Allison Murdock, an Analyst on our ID Ventures team, describes the challenges that Black and underrepresented founders experience when pursuing startup investment, and how she and the team intend to help with a newly created fund.
This week, 51 years ago, Nina Simone recorded an anthem dedicated to Black youth across the world, “To be young, gifted, and Black.” The powerful lyrics, written by poet, Weldon Irvine, are confirming reminders to the Black community of their excellence and their ultimate impact on the future of this world. To be young, gifted, and Black is to exist in a world where structural barriers to social and financial opportunities suppress equitable development for our success.
During college I began exploring a career in venture investment and startups, and I am now continuing that pursuit here at ID Ventures. Before this, my only immediate points of reference for entrepreneurship were stories of my Jamaican grandmother’s housekeeping business she had dreams of starting, as well as the peers, friends, and family I knew starting and running small businesses. Not once did I think I knew the next Eric Ryan, co-founder of Method, or Steve Jobs, co-founder of Apple. For all I knew, achieving such success boiled down to being a white, male genius. I learned quickly that there was no special formula to becoming a successful founder, but there was a special advantage. A mix of knowledge, social and financial capital, and an intersectional profile identical to that of the investors and founders of past successes has created a veiled loophole that keeps investments in Black founders to a minimum.
In spite of the odds stacked against us, Black entrepreneurs and those interested in startups are embracing failure and taking nontraditional risks. The desire to support these entrepreneurs led me to ID Ventures. The team has been and continues to be committed to filling the glaring gaps that exist in the entrepreneurial ecosystem for Black founders across Michigan and in Detroit, the most densely Black-populated city in the U.S. Black and other underrepresented founders are often forced to look for funding prior to demonstrating proof of viability, which often leads to frustration with the investment community when they are told to come back when they are ‘further along’. The funding stage that fuels the initial post-idea/pre-MVP (minimal viable product) stage is a round in which close friends and family give the founder a considerable sized-investment to fund the development of the founder’s idea.
We as a team recognize the systemic barriers which create a social and financial capital disadvantage for underrepresented founders. This is why we have recently created the Catalyst Fund – a new fund that will support Black, Latinx, Native American, and immigrant founders or founding teams in this critical early stage to help overcome this initial barrier of early product development. The Fund will invest between $10-25k in 4-6 startups each year while also providing social capital by assigning one IDV team member to act as a champion for the company and co-design an “execution sprint” for 3-6 months, measuring mutually created quantitative and qualitative execution milestones. After the end of the 3-6 month sprint, team members will evaluate progress, reassess market opportunity, and will help with the plan to move forward.
Diversity of thought and awareness of systemic biases in the venture industry is the first step to paving a pathway for underrepresented founders to receive funding and ecosystem support. At ID Ventures, the diversity of thought on our team and in our networks is fundamental to our ability to source and relate to overlooked and underfunded founders. The Catalyst Fund proactively targets founders and talented founding teams who would benefit from a supportive ecosystem to catapult them to the next level of funding.
To the overlooked founder, ID Ventures sees you and we recognize the conditional rules to venture capital that polarize investments. We are on the dawn of change—to be Black, supported, and backed is a tune we and investors will all know.