Given that less than 1% percent of all private equity in America is invested in black-owned companies each year, a number of African American high net worth individuals are doing their part to reduce this access to capital gap. They are angel investors like Lorine Pendleton who are actively funding women-owned and minority led businesses.
Pendleton is a seasoned business development executive with extensive experience in internet, legal and entertainment. She worked at a number of startups including SelectMinds, the industry leader of software and management solutions for web-based social network programs for corporations, as well as Community Connect, the publisher of the leading ethnic social networking websites BlackPlanet, AsianAvenue, and MiGente (acquired by Radio One).
She currently serves as the US director of business development at the global law firm, Dentons. But the former practicing attorney previously worked at a leading entertainment boutique law firm where she structured and negotiated multifaceted entertainment deals on behalf of such clients as Prince, Stevie Wonder, Chaka Khan, Spike Lee and the Estate of Christopher Wallace (a.k.a. Notorious BIG).
Today, she also holds several board seats including as a director for the National Black Programming Consortium, which provides funds, as well as distributes films and TV programs relating to African-Americans with principal funding from the Corporation for Public Broadcasting (CPB)/PBS. She serves on the boards of Living Labs Foundation, which organized the TEDxHarlem conference that took place in March 2012, and WomenLEAD Inc., which was awarded $285,000 from Verizon at the 2014 International CES. WomenLEAD is an online personal advisory board platform for women by women.
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Looking to invest in and work with entrepreneurs of colors, and helping them grow their businesses, Pendleton signed on in 2013 as a Pipeline Fellow–an angel investor in training. The Pipeline Fellowship trains women philanthropists to become angel investors through education, mentoring, and practice. Fellows commit to invest in a woman-led for-profit social venture in exchange for equity and a board seat.
Pendleton talked to BlackEnterprise.com about the things she is doing to help women entrepreneurs and to level the playing field.
BlackEnterprise.com: Why did you become a Pipeline Fellow?
Pendleton: At the time, Soledad O’Brien did the [CNN special] Black in America. In the [fourth installment of the documentary] series she focused on the NewMe Accelerator program. It was revealed that only 1% of black entrepreneurs receive VC money. I remember thinking how unfortunate that was. [Also], I was thinking
that I want to give back and help change things and that I could provide capital to companies, seed money to help them grow. I know business development and legal. But I don’t have a background as an investor.Daily Worth is a newsletter that provides financial information for women. I read about Pipeline and I was like: “Wow this group teaches women how to become angel investors.” You learn with other women, you have mentors who are in the VC world, and you get to invest in women-owned businesses focusing on social entrepreneurship and for-profit companies that are socially conscious. That resonated with me.
What did you learn from the Pipeline Fellowship program?
We looked at how to analyze a company. You can start out with a business idea and a business model, but once you are in the marketplace you may have to pivot your business. A lot of businesses that we see may have to change and adapt based on market conditions or opportunities. So, it is important to invest in the management team. Are they going to be able to pivot and adjust? I like tech companies because they tend to be scalable. I like companies that are improving upon a process or method that is already out there. I am looking to build my portfolio of companies. I may invest in two to three companies a year.
Not only did I learn how to become an investor, but now I belong to this network of women. When you talk about deal flow you want to hear about what’s hot out there. We are women from all different backgrounds and industries. We bring our varied experiences to the table in terms of providing resources and connections to the entrepreneurs [seeking funding]. There are now 70 plus Pipeline Fellow alumnae and we keep in touch.
Why did you decide to invest in the Cissé Trading Co.?
It is not a tech company but they have a great product [hot cocoa and baking mixes] that is organic and traceable. The founder [Diana Lovett] is remarkable and resilient. Her product is on store shelves next to Swiss Miss. The company did a deal with Whole Foods. She managed to get into 600 stores in a short period of time. The social aspect is that she gets her cocoa powder from the Dominican Republic [Fair Trade]; there is no middle person. This is a $2.2 billion dollar market in the US. Cissé could [eventually] be a buyout target for a [major] company.
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What are some things you look for as an investor when someone is pitching?
I have to believe in the idea and that it could do well. Is the product or service solving a problem? Is it marketable? Will people will want to buy it? What is the background of the management team? Do they have an understanding of the market and the industry? Is the founder a visionary who can get people to believe in their vision? Also, I interview their customers; I look at their financials.
What advice would you give to entrepreneurs looking to pitch to investors?
A lot of times companies will give the excuse that they are not ready to pitch, but the more you pitch the better you get at it. You learn from pitching. The Lean Start Up Machine is a good resource. It is a methodology for how you can bring your product to market. Also, by pitching you meet people. Go out and meet people in your community who are angel investors. Go where they go.