In 2019, U.S.-based companies raised about $136.5 billion across more than 10,700 deals, according to the National Venture Capital Association and PitchBook, a Seattle organization that monitors private equity and venture capital. Of that deal flow, however, about 10% went to people of color, women and LGBT founders combined.
In Wisconsin, startups raised $454.3 million in venture capital in 2019, the highest amount ever, but with 22% of those dollars going to women-led or women-owned businesses, which is in line with national averages of between 20% and 25%, according to the Wisconsin Technology Council. Only 34% of the overall investment capital in Wisconsin last year went to startups in southeast Wisconsin, creating a smaller pool of investment capital for entrepreneurs of color.
For years, members of the Milwaukee tech community have said the percentage of investment dollars going to founders of color in the region was in the low single digits.
To shift this trend, however, panelists who participated in the Business Journal's Technology Roundtable on Thursday said investors in Milwaukee need to be intentional in their deals and connections with underserved and underrepresented entrepreneurs.
Teresa Esser, managing director of Milwaukee's Silicon Pastures angel investor network, suggests investors treat any minority entrepreneur the same as they would non-minority entrepreneurs. Recently, Silicon Pastures listened to a presentation from a Black woman entrepreneur. Some of the investors at the meeting were also Black, she said.
"When you find an entrepreneur, you also need to find a champion who's an investor, and everybody needs reassurance that it's OK, that it's normal, that this is what we do," she said.
BLCK VC, a California-based platform for Black venture investors, says 81% of all VC firms in the U.S. don't have a single Black investor.
"We're trying to treat everybody the same, and trying to be intentional about how we put companies into the funnel at the top of the funnel," Esser said.
Andy Nunemaker, a well known Milwaukee investor and philanthropist, went a step further, encouraging fellow investors to duplicate what he's been doing, which is taking more of a special interest in the consultation and mentoring of those who aren't straight white males.
"I find myself taking more meetings, and these are meetings with people I don't have any intention of investing in, but I'll take all the time I can to help them and show them the path and help them understand what they need to do to get their business, or their idea, to a point where it would take investors," he said.
Wisconsin-based startup accelerator and venture fund gener8tor intentionally makes public the statistics of its investment portfolio. Over the last eight years, 36% of the companies to receive an investment from gener8tor have at least one minority founder and 27% have at least one woman founder.
"I think a lot of groups, if they were to publish their statistics, it would look something like they've never invested in a Black female CEO or they've never invested in a Hispanic co-founder in the company," said Troy Vosseller, co-founder at gener8tor. "You could go down the list based on gender, demographics, immigration status, veteran status, you name it."
Mark Grosskopf, president and CEO of Milwaukee-based New Resources Consulting, is an investor in gener8tor. He supports Nunemaker's take on enhancing mentorships between investors and underrepresented entrepreneurs.
"Starting younger and exposing them – (Milwaukee Public Schools) kids, Milwaukee Academy of Science – exposing them to what can be, what they can do, who they can reach out to and who they can connect with, I think is critical," he said.
