It takes a lot of effort to start a company from scratch. From coming up with an idea that is commercially viable to sourcing a team to marketing the product to consumers, a high degree of acumen and drive is required. The real test of endurance, however, is finding the money to get it all going. There are plenty of roads to take: bank loans, government grants, friends and family, angel investors. But in the tech world, venture capital—a form of private equity and a type of financing provided by investors—is often the quickest path to raising large funds.
“If you need $2 million to start your company, VC is the way to do it,” says Ethan Mollick, a professor at the Wharton School of the University of Pennsylvania, where he specializes in innovation and entrepreneurship, and the author of The Unicorn’s Shadow: Combating the Dangerous Myths That Hold Back Startups, Founders, and Investors. “My favorite analogy for venture capital is that it’s rocket fuel, which is really great if you’re building a rocket and really bad if you’re not.”
The problem is that the launchpad to success is guarded by a select group that is unabashedly homophilic. “The original venture capitalists tended to be either Ivy League- or Stanford-educated white men,” Mollick notes. “And because venture capital is a business about knowing people and making judgment calls on people, the networks that they were drawing from look like them.”
This means that from the go, women of color are at a disadvantage. The playing field is not level; entrepreneurs who don’t have the same “pedigree” as these investors, despite whatever successes they might have achieved in the past, are less likely to be seriously considered. When presenting in a boardroom, if given that opportunity at all, Mollick says women are asked “how they’re going to avoid losing, whereas men are asked how they’re going to win.”
“If you take away bias, I’m not sure that investors really know what they want,” says Lauren Maillian, an angel investor and the interim CEO of DigitalUndivided, a non-profit organization that leverages data to help change perceptions of what makes a sound investment in order to create opportunities for Black and Latinx women entrepreneurs. “We’ve seen white boys get invested in time and time again; they fall flat, they lose money, they go bankrupt, they return nothing to their investors, but they get another idea and get funded again,” she continues. “I know many in the space on their third business, and none of them has been profitable. Women of color don’t get that opportunity.”
As a result, many of these founders have looked to alternative sources for financing, like equity crowdfunding. Through platforms like AngelList, Microventures, and Fundable, they are able to raise capital from the general public in return for small shares of the company. “It’s the path of least resistance that lets women have the flexibility and power to let their story work for them on its own accord,” says Maillian.
Still, there is a negative stigma around garnering capital this way, primarily because it’s a relatively new method and has yet to “have a big winner in the space,” says Mollick. “It’s been tried for five years, and there are no big successes.”
Here to change that are Dawn Dickson-Akpoghene, Angela Benton, Maxeme Tuchman, and Sharmi Albrechtsen, four women of color and entrepreneurs in the tech world who have gone through the VC system with little to show for it. They spoke with BAZAAR.com about how opening themselves and their companies to the general public could reap far greater rewards—and ultimately skyrocket their success.
Dawn Dickson-Akpoghene, PopCom
In 2000, Dawn Dickson was studying journalism at Ohio State University. AOL Instant Messenger was blasting off, and email platforms began to see a host of new users. Dickson soon realized that the future of communication would be virtual and that consumer spending would go digital, so she decided to pivot and, as she says, “gain tech skills that would be competitive in the workforce.” She became a serial entrepreneur upon graduation, founding various media platforms and working with tech-enabled businesses until 2011, when she launched Flat Out of Heels, which sold roll-up ballet flats out of vending machines at clubs and airports in order to provide women relief from heels and other uncomfortable footwear.
Dickson saw a niche to be filled, a commodity that provided consumers with greater ease. But she also saw that there was more to the business than simply selling comfortable shoes. A year later, she developed PopCom, a software company that allows vending machines to collect data about their customers and gain insight into their user experience. “I really wanted to make omnichannel sales really possible for brands and retailers, including myself at the time,” she says.
To garner a competitive edge in the software space, Dickson enrolled in Techstars, a noted accelerator program that helps scale burgeoning technology firms, which provided PopCom with its initial investment. She also raised funds from accredited angel inventors and, yes, venture capitalists, primarily in her native Columbus, Ohio, becoming one of the first 25 Black women in the country to raise a million dollars in this way. Dickson accomplished this feat knowing that vending machines weren’t a “sexy, popular thing.” She had to “educate [potential investors] about the market opportunity and really explain what [she] was working on building.”
