In business, it takes money to make money. Yet for many Black and Latinx founders, access to capital is a barrier to entry into their respective industries. Another barrier is often access to venture capitalists who come from similar backgrounds as them, who understand them, and who believe in their ideas and businesses enough to invest in them.
According to research, only 1% of VC-backed companies have Black founders, and only 2% of firms have investment team members who identify as Black.
San Francisco based technologist, Hadiyah Mujhid, has been solving for that equity problem as the founder and CEO of HBCUvc. Prominently known for building pathways for underrepresented investors and founders, HBCUvc has led the charge on developing the next generation of venture capital leaders from Historically Black Colleges and Universities through their strategic programming and partnerships. With the perspective that culture is a currency, Mujhid and her team nurture budding entrepreneurs and investors through training, coaching, mentoring, and immersive fellowships that are culturally responsive and inclusive for everyone involved.
“I like to think that our program is extremely comprehensive, and it’s culturally affirming of the identities that people bring to the space,” said Mujhid.
HBCUvc offers core programming throughout the year for HBCU students and alumni. And in the summer, they work with AnnenbergTech and PledgeLA to host a venture capital internship which places Black and Latinx interns at esteemed VC firms like Stat Zero and Crosscut Ventures.
As a part of the PledgeLA program, “We [HBCUvc] spend two weeks doing an immersive training with the fellows in LA and then they are placed with a firm for 8 weeks. During those 8 weeks, we still do one-on-one coaching support,” said Mujhid.
As firms and startups work on their diversity and inclusion efforts, Mujhid has made coaching and mentorship a priority for program participants as they seek experience.
“I truly believe that a lot of times these fellows are going into spaces where sometimes it’s the first time that people at the firm have interacted with people of color. There’s also peer support within the community for fellows to work through some of the emotional, mental, or even microaggressions that might happen in the firm,” Mujhid added.
Creating Equity for Black and Latinx Investors and Founders
In efforts to change the narrative and create more equitable outcomes for Black and Latinx investors and founders, HBCUvc and PledgeLA added a new element of programming which merged HBCUvc’s Lab Fund methodology with the PledgeLA program.
“Last year, we started a program called the Lab Fund. It was our opportunity to allow the students that we were training to get hands-on experience identifying entrepreneurs to support with capital. This year, Mujhid and PledgeLA decided to run the program in the way that the HBCUvc Lab Fund operates. “I did have a caveat – at least for this iteration – I wanted it to be focused on black entrepreneurs. And, I wanted it [the entrepreneurs] to come out of the HBCU community,” Mujhid said.
“It’s something that is definitely viable for their experience. I also think it was valuable for the experience, because the PledgeLA cohort in themselves were not representative of HBCUs. That additional layer of ‘now go find entrepreneurs at HBCUs’ forced them to reach across networks,” said Majhid.
This year’s PledgeLA program consisted of 13 interns. In the third week of the 10-week program, they were charged with the task of managing a fund set aside for Black startup founders. That is a part of the real-world experience Mujhid believes all venture capitalist should have – but unfortunately some do not.
HBCU alumnus and Chair of PledgeLA, Austin Clements, who is also a partner at a Slauson & Co. agreed.
“The connection we’re forging between PledgeLA’s interns and HBCU entrepreneurs via the Lab Fund is crucial. Our VC interns bring diverse perspectives as investors to an industry that has often overlooked founders of color. Using this lens, the Lab Fund allowed them to not only fund Black-led companies, but also empower them and raise their profiles,” he added.
What It Takes to Nurture and Support Black and Latinx Investors and Founders
Jessica Salinas, Founding Partner and VP, Venture Ops & New Media at Stat Zero, said that the partnership with HBCUvc and PledgeLA met her firm’s critical need for VC talent with unique skill while advancing their core tenet of equity.
“Beyond recruitment, PledgeLA and HBCUvc equipped our interns with the foundational education, training, peer network and resources to integrate into our operations and engage in meaningful work quickly. The intentionality in which they addressed critical conversations in venture capital, like access to capital for underestimated populations via the Summer Lab Fund, sets them up as the change makers the tech and VC industry needs,” said Salinas.
She and her team even extended a full-time offer to one of their summer interns.
As a part of the partnership, HBCUvc and PledgeLA recently announced the latest cohort of Black startup founders who were awarded $5,000 equity-free grants who were selected by the VC interns.
Beatriz Acevedo, entrepreneur and Vice-Chair of PledgeLA, said that it is privilege to be able to support well-deserving Black and Latinx founders with non-dilutive capital with the support of her family’s foundation, (The Acevedo Foundation), Grid110, Plug In South LA, the Latino Chamber of Commerce.
Nevertheless, continued support is essential. “These founders have innovative ideas to build and grow businesses – this will open more doors in our community. Mentorship only takes you so far, and eventually, these founders will need capital – only 6 – 7 percent is available to Latinx and Black founders in our LA VC world. Economic mobility needs to be at the heart of our efforts, particularly post-COVID-19 when our communities of color have been the most affected by this pandemic,” said Avecedo.
As detailed by HBCUvc, as a part of that continued support, the six entrepreneurs who were awarded the grants will receive two years of free banking, legal consultation, and access to an online platform with valuable information about company-building, events, and other resources made possible by AnnenbergTech, Cooley and First Republic Bank. Additionally, the founders are now members of the HBCUvc portfolio and will be introduced to our network of mentors and investors.
Support In The Long Run
Despite the pandemic, the amount of funding that has become available for founders from diverse backgrounds has grown exponentially as corporations respond to the national call to support Black businesses owners during the pandemic and moments of civil unrest. Which also has many founders wondering how long the financial support will last.
While no one has an answer to that question, Mujhid said that while she is in disbelief about the turn of events this year, she is hopeful that the support some believe is a trend is long lasting.
“It’s hard work to do something that you’ve never done before. It’s hard work to unlearn patterns – patterns that were given to you by a system of racism. I sincerely hope that those who have stepped up stay committed to it for the long run,” said Mujhid.
She went on to quote a friend who shared with her that the work cannot merely be that of “defensive empathy.” Mujhid explained it “defense empathy” as the act of, “Throwing something up [i.e. an advertisement in solidarity with Black lives or a fund to support Black founders] so that no one can point fingers and no one can say that I didn’t do it.”
Beyond accessing capital, Mujhid firmly believes that Black and other investors and founders from underrepresented and underestimated communities must be willing to invest in themselves first – which starts with learning the ropes.