When Himalaya Rao read about the steep disparity in funding for women founders she immediately looked at the portfolio for her fund Black Founders Matter.
She was stunned by what she saw.
The nascent fund had made its first five investments totaling around $500,000 to Black founders since the start of the year.
All the founders were men.
“Somehow we got five investments deep and there was no women. How did this happen?” she asked.
An advocate for BIPOC women, Rao said she couldn’t believe she let that happen. But it did, so she and managing director Marceau Michel vowed to do better and went back to the drawing board.
The duo had made their intentions known to fund Black founders, but within the criteria for investment they never spelled out gender parity.
“The things you measure is what you do,” said Rao, citing advice she received from a fellow investor. “We were measuring BIPOC and not gender and it was shown in our outcomes.”
The error has since been rectified and the fund has six new investments in the pipeline or in due diligence. All founded by Black women. Three are in the Pacific Northwest, one is in California and two are on the East Coast.
Michel and Rao went to their investors, most of whom at this point are individuals, and talked about this failure in their mission. They talked to their networks and put the clear intent out that they wanted to fund all Black founders. They started interviewing Black women founders about the barriers in access to capital.
“There are a lot of obstacles in entrepreneurship and funders. In an organization it’s easy to see systemic problems and say there is nothing we can do to fix it,” she said, which ends up in just a lot of talk about problems. “But, as we saw with Black Founders Matter, as we made our intention known the rest follows. We have been excited to see our own change; correcting ourselves. Using ourselves as a test case.”
She said that once the intent was out there through their investors and their network, the pipeline was not the problem.
Rao said the fund wants to be transparent about its success and shortcomings. She said they would continue to evaluate their focus as the fund grows and matures.
“We can’t just say we are inclusive. And this was a good reminder,” she said.
Recognizing the mistake and taking feedback on the work that Black Founders Matter does is important. Rao said that criticism of an inclusive award the group launched as part of Oregon Entrepreneur Network’s Angel Oregon Tech event has led to refining the program more and clarifying the messaging around it.
Instead of being paralyzed by the fear of doing something wrong, the group is taking the input and modifying.
“Things are coming now that wouldn’t have happened without us doing something (in the first place),” she said.
This fear can typically stymie programs or organizations that want to build more inclusive environments. But, experts on diversity, equity and inclusion say, mistakes will be made but it’s how you react that is important.
Black Founders Matter is targeting a $10 million fund. It’s already had its first close and started investing. The fund is now pitching institutions for backing and larger amounts. Rao said that as first-time fund managers this stage of fundraising is more difficult.
However, many of these institutions they are pitching are themselves looking to diversify the demographics of their portfolios. Rao said she is going deep on building relationships with funders across industries so that Black Founders Matter, which is industry agnostic, can be a pipeline of deal flow for these larger groups.
Rao and Michel said they know that their fund isn’t going to be the biggest check for a founder but they hope to help build social and political capital as well, which is important for future fundraising.
“Other startups (led by white males) benefit from the political and social capital, and we need to get our founders in that mix,” she said.