But Dickson proved less successful in her second round of fundraising. “VCs are not really big on follow-ups,” she explains. On top of that, she was located away from the deep pockets of Silicon Valley and was tired of trying harder than the rest to get a seat at the table.
“From what I’d seen with my peers, going through Techstars, other programs that I’m a part of, and my network, I felt that no one ever directly said, ‘I’m not going to invest because you’re Black and a female,’” Dickson recounts. “I would hear things like, ‘We’ve already invested in a company like yours,’ or, ‘We don’t invest in this category,’ but then I would see them later invest in something similar. The overall VC experience didn’t sit well with me, so I started to really think about alternative paths to raising capital.”
In 2017, the Securities and Exchange Commission (SEC) revisited certain laws under the JOBS Act, which stipulates how businesses are able to raise capital. Since 1933, there had been regulations in place that prevented the average person, one who made less than $200,000 annually, from investing in early-stage deals prior to companies making their initial public offerings. This curbed many marginalized groups from getting in on the action from the onset. “If you’re a Black person, nine times out of ten, you do not have inheritance, because our grandparents weren’t allowed to own property and have things, then you can’t make an investment,” Dickson explains.
But thanks to a change in statutes, equity crowdfunding has become a tenable way to procure funds for a startup. Not only does it do away with the stipulations that are often requisite with VCs—offering preferred shares, board seats, and large parts of equity—it also fosters opportunities within a close-knit group. Friends, family, and those who really believe in the company are able to put their money where their hearts are.
“I’m very passionate about creating generational wealth in my community—for myself, for my team,” says Dickson. “VCs are always acting in the interest of their investment and not of the overall company. All this played a role in my decision to do something that was, at the time, considered very unorthodox—and still kind of is.”
Crowdfunding, however, comes with its own hurdles. After landing on StartEngine, a platform that allows entrepreneurs to seek small investments from the public, in 2018, Dickson had to ensure maximum visibility. “I had to put together a strategy that could reach hundreds of thousands of people, getting enough traffic so my campaign could convert,” she explains. “It’s really a numbers game at this point. You have to get people to come, be aware of your campaign, read about it, click, and go through the entire investment process.” Dickson’s efforts paid off—within 47 days, PopCom had raised one million dollars by “using that same strategy of just flooding every possible channel that we could.”
It takes a great deal of time and effort to crowdfund, but for Dickson, it puts her in the driver’s seat rather than being a passenger. “I could have been discouraged, but instead I worked toward making it easier for people that follow me,” she says. “That’s how I think about it. Yes, I’m shoveling the dirt in front of me, but I’m clearing a path. Somebody had to do that for every single one of us. Somebody needed to pave the way.”
Angela Benton, Streamlytics
Angela Benton built her career on uplifting Black professionals in tech. After receiving her MFA from Savannah College of Art and Design in 2007, she founded the now defunct Black Web 2.0, a TechCrunch for the Black community, where she served as editor, profiling up-and-coming tech entrepreneurs and analyzing culture and trends in the industry. Four years later, she created NewME, the first accelerator program for minorities, which raised over $47 million in venture capital funding. In the process, Benton received numerous accolades from Goldman Sachs, Fast Company, and Business Insider, and was featured on CNN’s Black in America with Soledad O’Brien, where she highlighted the racial and gender inequalities in Silicon Valley and other hubs for venture capital firms.
“It actually was the catalyst for all the conversation that’s happening right now around diversity in tech,” Benton says of her appearance on the broadcast. “Our profile there is what started all of these conversations that have been happening over the past decade.”
Benton’s latest endeavor is Streamlytics, a company founded in 2018 that helps anyone reclaim their online data from tech corporations. The buying and selling of this information is already being done without consumer input, so Benton set up a system that lets the average person sell that data to Streamlytics and get a piece of the profits. “You own your data, we’re just licensing it from you,” she explains. “We also strip any personal identifying information from any data that’s connected to any of our products. We’re really a privacy-first company, which is really where the Internet is going nowadays.”
