Ohio should strive to become the top destination for Black-owned technology startups and venture capitalists – turning persistent funding gaps into an opportunity to seize, a JobsOhio official said.
The statewide economic development organization and Eficionado LLC, a Gahanna brand management agency, have convened a council of business leaders to form a strategy to evangelize for the state, and make the introductions to customers, state programs and investors that can help entrepreneurs from underrepresented groups succeed.
Black founders raised record amounts of venture capital in 2021 nationwide, $1.8 billion in the first half of the year alone, according the latest report from Crunchbase, but in an overall record-breaking environment that did not budge from 1% of the total. Also nationally, about 2% of VC partners are Black.
"Why has this been at 2% for four years and not moved?" said Eric Troy, CEO of Eficionado, whose clients include VC firms. "That’s not OK."
Ohio startups raised a record $2.4 billion VC in 2021, according to PitchBook and National Venture Capital Association.
Of that, $13 million went to three companies led by CEOs of color: two of South Asian descent and a former refugee from Afghanistan. Another that raised $120 million has a woman of color on the founding team. A Columbus startup with a Black founder has raised an undisclosed amount from Drive Capital.
"I know we can do better," Terry Gore, JobsOhio senior director of financial services, said at an event kicking off the initiative, with more than 50 business leaders, public officials and entrepreneurs, nearly all Black, including U.S. Rep. Joyce Beatty of Columbus, chairwoman of the Congressional Black Caucus, and Ronald Todd II, minority liaison to Gov. Mike DeWine.
Members of an advisory council are charged over the coming months with devising specific actions to better connect founders and resources. JobsOhio is pledging outreach and coordination but not specific funding for the initiative.
"We have the partners, the customers and the talent," Gore said. "We can attract so many more companies to the state. If you are a founder of color, Ohio is going to be a welcoming state."
It's discouraging to see record VC numbers when barriers to access still stand, said Branden Jones, co-founder of BlkHack advocacy group, Venture Suites co-working space and Color Coded Labs coding boot camp.
"We're in the rooms with Black founders (who) can't raise $10,000," Jones told the crowd at the event. "We're solving big-ass problems with big-ass solutions, but we're getting 'pilot' dollars."
Ohio entrepreneurs should capitalize on "this little window right now," in which corporations are announcing renewed commitments to diversity, equity and inclusion, said Jay Bailey, CEO of the Russell Innovation Center for Entrepreneurship in Atlanta. The 50,000-square-foot incubator connects Black business owners with mentors and resources, in a setting where they can feel comfortable and be fully themselves, he said.
"Create pathways to prosperity that are intentional," Bailey said. "We far too often create programs that are only meant to be informational. Our goal should be to be transformational: How does Ohio look like a different state in 10 years?"
Steve Stivers, CEO of the Ohio Chamber of Commerce, said the business group can promote a culture of entrepreneurship and encourage its large members to diversify their supply chain. The VC "fund of funds" he's been urging state leaders to create – using a one-time budgetary windfall to attract venture funds to the state – has a portion for emerging fund managers.
"I'll be with you every step of the way," said Stivers, one of the few white faces in the room.
Cincinnati entrepreneur Candice Matthews Brackeen said she gathered at a bar seven years ago with 10 fellow Black entrepreneurs who, like her, didn't always feel welcome in tech meetings or events. That led to her co-founding Hillman Accelerator, which is focused on underrepresented founders.
In June 2020 Matthews Brackeen launched the $50 million first fund of Lightship Capital with husband Brian Brackeen, the Cincinnati Business Courier reported.
And the friends group has collectively raised $120 million in venture capital, she said.
"When you have a group of people constantly behind you, and rooting for you, you can accomplish a lot," Matthews Brackeen said at the event. "You don't move the needle just talking about it."
Several inclusive VC funds have launched in Columbus in recent years. Color Coded Labs has graduated its first class of six and is starting a second cohort of 18 trainees.
"We've had hopes for a long time to stand up a fund and do things for our demographic," Jones told me after the event. "We've been trying to close all of those gaps. Collectively, the voice of the room spoke tonight. I hope it turns into something more tactical, versus more studies and reports."
