Cincinnati native Rod Walton doesn’t want to move the business he founded out of his hometown, but he’s considering it.
Austin, Miami and Atlanta — all are on his radar.
“Those three cities seem like great places for founders,” said Walton, founder and CEO of The Home Team, a labor-tech startup. “Cincy doesn’t necessarily try to hold you back because of who you are, but it doesn’t push you forward as much as it could, either.”
Other Black founders — such as Candice Matthews Brackeen and Rodney Williams — echo Walton.
Cincinnati, they say, has some work to do to support startups owned by people of color. There’s a lot of talk but not enough action — and certainly not enough cash finding its way to minority founders.
“Cincy is a unique place,” Walton said. “Cincy has a really strong desire to be at the forefront of certain industries. But the initiatives to execute are poorly thought out.”
That belief was a common thread in interviews with a group of startup leaders.
Rodney Williams, the chief commercial officer for LISNR, which has raised $35 million since 2012, offered a telling anecdote.
“Cincy has a really strong desire to be at the forefront of certain industries. But the initiatives to execute are poorly thought wdout.”
When he drives his BMW in Cincinnati, people often think he’s an athlete or “possibly something worse,” he said.
People talk him to “in a certain way I don't really like,” he said. “When I exit my car in Los Angeles, I am perceived as a business owner."
He drives a Porsche in Los Angeles.
The early days
Brackeen, the founder of the Hillman Accelerator and general partner of Lightship Capital, made history June 26 when she and her husband, general partner Brian Brackeen, announced what is likely the largest-ever venture capital fund dedicated to investing in Midwestern, minority-led startups. This is also believed to be the largest initial fund run by a Black woman to date.
She remembers when she couldn’t get a loan to buy equipment for her first fitness studio in an affluent Cincinnati neighborhood. It was maddening, she recalled.
A Native American-owned bank stepped up to help, and she said she’s forever grateful for that. Brackeen now helps people such as Walton through Hillman and Lightship.
Walton went through Hillman in 2018. The Home Team has raised $540,000 – $100,000 of which came from Hillman.
Walton met Brackeen at an event about a year after he returned to Cincinnati after spending some time in Pittsburgh.
“Hillman is a force,” Walton said. “I think they experienced some of the similar issues as a startup. Their job is twice as hard because they’re trying to raise money for Black founders. I give them a lot of credit for how far they’ve come.”
Brackeen founded Hillman in 2017. It serves underrepresented tech-driven startups through mentorship, a specialized curriculum, partnerships and capital investments, and identifies as the first Midwest accelerator to focus on that demographic.
Brackeen started her first tech company, Hello Parent, in 2015. She went through an accelerator in northern Kentucky.
It was tough going, though.
“We would go to tech meetup groups trying to find someone who was a developer,” Brackeen recalled. “No one was trying to hang out with 30-something moms trying to build a parent app.”
She started a group in June 2015 with 11 Black founders. That group has raised more than $60 million in the past five years.
“It’s a long process, and it hurts your entire soul. But if it’s your life’s work, you won’t stop doing it.”
“That number will significantly increase in the near future,” she said.
By November 2015, about 75 founders and friends were meeting monthly.
“After my tech company raised money and then ran out of money, I said ‘How about we all start some kind of pre-accelerator to get into an accelerator?’ ”
Doing so was an uphill battle, she said.
Although people told her “There’s no problem with diversity. We love you. You’re our friend,” Brackeen recalled, “The numbers just weren’t there.”
People of color and women weren’t getting into accelerators, she said.
She describes trying to change the ecosystem in Cincinnati as a “slow and tedious slog.”
“It’s a long process, and it hurts your entire soul,” she said. “But if it’s your life’s work, you won’t stop doing it.”
Hillman, she said, has “had very difficult conversations” with groups and entities such as CincyTech, Cintrifuse, the Cincinnati USA Regional Chamber, the City of Cincinnati and the state.
“We aren’t receiving the level of service, the same level of capital that others are," Brackeen said. "I think in Cincinnati it really just came down to letting people see the problem. Conversations on race just aren’t easy.
“It’s not a combative relationship at all," she continued. "We’ve all just grown and learned over the last few years. I can’t say it’s easier right now, but it’s more open. It’s just constant work, and we’re all out here working for economic justice.”
Honest conversations
LISNR was the first company to go through Cintrifuse, Williams said.
“LISNR was part of what I would tell you was Cincinnati’s emerging into the startup ecosystem,” he said.
Williams previously worked in brand management at Procter & Gamble, and he credits relationships there for helping him make connections.
“I was connected to a network and had more access,” he said. “That’s the honest truth.”
Still, CincyTech and Cintrifuse are LISNR’s only institutional investors in the city. LISNR has a few angel investors from Cincinnati as well, but the majority are outside the city and state. That’s telling, he said.
The startup ecosystem in Cincinnati as a whole is better than some cities. The ecosystem for minorities is average, in his opinion. Cincinnati corporations need to invest more in minority businesses, he said.
Hillman and Lightship “are definitely bright spots,” he said.
Despite challenges, Williams thinks “you can be successful anywhere. Doors can be harder to open, but they can be opened.”
Conversations about bias are crucial, he said.
“If there is some negative bias, some negative perception, we have to do something to correct it,” he said. “It’s OK to have a bias. I even have biases. What is not OK is to not acknowledge it.”
Moving the needle
Elizabeth Edwards, founder and managing partner of H Venture Partners, said lack of funding for underrepresented founders, including women, hurts everyone.
“There’s a real trickle-down effect,” she said. “It affects founders, consumers and communities.”
A Knight Foundation study showed that about 1% of the investment management industry’s $70 trillion in total assets under management are handled by women and minority-owned managers.
“You find that Black founders don’t get funded. Women don’t get funded,” Edwards said.
The numbers haven’t changed over the years, she added.
“You might see little blips here and there, but there hasn’t been steady improvement. There are initiatives that people get excited about. There’s a lot of talk and no cash," Edwards said. "How did Amazon and Apple and Google and Facebook and Airbnb and Peloton get started? They raised venture capital.”
Main Street investors need to make sure that their values are reflected in their portfolio, she said.
“That’s really where the accountability starts,” Edwards said.
The lack of funding is particularly troubling because “when you look at performance for female- and minority-led firms, the Knight Foundation found that for private equity, they were more likely to be top-quartile performers. So if that’s the case, why aren’t more assets being invested in those funds and in those communities?”
Edwards believes she knows the answer: the status quo.
“We as individuals have the power to change this equation just by asking your financial adviser, ‘What percentage of my portfolio is managed by women or people of color?’ " she said. "They’ll know you care, and next time they have to come back with a better answer than ‘Zero.’ ”
Will they stay, or will they go?
Walton said he hopes to keep Home Team in Cincinnati.
But it can be depressing, he said, trying to raise capital in a city that says it wants to support Black founders but doesn’t have the numbers to back it up.
“I think there’s some momentum, but there’s still a large gap to be filled,” he said.
Home Team won’t limit itself to raising money only in Cincinnati.
“We would love to stay and grow our business here,” he said. “The ultimate mission is the success of our business for our team members and shareholders. We’re going to do that wherever it needs to be done.”