Finding funding for Streamlytics should have been a no-brainer. In fact, a network of investors came knocking with offers, and Benton used them as pre-seed to get her business off the ground. But after learning about the new SEC regulations in 2017, and knowing the culture of venture capital firms all too well, she decided to pass on all subsequent offers.
“A lot of people think venture capital is risk capital. It’s not,” she says. “They are in the business of generating returns for their limited partners. And one of the ways that they do that is to optimize for the best outcome. And they do this by looking at other things that have been successful and build patterns around that. The issue is that other things that have been successful in the past don’t include people of color. It’s very much a systemic issue.”
Benton describes one interaction she had with a VC firm, when she left the meeting feeling belittled and completely discouraged. “They were elitist and prejudiced, and because of that, they were not a good fit for Streamlytics,” she says. “And it’s okay to say that. Part of the reason why I shared that on Twitter at the time is because founders of color need to know that you can do that.”
With no desire to hit Silicon Valley’s famed Sand Hill Road to raise capital only to experience the same interaction again, Benton instead filed the paperwork to launch a crowdfunding campaign, having seen the success that Dickson—a friend and fellow member of several female founders groups—achieved using this channel. “Dawn was the first woman of color to crowdfund successfully,” she says. “And for me, it didn’t make sense to try to re-create the wheel. What Dawn did has worked twice for her, so I did the same exact thing. Dawn was on StartEngine, so I went on StartEngine. Dawn did XYZ, so I did XYZ.”
After posting her campaign in June of 2020, Streamlytics received the maximum amount of funds that is allowed to be raised on the platform (just over one million dollars) in eight days without running ads or doing any paid marketing. Rather, Benton brought on first-time inventors to StartEngine. From the beginning, she has made it her mission to boost the standing of Black people not just in tech, but across all industries. And by utilizing crowdfunding, she is giving true believers a chance to engage in the “next-generation data intelligence ecosystem” at the ground level.
“These are people who are from minority communities,” she says. “These are people who are excited about investing in a Black founder who is building a technology company. It was really transformative, especially in the time and age of what’s happening around racial equity in the world. It’s just night and day from raising money the typical way. I feel like I’ve been doing it wrong all of these years.”
Maxeme Tuchman, Caribu
After graduating from Harvard University with two degrees—including an MBA—in 2012, Maxeme Tuchman worked for numerous organizations and companies in the realm of child education. As a self-professed “problem solver,” she saw that there were complications in the field’s feckless bureaucratic structure, which sees “adults fighting with adults,” and where kids are left out of the conversation.
“I’m a natural-born hustler,” says Tuchman, who realized edtech was the future of education. “My family has fled countries. We’re Jewish and Cuban, so we were kicked out of everywhere, and we constantly had to reinvent ourselves, no matter where we went. Every time I faced adversity, discrimination, or a problem, I wanted to fix it or make it better.”
In 2015, she founded Caribu, a video-calling platform that integrates books and activities to allow kids and their families to partake in fun, scholastic activities, no matter where they’re located. “We create virtual playdates with a kid’s family and friends when they can’t be physically together,” she explains. “That’s been our mantra even before the pandemic. Now, obviously, it’s extremely important that kids have a better video call experience that is more educational, engaging, and entertaining.”
With an inventive concept and an impressive academic record, Tuchman believed that finding investors would be a cinch. “When I started, I had a lot of hubris,” she says. “I thought I was going to raise a million dollars tomorrow—but that wasn’t true.”
Tuchman started by appealing to angel investors, who all essentially told her, “Well, we don’t know, and you’re unproven, and you have a nice fancy degree, but we don’t care.” So she tried her luck with venture capital firms, and found the route even steeper to climb.
“I realized there was a false assumption placed on me that didn’t expect me to know how to run a business,” she says. “People were looking at me and thinking, ‘Oh, it’s education, and she’s a woman. She probably doesn’t understand how the numbers work.’ I was more than prepared, and still VC investors were telling me that they need to see more numbers. Then I started wondering, ‘Is it me? Is it my background? Is it the assumptions that they’re making? Or is it the business?’ You just never know.”
