. Serial entrepreneur Lisa Morales-Hellebo launched New York Fashion Tech Lab, an accelerator that fosters collaboration between major retailers and startups. Sulaiman Sanni's crowdfunding site, WeDidIt, helps schools and nonprofits raise money on the Web and via a mobile app. Amnesty International is one of its clients. One investor who backs minority entrepreneurs attributes the lack of interest in them to group-think in venture capital, a risk-averse business in which the same types of industries, geographies and ventures reap funding, even though investors could get better returns outside crowded sectors. "A lot of my peers are not sufficiently open to companies that address the changing American landscape," said David Teten, a partner in ff Venture Capital and chairman of Harvard Business School Alumni Angels of Greater New York, whose Venture Capital Access Program invests in women and minority entrepreneurs in partnership with the National Association of Investment Companies. These are businesses like East Harlem-based Qlovi, a digital platform that helps kids in urban communities meet Common Core standards by mastering language and reading skills. CEO and co-founder Harlyn Pacheco sees opportunity in serving underserved communities. "It's a growth market and an arbitrage opportunity for whoever identifies it," he said. "The needs of diverse communities are unmet." Likewise for Edrizio De La Cruz. He co-founded Regalii, a cellphone app that immigrants can use to send gift cards to relatives overseas. The cards can pay for groceries, medicine and utilities. Courtney Williams, founder of Torsh, a video teacher-training platform that has the state of Massachusetts as a client, summed up his approach to race in the startup world this way: "At the end of the day, it's a challenge like any other." Mr. Williams—a Jamaican immigrant, veteran of AOL and two-time entrepreneur—saw the gap between new Common Core requirements and what teachers learn in college and on the job. Crashing the partyLike Mr. Williams, Mr. Garcia-Amaya's sterling education and work experience—he's a New York University M.B.A. and Innovation Fellow, and an alum of the Bloomberg administration—has opened doors. As chair of the technology committee of the New America Alliance, an organization of prominent Latino business leaders, he's trying to create mentors and angel investors within his community. In June, Mr. Garcia-Amaya brought together Latino business leaders and tech entrepreneurs at BET Networks' offices in Times Square. Investors are starting to take notice. The Harvard B-school alums' Venture Capital Access Program, which holds demo days every month, has so far staked three startups to seed money. Comcast Ventures' $20 million Catalyst Fund for minority entrepreneurs is backing seven early-stage startups around the country, including Maker's Row and Viridis in New York City. Similarly, Jalia Ventures made nine investments in social-impact ventures started by minority founders. And Nnamdi Okike, a former principal with Insight Venture Partners, is raising money for a new fund, 645 Ventures. "[Entrepreneurs] have to crash the party and make sure they are present and accounted for," said Catalyst's Mr. Crowder. "But the onus is also on investors to say, 'I recognize the lack of diverse people, and I want to do something about it.' " Correction: Matthew Burnett is a co-founder of Maker's Row. His first name was misstated in an earlier version of this story, originally published online July 21, 2014. Originally posted on CRAIN'S NEW YORK BUSINESS A version of this article appears in the July 21, 2014, print issue of Crain's New York Business.
0 Comments
|
BRIDGING THE DIGITAL DIVIDE
FUNDS TARGETING MINORITIES Catalyst Fund, New York, invests in early-stage technology startups led by minority entrepreneurs. Impact America Fund, New York, formerly Jalia Ventures, is an early-stage equity fund at the Pace University Helene and Grant Wilson Center for Social Entrepreneurship. It invests in companies that create jobs and improve the well-being of underserved communities. Minority Angel Investor Network, Philadelphia, represents investors who target high-growth, minority-owned or minority-led companies. Venture Capital Access Program, New York, a venture between Harvard Business School Alumni Angels of Greater New York and the National Association of Investment Companies, provides access to capital for women and diverse entrepreneurs. MINORITY-LED VENTURE FUNDS 645 Ventures, New York Base Ventures, Berkeley Hills, Calif. Bronze Investments, San Francisco EchoVC Partners, San Francisco Bay Area H360 Capital, Charlotte, N.C. Jalia Ventures, New York Syncom Venture Partners, Bethesda, Md. Valencia Ventures, Oakland, Calif. ACCELERATORS DreamIt Access, New York and Philadelphia, helps launch minority-led startups in those cities. Latino Startup Alliance, San Francisco, promotes tech entrepre-neurship in the U.S. Latino community by providing a network of entre-pre-neurs, investors and mentors. Manos Accelerator, San Jose, Calif., provides mentorship, resources and access to early-stage capital for Latino entrepreneurs. New Me Accelerator, San Francisco, targets businesses led by founders in underrepresented populations. RESOURCES America21 Project, Medford, Ore. Black Founders, San Francisco Code 2040, San Francisco Digital Undivided, New York DiversiTech, Washington, D.C. |
Top Latino Tech Leaders 2015