Jaclyn Huang contributed to this article.
Arlan Hamilton built a venture capital fund from the ground up, while unhoused. The fund, Backstage Capital, is dedicated to minimizing funding disparities in tech by investing in high-potential founders who are people of color, women, and LGBTQ+.
Investing in underestimated founders
After starting from scratch in 2015, Backstage Capital has now raised $20 million and invested in nearly 200 startup companies led by underestimated (a term Hamilton uses instead of “underrepresented”) founders. Following the fund’s success, in 2018, she co-founded Backstage Studio which launched four accelerator programs for underestimated founders in Detroit, Los Angeles, Philadelphia, and London. Hamilton has been featured on the cover of Fast Company magazine as the first Black woman non-celebrity to do so, is the author of “It’s About Damn Time,” and hosts the weekly podcast “Your First Million.” She and her mother, Earline Butler-Sims, have also created a scholarship program for Black students at Oxford University and HBCU Dillard University.
Hamilton’s work has been a game-changer for underestimated entrepreneurs. According to Forbes, Black consumers spent $1.4 trillion as of 2019, “… yet 1-2% of bank dollars go to Black-owned businesses.” This restricted access to funds plays a key role in the racial wealth gap. “White lenders have historically underserved and discriminated against the Black community,” said Kevin Cohee, Chairman and CEO of OneUnited, a 50-year-old Black-owned bank. “The Black-white wealth gap means Black people have fewer assets and less income because of this racial discrimination.”
Hamilton joined us at Representation Matters, our fourth annual racial equality summit, to discuss the importance of increasing financial access to Black and brown entrepreneurs as we work to close the racial wealth gap. Prior to her work in the venture capital space, Hamilton knew of Black men and women in the industry, but she wasn’t seeing them. Perceiving this disparity inspired her ambition to use her platform to create access for others. A pioneer in the tech space, she shares ways we can continue moving the needle forward.
Others making an impact in finance
When asked if she knew any others that have made similar impact in the field, Hamilton readily gives recognition to a few powerful predecessors in the world of finance, referencing renowned figures such as Mellody Hobson and Carla Harris. Despite the two making waves in work that looked a little different from Hamilton’s vision, simply witnessing the representation they brought to the field gave her the faith she needed to take initiative and make change herself. “I didn’t see anyone doing what I wanted to do, at the velocity that I wanted to do it… So I decided to do it myself.”
Soon enough, Hamilton found herself in the position to positively influence others by becoming that representation herself. Her book, “It’s About Damn Time,” was written with the goal of becoming a source of inspiration for those who, just as she once did, aspired to be game-changers in a world oversaturated with white figures. She wrote for specific audiences hoping to learn from a Black woman — or queer Black woman — and found inspiration by asking herself what book she would have loved to have had access to years ago. The sense of empowerment readers receive from her authorship is a sweet parallel to the jumpstart she had long ago when she witnessed the presence of Black women in finance. Both showcase why representation matters: it’s the driving force behind positive change in generations and generations to come.
Be intentional when setting up the infrastructure
When asked how access to financial opportunities can be widened for minority-owned businesses, Hamilton emphasizes that the goal should not be to simply receive money to get along. Looking ahead, venture capitals, banks, and businesses must adopt the act into their building blocks for equality to truly come into fruition. Success exists only in the short term through one-time pledges that “get all of the goodwill and customers that replenish that amount anyway,” but sustainable success comes when you “really set it up as part of your infrastructure, as part of your framework that is deeply seeded within the DNA of the company and not just for show,” said Hamilton.
And the opportunities that come from embedding intention into infrastructure are important — they exist to give underestimated groups the visibility they deserve. This also matters because representation is vital when working towards closing the racial wealth gap, Hamilton says. “That vision, execution, and amplification of that work — we’ll see the fruits of that for years to come. And that all pulls people towards thinking, ‘It’s okay for me to aspire to have a lot of wealth, which will help me amplify the work that I want to do.’”
When speaking about the impact of diversity on innovation, Hamilton draws our attention to top technologies we use in a day as provoking comparisons. “Telephone, television, some sort of app. And we think that’s great. Well, what if diversity had been at the forefront of people’s minds 100 years ago? … I think so many people think that we’ve gotten so far in technology, but what if we could have been much further along, had we not just been pulling from one category of people?” Years’ worth of overlooked potential inspired her to name her book “It’s About Damn Time” to reflect the long-awaited arrival of diversity in technology. But though the revelation of lost time could lead one to feeling exasperated, Hamilton instead finds herself more thrilled than ever: “It’s not only exciting to think about the diversity, but also the amazing amount of innovation that will come from this if we do it right.”
Doing it right is exactly how many would describe Hamilton’s efforts in the venture capital space today. “When you invest in Black people, when you invest in Latinx people, when you invest in Indigenous people who are starting startups or who are building growth companies, you’re also investing in healthcare and infrastructure and space exploration and the next tech titans of the world.” There has always been high chances for the company led by a person of color to become a global powerhouse, Hamilton shares.
Certainly, the evidence lies in Backstage Capital’s diverse portfolio — there’s Bitwise, a tech ecosystem that has taught thousands of people from “underdog” cities to code; Goodr, a ledger that tracks an organization’s surplus food from pickup to donation to help food-insecure communities and combat waste; and Dollaride, a mobility company that connects people living in transit deserts to informal transit networks called “dollar vans.”
Hamilton’s willingness and intentional work to fund historically underestimated founders provides a model to all communities in the ways we, as members and allies, can commit to advancing equality and inclusivity in all facets of our society.
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