This post is in response to the earlier post on the need for Black Celebs to become VC’s as a means to increase investment in Start-ups founded by African Americans. This post is in no way to meant to slight the previous writer on her well intended idea but in a effort to get more of us to the place where we can create successful online businesses, I wanted to clear up some misconceptions.
First, Chamillionaire is not a VC. The Crunch Base profile that the article mentions lists him as an endorser of those start-up companies, not an investor. That could mean anything from him doing promotional deals for them to him just saying he liked those products as at conference. Even if he did invest in those companies, that would not make him a VC. Venture Capitalists are institutional investors who are usually investing money from a large fund that their firm has raised (usually from large pension funds) to attempt to get those fund holders a large return on their money. VC’s also have some say of the future of the company by way of a board seat. If he invested out of his pocket then he would be considered an investor or Angel investor depending on how early he put his money in. I hope that clarifies things for people.
My issue with articles like this is that they open the window to give us another excuse to justify why we don’t have more Internet start-ups that are founded by African Americans. The hard truth of it is that the creation of such a “Uber Black Celebrity VC Fund” would not mean a sudden huge uptick in investment in black owned start-ups. If celebs did decide to do such a thing they would seek the advice of existing successful venture capitalists to see what metrics they use to determine a good investment.
Venture capitalists look for a few things in a company before they consider investing. Usually it’s one or more of the following:
- The market that you’re entering is big enough and there is a opportunity for your product to achieve some disruptive scale in it.
- Your product has been tested on some level and been able to gain some traction and is based around some revenue model. (Saying your going to make money on ads and sponsorship does cut it unless you have are able to amass a large audience)
- The person and/or team involved has some pedigree in the space or has a successful track record of launching successful companies and/or taking them to an exit (sale or taking them public)
I believe the last point is the one where a lot of us spend too much time on. Yes, there are people who are able to get funding on an idea. But 9 times out of 10 they have done something successful before. Jack Dorsey raised millions for Square before he launched it because he had built Twitter. I’m sorry but if you have not done any of the points I mentioned above then the reason you’re not getting investment is not because your black, it’s because you have not done the work yet. Are there things VC’s and investors can do to help create a better ecosystem for African-American start-up founders? Absolutely, but I think that is a whole other blog post.
The good news is if you’re ready to look yourself in the mirror and take an honest assessment of what you need to do then can get to the point of getting investor money. Look at some of my posts on entrepreneurship ( part 1, Part 2, part 3) here on Black Web 2.0 to get your started.
You can follow Navarrow on twitter @navarrowwright and at navarrowwright.comCategory: Entrepreneur, Featured | Tags: angel investors, black web start-ups, broadband, Chamillionaire, Entrepreneurship, internet, Jack Dorsey, twitter, Venture Capital, Venture Capitalist