Diversity Venture

How Former AOL CEO Steve Case Aims To Address The Funding Gap To Black Founders

Steve Case, the billionaire former CEO of AOL turned venture investor, has spent years working to make entrepreneurship more inclusive with his Rise of the Rest Seed Fund, which invests in startups away from the coastal tech hubs. This year, the company is focusing on Black founders with a virtual event that aims to connect investors with those underrepresented entrepreneurs.

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Revolution’s Rise of the Rest has partnered with Atlanta-based Opportunity Hub (OHUB), a venture ecosystem platform which addresses coworking, education and investing inequities for Black founders. The 100 Black Angels & Allies Fund—which came out of OHUB to connect angels interested in tech investing—will also join, as will Morgan Stanley’s Multicultural Innovation Lab.

Together, Revolution’s Rise of the Rest Seed Fund and Morgan Stanley’s MCIL will invest $1 million in the winner of the pitch competition, with two runner-ups receiving $500,000 each.

“The vast majority of venture capitalists do have a desire to broaden their portfolios and back Black entrepreneurs, but not everybody has the network, the pipeline, the deal flow,” Case told Crunchbase News.

As it has done previously, Revolution has invited a network of venture capitalists to join the effort. So far, 20 firms have agreed to do investor meetings including Cowboy Ventures, First Round Capital, Foundry Group, Greycroft, M25 and Upfront Ventures.

We spoke with Case, as well as managing partner David Hall from Revolution’s Rise of the Rest Seed Fund, and Rodney Sampson, co-founder of OHUB.

Sampson said that this event is different, noting that in most pitch competitions in the Black community startups normally receive more in the range of $5,000 to $10,000 in investment.

‘The data don’t lie’

A 2019 report on Black and Latino founders from Harlem Capital Partners showcases 200 Black and Latino founders who have raised more than $1 million in funding. Back in 2000, when Sampson was starting out, there were only a handful of Black entrepreneurs: Omar Wasow of social media company BlackPlanet; Sampson himself, who created a streaming platform company called Streaming Faith for those who want to stream their favorite pastors; and Clarence Wooten, co-founder of ImageCafe, a site for customizable websites for small businesses, which sold to Network Solutions.

Based on the data in Crunchbase gained with the recent launch of Diversity Spotlight, it’s clear that the startup community is now more diverse and has more than just a handful of Black founders. Still, funding to Black founders comprises less than 1 percent of total venture investing overall.

For this event, Revolution plans to mirror what has worked well on its across-the-country tours. The virtual tour will include town halls with ecosystem builders, an entrepreneur showcase of companies already backed by Revolution, the pitch event, and bootcamp training.

Case said he’s witnessed investors showing more interest in building bridges with underrepresented entrepreneurs, “but they don’t really have the networks and therefore don’t get the deal flow.” He believes more investors will join for this event than previous Revolution tours, one of the benefits of being remote this time around.

In a previous partnership, Revolution and OHUB teamed up for a 2015 bus tour in Atlanta. So far, Rise of the Rest has toured 44 cities, always with a focus on a diverse mix of entrepreneurs, according to Hall.

The group’s ninth tour was cancelled due to COVID-19 but tours are scheduled to resume when things open up again.

To date, Revolution has invested in 15 companies with Black founders. The firm knows it has more work to do.

“The excitement gets generated from the people who come off of the sidelines; either the investors who haven’t written checks in startups, the corporations that realize they haven’t done enough to support startups, and the entrepreneurs who have an idea,” Hall said.

The hope, according to Case, is to “build bridges that lead to more sustainable funding from more venture capitalists backing more entrepreneurs.”

Pitch applicants can apply here before Oct. 25, 2020.

Photo: Rodney Sampson, co-founder OHUB, and Steve Case, co-founder of Revolution.

Photo credit: OHUB.

Blogroll illustration: Dom Guzman

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