All the rejection took its toll on her confidence, but, determined to see Caribu succeed, Tuchman found another channel to raise capital: pitch competitions. “We were the winner or finalist in 30 of them, which really kept the company alive,” she says. “We would clean house, and it was awesome.” But four years after founding the company, with mounting expenses and the summer of 2019 (“the worst time to meet with investors unless you are a white dude with a hoodie who has the coolest, hottest crypto-credit-card-bank thing”) drawing near, she needed funds fast, so she tried her hand at equity crowdfunding. “We chose Wefunder, because, at the time, it was bigger than the others. It’s all a numbers game. I wanted to access the most investors.”
Steadily, they came pouring in by the thousands. Not only did they believe in Caribu, they also were active users of it. “They’re glam-mas,” Tachman says. “Our core customer is the glamorous grandma or abuela fabulosa in español. She would see our product and realize, ‘Wait a second, I think this product is amazing. I have the money to invest. I want to become a startup investor. I want to get into private companies.’ She both became our investor and our customer.”
Even if there is “negative stigma with equity crowdfunding,” Tuchman remains undeterred in growing her business using this avenue—and there are numbers to prove it. “We’re already in over 200 countries and have users using us 24/7,” she says. “So global domination, to me, is a very, very realistic plan.”
Sharmi Albrechtsen, SmartGurlz
In 2010, Sharmi Albrechtsen was the associate director at the Ida Institute, which creates therapy tools for children and adults suffering from hearing loss. She was also a mom with a daughter struggling in math and science. And with a full understanding of how toys could foster learning, she bought the only fitting product available at the time: Lego Mindstorms, a robot inventor kit. “My daughter hated it.” she says. “It’s created by boys for boys. From the packaging to the entire app interface, everything was masculine and really aggressive.”
Seeing the lack of options, Albrechtsen created SmartGurlz, a line of robots “that engage and encourage girls to learn how to code” in 2016. Each doll, or Smart Buddy, can be connected to a smartphone or tablet and features programming intended to spark interest in STEM. “They create stories and role play,” she explains. “And we wanted them to start creating fun, fantasy experiences with these characters.”
To get it off the ground, Albrechtsen acquired a $100,000 government grant, which was enough to create a prototype to gage the market’s reaction (it was overwhelmingly positive). “I had these 300 names and two distribution contracts in my hand,” she says. “With that, I was able to raise a little bit of angel funding and focus on SmartGurlz full time.”
But as a hardware company, she required more capital to not only manufacture the product, but to store, ship, and market it. By chance, she was scouted by the producers of Shark Tank when showcasing SmartGurlz at the Consumer Electronics Show. On the television program, Albrechtsen sold Daymond John on her vision, but didn’t end up accepting his offer. Still in need of finances, she sought out venture capital firms.
“It was tough,” she says. “Not because I couldn’t get meetings—you can always get meetings with them—but because they were just really fluffy. They gave me a lot of advice, and then sent me packing out the door.”
Many VCs told Albrechtsen to turn SmartGurlz into a software product or video game, failing to fully comprehend the power that dolls have in a girl’s development. “They didn’t have those experiences, which made it really hard to get them excited about the products,” she says. “Another thing is that I do think it matters if you’re a woman of color. I do think that there is a certain kind of comfort level that men have with other men. And most investors are white men. That’s just the world that we live in. I walked away completely deflated and saddened by the whole VC culture. They’ll just happily waste your time.”
In 2017, Albrechtsen launched her first crowdfunding campaign with SeedInvest, which landed her more than $600,000 to keep SmartGurlz afloat. But this sum wasn’t enough to sustain her company long-term, so she followed it up with a Wefunder campaign—which entices prospective inventors with perks, including offering a Smart Buddy with every $250 investment—that’s raised more than $1 million to date. On the side, she continues to apply to accelerator programs and government grants.
“I still get associates at VCs who write to us, and I just don’t even bother,” she says. “It’s a nasty game. If you do it right, and you’ve got the right story, there are other ways you can raise funds,” Albrechtsen says.