The Builders
Marceau Michel, Himalaya Rao-Potlapally
Organization: Black Founders Matter Fund
Who: Michel is a minister-turned-entrepreneur-turned investor; Rao-Potlapally is a social worker-turned-MBA-turned-investor
What the fund does: Invests in Black founders across the country and across industries
Fund size: Actively fundraising toward a $10M target; $875,000 has been deployed so far
Portfolio: A Kids Company About; Saysh; Hued
For more stories on this new generation of investing see the main story here.
Marceau Michel started his career in ministry with the Jehovah’s Witnesses. Himalaya Rao-Potlapally was in social work in New York City. Neither comes from money. Yet, both their worlds now revolve around it through the Portland-based fund, Black Founders Matter.
Michel started the fund in 2019, but it wasn’t until he teamed with Rao-Potlapally in 2020 and the nation’s collective racial reckoning that year, that the fund found traction with limited partners. It has deployed $875,000 into 10 startups. Fifty percent of the founders are men and 50% of them are women.
The duo are still raising the fund, which has a target of $10 million. They’ve already backed a children’s media company, a startup training doctors on how to spot skin cancer in melanated skin, and a shoe company founded by an Olympic track star.
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Both come to their roles with an understanding of the traditional gatekeeping that has occurred in the venture industry. For Rao-Potlapally it was her time in MBA school working with an angel fund in Pasadena. She watched a founder of color pitch what she thought was a promising idea that aligned with the angel group's philosophy. And, yet, she said her partners in the group were ready to pass, until she convinced them otherwise.
“I just used the words they wanted to hear,” she said. “I’m saying the same thing that the founder said 15 minutes ago (but in their vocabulary). I realized that this is where I needed to be.”
Michel said he's been that founder who was unable to connect. He started a company in 2017 called Werkhorse, an app that would connect businesses with skilled labor to fill last minute shifts. The more venture walls he ran into, the more determined he became to knock them down as an investor.
Rao-Potlapally and Michel have been learning as they go, and reassessing to be sure they're being true to the equity ideals that guide them.
For instance, after realizing that the fund's first five investments were in companies with male founders, the two made sure the next five were in women-led startups.
“We really set out to find the best possible deals and the best founders and invest in them and be as fair as we possibly could. That (sometimes) involves us having to reassess.” Michel said.
The two oft repeat that they know Black Founders Matter won’t be the largest check in a startup’s round, but they strive to be the most useful investor.
“It’s been about sharing resources. One of those resources is capital, but that’s not the only resource, right?” said Michel.
The two have been building relationships with other investors across the spectrum in order to ensure Black Founders Matter portfolio companies have access. Helping founders get the coaching and mentoring they need is another priority. That could mean connecting a founder with an engineering background with an executive coach, or helping them find a CEO who might be more suited to the top business role.
The investors also seek help for themselves when they need it. Rao-Potlapally notes that staff at the Oregon Growth Board, which invests state money into venture capital funds, took the time to work with the two first time fund founders to ensure they were ready for state backing. They got that with a $350,000 commitment at the end of last year.
As they continue to fundraise, Rao-Potlapally said she is always reminding potential investors that Black Founders Matter is not an impact fund.
“We are an impactful fund. We are a return-focused fund. The core mission is that innovation is fueled by different perspectives coming together,” she said. “And different perspectives are driven by different lived experiences.”
She said the founders they work with are resilient, capital efficient and looking to scale. It’s all there if you look, she said.
“We are helping to change the narrative of who society sees as a successful entrepreneur,” she said.
