Venture capital investment in companies led by women and minorities is lacking. CB Insights released its data in showing only 1% of VC-funded startup founders are African American, whereas 83% of VC-backed founders are white. Stepping up to the plate to help change that narrative are early stage venture capital firms like Cross Culture Ventures.
Launched in 2015, the firm is led by three African American men: talent manager and venture investor Troy Carter, former Gastronome Ventures vice president Trevor Thomas, and prior Intel Capital Partner Marlon C. Nichols, who led investments in women and minority-led start-ups through Intel Capital’s Diversity Fund. Nichols will lead a panel discussion on identifying seed and early-stage funding at the Entrepreneurs Summit.
Cross Culture Ventures invests in entrepreneurs creating next generation technology and consumer products. It expects to invest in 40 companies out of its first fund. While their mission is not to invest in minority-led companies, its founding partners take really good looks at companies that are led by founders of different racial and cultural backgrounds.
“About 50% of our (eight) portfolio companies are led by black men. It is not something that we set out to do,” says Nichols, a former enterprise software start-up guy and strategy consultant turned venture capital investor. “We were looking for companies that solve real problems. We are discovering and investing in companies that are aligned with what we are seeing in terms of a shift in cultural trends and consumer behaviors within an increasingly diverse global marketplace.”
Take for instance, Mayvenn Inc. and its co-founder and CEO Diishan Imira. The idea of mixing the black hair market with the ecosystems of Silicon Valley may seem like a foreign concept to many, but the idea sounded perfect to the 34-year-old Hampton University alum. To solve this problem, Imira created an innovative tech platform that allows hair stylists to sell hair extensions directly to their clients without a middle man involved. The hair market (weaves, wigs, and extensions) is a billion-dollar industry. Since its 2012 launch, Mayveen has raised $10 million. Outside investors include Cross Culture Ventures, music mogul Jimmy Irvine and tennis great Serena Williams.
Nichols’ advice to entrepreneurs is to come up with an idea that is authentic to your experience, something you can relate to and really understand. What’s more, be honest with yourself. What is the potential for this business? Is this going to be a couple million dollars or even a $10 million dollar business. If so, you don’t need to take on equity, Nichols explains. “That is what we call a lifestyle business. You can become wealthy, but it is not a business a venture investor is going to fund.”
MINORITY-LED VENTURE FUNDS
645 Ventures, New York
Base Ventures, Berkeley Hills, Calif.
Bronze Investments, San Francisco, Calif.
EchoVC Partners, San Francisco Bay Area
H360 Capital, Charlotte, N.C.
Syncom Venture Partners, Bethesda, Md.
Valencia Ventures, Oakland, Calif.