It was 2016. My company, Upswing, was in its third full year as a company. It was an exciting time, as we found ourselves growing, figuring out key processes, and gaining brand recognition in the market. But we were running into an issue: in order for us to achieve the next level of growth, the amount of money we needed to raise made it difficult to reach out to angel investors as we had done before. We need to raise venture capital funding.
I began as any founder would, asking various angel investors and other founders if there were people they may no. Unfortunately, our investors didn’t have connections to venture capital firms, and other founders were in the same boat as me. As our financial runway shrank further, anxiety set in as I realized that I hadn’t made any headway toward introductions, let alone actual meetings. Out of desperation, I began googling for information on how to break into venture capital’s walled garden.
That’s when I began to see the disheartening statistics around venture funding. Less than 1% of all companies funded by VC are led by a black or brown founder. The statistic hit me like a ton of bricks. After overcoming the seemingly impossible by taking an idea and growing it into a business despite no personal or family funding to commit to its growth, I was met with the stark realization that – like many other black and brown founders – a lack of access to this exclusive network could mean the end of my dream.
Just as I was at my lowest point, I came across a blog post written for those in my position. The author discussed VC’s walled garden, and how many – if not most – VCs have a reputation for only entertaining introductions from their networks. This blog, however, was for the rest of us. It began by saying that yes, there’s only a 1% chance that you get VC funding through this route. But at the end of the day, 1% still means there’s a chance, right? It then linked to a spreadsheet showing all of the micro VCs in the United States, followed by information on how best to draft a cold email that stands a chance of getting a response.
Over the next couple of months, I stayed home from the office, preferring to focus exclusively on making this work. I parsed apart the edtech (or similar) micro VCs from the others, and found interesting information about each one. I then drafted a templated email and customized it to each investor willing to accept a cold email. In the end, I sent cold emails to 97 different funds. 25 replied. 10 agreed to meet with me. In the end, none invested, but one investor in particular found what we were doing interesting enough to share with another investment fund.
With that one warm introduction, not only did we find our lead investor; we also secured follow-on investors, ultimately closing a $1.5M seed round and an additional $500k in grant funding.
I am eternally grateful to the investor who gave us a chance on a cold email. Unfortunately, there are too few investors out there willing to do so. These decisions have adverse consequences on not only who gets funded, but ultimately which communities benefit from innovations in technology. It’s time to end warm introductions.
This idea isn’t mine alone. Funders of color throughout the space have argued for this, highlighting stories of founders like me who fund themselves on the outside looking in. In today’s age, where many funds and firms are thinking about how they can become more inclusive, this one simple change can do so much to quickly level the playing field and truly increase the percentage of VC-funded people of color.