Access to capital is always a struggle for entrepreneurs, but for African American founders, it is a greater struggle still, says Kwame Anku, CEO and founder of Black Star Fund, a Sacramento-based venture capital firm.
Less than 1% of venture capital investments go to companies with African American founders, he said.
With his existing $12 million fund, and a new larger fund he is raising now, Anku wants to get startup and expansion money to Black entrepreneurs.
Black Star's investor agreement does not say the fund is required to invest in Black entrepreneurs and founders, but the strategy is to take advantage of what African American founders bring to the marketplace, Anku told the Business Journal.
"Let's get the people we've been ignoring for 50 years involved," he said.
By supporting Black founders to become successful, it will lead to having more Black founders to be mentors to and investors in yet still more Black founders in the future, Anku said.
"We are creating systemic inclusiveness in venture capital to the people who have been overlooked in the past," he said.
Anku said that the elements of success can be duplicated, as was shown with Motown Records' long string of hit songs in the 1960s. Similarly, Black entrepreneurs can support each other with the benefits of what they learn on their journey, he said.
Anku entered the tech and investment industry after being personally recruited by the late legendary rock star Prince to develop a mobile app, overseeing business and development teams in Africa, Asia and the U.S.
Anku later went on to serve as the national director of strategic development for the Prince-inspired #YesWeCode initiative.
It was while working with Prince that the recording artist asked Anku a question that eventually led to Anku becoming an investor.
"Prince asked me, 'where are the Black Mark Zuckerbergs?'" Anku said. "That shook me to the core."
Raised in Cleveland, Anku came west to go to college. He was a contemporary at Stanford University with some of the most successful startup founders of the web economy.
After Prince poised that pivotal question, Anku thought back to his time in Silicon Valley during the rise of software companies.
LinkedIn founder Reid Hoffman, PayPal Holdings Inc. co-founder Peter Thiel and Google founders Sergey Brin and Larry Page were all Stanford grads. And like Facebook co-founder Mark Zuckerberg, they all were able to start what became giant companies because they had access to an angel investment of between $100,000 to $500,000 to start their enterprises.
Black Star isn't working alone in its quest to support Black entrepreneurs. It's working with other funds to leverage investments and diversify risk. Black Star has made three investments with retired NBA All-Star and former Sacramento Mayor Kevin Johnson's Sacramento-based venture capital firm Black Capital. Representatives of Johnson didn't respond to a request for comment for this article.
Anku said that raising his first fund involved a great deal of travel and a lot of meetings to find potential investors and other connections. He said that he has more than 400,000 miles on Delta Air Lines.
These days, Anku said he's trying to be more strategic in his travel planning, stringing trips together, for example. As the single father of a teenage son, he's trying to spend less time on the road.
Still, Anku continues to get around. A few weeks ago, he was at an event ringing the opening bell for the Nasdaq Stock Market in New York, as part of a 13-day road trip to meet with investors, potential investors and potential investment prospects.
Anku is also on the board or regents of North Central University in Minneapolis, and on the board of the New Community Transformation Fund in Grand Rapids, Michigan. Locally, he's on the presidential advisory board for the Carlsen Center for Innovation & Entrepreneurship at California State University Sacramento.
"It is important to take the time to meet with people, to take the time to break bread together and to shake their hands and talk with them," Anku said.
Anku has been CEO of the Black Star Fund since 2018. He raised $12 million for Black Star's first fund and invested in 20 companies. Those included Granite Bay-based ReviverMX Inc., where Black Star was the first local investor. ReviverMX is pioneering the development of street legal digital license plates for cars, trucks and fleets that automatically renew registration with state departments of motor vehicles.
Neville Boston, the co-founder of ReviverMX, met Anku at an event for the Sacramento Kings Capitalize startup pitch competition in 2019. Black Star put two rounds of funding into ReviverMX, Boston said. "He's just been amazing as an investor, an adviser and a brilliant strategist," Boston said.
None of the companies in Anku's first fund have had an exit, either a buyout or an initial public offering, but at least five of the companies are on a strong upward trajectory, Anku said, adding that he anticipates exits in the next 18 months to two years.
The Black Star portfolio has investments in companies all over the country, including Partake Foods, a vegan cookie company in New Jersey; Resilia, a New Orleans-based software developer for nonprofits; and Actively Black, an athleisure and sports apparel company based in Los Angeles.
Anku declined to say how large the new fund will be other than that it will be significantly larger than the current fund.
"He's got some great companies in there," said Mark Haney, local serial entrepreneur and investor and the co-founder of the Growth Factory accelerator in Rocklin and its associated venture capital fund.
"Success breeds success," Haney said. "What he's done so far gives him a lot of credibility to go out and do it on a larger scale."
The first investors into Anku's first fund were local entrepreneurs Haney, Dale Carlsen and Tom Kandris, and Haney is on Black Star's advisory board.
Anku met Haney through their mutual support of the Carlsen Center at Sacramento State. They knew each other for more than two years before Haney invested, Anku said.
"These are relationships. They take time," Anku said, adding that what he brings to Black founders is the ability to shrink that time to build relationships.
Earlier this year, the Sacramento Metropolitan Chamber of Commerce awarded Anku "Entrepreneur of the Year," an award the chamber had never given out before in its nearly 130 years.
The Essentials
CEO, Black Star Fund
Age: 50
Education: Bachelor's degree, African American studies, media production, Stanford University, 1994
Career: Regional manager, LegalShield, 2005-2015; director, YesWeCode, 2013-2015; co-founder, Black Angel Tech Fund, 2015-2018; chairman and CEO Black Star Fund, 2018-present.
Personal/family: Divorced, 14-year-old son. Lives in North Natomas.
Something people would be surprised to know about you: Likes rock and heavy metal music.
Passion (outside of work and family): Photography and music.
First job (nonprofessional): Worked in the mail room at Stanford University's Hoover Institution.
