Editor’s note: This article is part of Something Ventured, an ongoing project by Crunchbase News examining diversity and access to capital in the venture-backed startup ecosystem. As part of this series on venture funding to Black entrepreneurs, we also look at how venture funding to Black startup founders has grown over the past year and the state of VC funding to startups led by Black women. Access the full Something Ventured project here.
Investors were skeptical. There was doubt about raising successful startups in Atlanta’s nascent technology economy and it was a day and age long before venture capital firms started using diversity as part of their investing mission.
“If there was one, I sure can’t think of any that had diversity as part of their thesis in investing,” said Judge, who is managing partner and co-founder of Atlanta-based Panoramic Ventures, which invests in emerging markets and diverse founders.
Purewire was successful in raising its money and — more importantly — Atlanta itself has been successful in not just building a thriving startup ecosystem, but one that has been the friendliest to Black founders, according to Crunchbase data.
“Living as a Black entrepreneur in the southeast then and being an investor now — it’s such a different environment,” opined Judge, who also is co-founder and partner at incubation center TechSquare Labs and sits on the investment committee of the SoftBank Opportunity Fund, which is focused on funding Black, Latinx and Native American founders.
The Peach State has seen the highest percentage of venture funding going to Black founders of any other state in the country since 2016 at 8.4 percent, per Crunchbase figures.
In fact, only California and New York have seen more total dollars go to Black founders than Georgia — which has witnessed $749 million flow to Black founders in the last five-plus years — but those states see only 0.7 percent and 3.2 percent of their total funding go to Black founders, respectively.
“It’s just changed exponentially,” said Justin Dawkins, a managing partner at Collab Capital in Atlanta which invests specifically in Black founders. Like Judge, Dawkins remembers trying to raise money nearly a decade ago for his startup, and the dearth of Black entrepreneurs in tech at the time.
“When I was building my company, I think you could have fit all of us in one room,” he said. “It’s just a different world now.”
Different world, but the same Atlanta
Georgia — along with having one of the fastest-growing metros — is also one of the fastest-growing states in the U.S. venture capital landscape. The venture money going to companies in Georgia has more than doubled in the last five years — from about $800 million in 2016 to $2 billion last year, a more than 158 percent jump, according to Crunchbase numbers.
While Dawkins agrees the tech scene has grown in the area — especially for Black founders — he also points out Atlanta has always been a unique place for minorities, both culturally and politically.
“First, Atlanta is just special geographically,” he said. “It’s embedded in the South, obviously. That means something in itself.
“Secondly, we’ve always had Black leadership since I can remember,” said Dawkins, who was born at the tail end of Atlanta Mayor Maynard Jackson’s second consecutive term as the city’s first Black mayor. “We’ve been blessed to wake up every day and see someone who may have grown up in our neighborhood.”
The city’s culture — from music to movies to the civil rights movement — has made Atlanta a destination for Black Americans, so it only makes sense Black entrepreneurs also would seek it out, said Judge, who was born in Louisiana.
“Atlanta has been a Mecca for Black people,” said Judge. “It is the core of progress for Black America.”
The cultural aspect Atlanta holds is important to the startup community, contends Judge, who often talks of “the three Cs” an area needs to have a successful entrepreneurial environment: culture, colleges and corporations.
From Georgia Tech to Coca-Cola to Calendly
Georgia also has those other “Cs,” as the area is fertile with 30 Fortune 1000 companies, including Delta Air Lines, Coca-Cola and The Home Depot, and rich in institutions of higher education such as Georgia Tech, University of Georgia, Georgia State University and Emory University.
In addition, the state boasts 10 historically Black colleges and universities and many of its largest corporations have had diversity-focused hiring programs for decades.
“Having a great talent pipeline is a huge key,” said Kathyrn O’Day, a partner at Atlanta Ventures. “Then you add in the fact Atlanta has been such a hub for Black business leadership for decades and Fortune 500 companies here actively recruiting Black talent. There are just so many multipliers.”
While Atlanta Ventures does not specifically use diversity in its investment criteria, it was the firm that gave a then-small startup called Calendly its seed money in 2014, a $550,000 round. The automated scheduling company founded by Black entrepreneur Tope Awotona
just closed its only other funding round in January, a $350 million round valuing it at $3 billion — the largest round to a Black founder this year, according to Crunchbase data.
O’Day said other Black founders are attracted to Atlanta when they see success stories like Awotona and the multitude of Black leaders and entrepreneurs who preceded him in the city.
“Success just begets more success,” she said.
Aside from schools, big business and its place in Black history, O’Day said considerations such as cost of living have made Atlanta attractive to all types of entrepreneurs, as well as the area’s desire to open doors for people rather than closing them just based on things such as schooling.
“In California it’s the norm to have a degree from Stanford or wherever,” she said. “That’s not a prerequisite here.”
She also cites the area’s desire to foster its entrepreneurial community through places such as the Atlanta Tech Village, a coworking space and community for the tech community that once housed Calendly.
The village was started by David Cummings, a founder and investor heavily involved in the Atlanta tech scene.
“Atlanta’s always been a hub for Black founders and it starts with higher education,” Cummings said. “Georgia Tech graduates more Black engineers than any school in the country. Georgia State has more annual Black graduates than any school in the country.”
Cummings said when one combines that amazing pipeline with the great quality of life, vibrant culture and can-do attitude for a fast-growing startup scene of underrepresented founders, it’s no wonder Atlanta has some of the highest funding numbers for Black founders.
Still not easy
While venture capital numbers grow in Georgia, Tree McGlown remembers a time when finding funding in Atlanta was more challenging.
“Just a few years ago being from Atlanta could be an ordeal — just because you were not on the West Coast,” he said with a laugh.
In 2012, McGlown co-founded Atlanta-based Sideqik, a business intelligence platform for influencer marketing. In 2017, the company decided it wanted to raise a Series A and started the process early to refine its pitch to investors.
After two years, the company secured a $5 million Series A, mainly from West Coast inventors. McGlown said he does believe investors looked at him differently than they would have a white founder.
“I feel there were questions that were asked because of the way I looked,” said McGlown, who nevertheless says he holds no bitterness.
“People do what is most comfortable for them,” he said of investors. Instead he used the experience as a learning opportunity to improve even further as an entrepreneur.
“Iron sharpens iron, right?” he said. “Getting upset won’t change anything. It’s up to you to get better and improve. I thought about what I could do to help people who look like me.”
Even as more firms look to invest in diverse founders, McGlown said he has no doubt it is still more difficult for Black founders to get investors’ attention than it is for white entrepreneurs.
“It’s only been a couple of years since firms have been looking at that,” he said. “You still have to be perfect” if you’re Black.
McGlown — who recently helped sell Sideqik to Engine Media — hopes to be an investor someday himself and sees amazing potential in what his hometown can be.
“I love Atlanta,” he said. “I grew up here and I see what you can build.”
Even as Black founders flourish in Georgia, the state itself has made recent headlines for enacting voting laws that many believe disproportionately affect Black voters.
McGlown, however, said living in Atlanta — and even going to the University of Georgia — has only reinforced the idea of inclusion and having a voice in the community.
“I have always felt more heard in Georgia and Atlanta than anywhere else,” said McGlown, adding he does not think the new law will affect what is being built in Atlanta.
As an investor, O’Day also does not expect the law to have a significant impact on the venture world, but acknowledges people feel strongly about it.
“Legislation that is not inclusive is against everyone’s best interest,” she said.
Numbers improving, but…
While Georgia may offer up the best numbers in the U.S. startup ecosystem when it comes to Black founders receiving investment, not everyone is impressed.
“Overall, relative to the percentage of the population that is Black, we have a ton of work to do as to where we should fall,” said Judge, pointing out that more than 50 percent of the population in Atlanta identifies as Black.
Judge agrees there has been a shift in the way some firms look at diversity and investments, but also notes there has been a general shift to not focus solely on two or three areas of the country to invest in, which has opened up the market.
“The tech industry for so long was so focused on certain areas,” he said. “But now everything is more accessible and it allows for more diverse founders. It’s not just a case of the world doing the right thing but the fact things are just more accessible.”
Judge said in his experience, diverse founders often spot problems other founders overlook. Growing up Black in the U.S. you tend to develop a set of attributes and qualities you need to survive as an entrepreneur, he said.
“If you’re not seeking diverse founders, you’re not doing your job,” Judge said. “You are not looking at overlooked opportunities.”
However, Judge does hold out hope as more companies like Calendly have success in the market and eventually large exits for their investors.
“Excellence is one of the best deterrents of racism,” Judge said.
Illustration: Dom Guzman
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