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B the Change: Spreading the wealth – program puts diverse entrepreneurs on path toward startup funds

B the Change, October 29, 2018: Spreading the wealth – program puts diverse entrepreneurs on path toward startup funds

Most startups fund their earliest days with money from friends and family, as well as angel investors. But what if your friends and family are not wealthy?—?and, in fact, are more on the struggling side of the equation?

That’s the stark reality for many entrepreneurs, especially those from diverse backgrounds. The average white household has more than seven times the wealth of a black family and five times that of a Hispanic family, according to 2016 data.

To tackle the early funding conundrum, social enterprise accelerator Village Capital created an initiative called VC Pathways to help early-stage African American, Latinx and female founders get on a solid path to raising money. First launched last year as a pilot in Washington, D.C., in conjunction with the Rockefeller Foundation, it more recently ran in Philadelphia, Chicago and Atlanta with partner UBS. Each cohort included 10 startups.

The program is aimed at founders who are too early-stage for the usual three-month Village Capital program but have a prototype and, perhaps, a pilot under way. There’s a one- or two-day training when entrepreneurs receive the most important parts of the usual Village Capital training. But the focus is on setting milestones for important points in the process, from friends and family fundraising up to an IPO.

Specifically, entrepreneurs are given several milestones to reach over three months. To help achieve those goals, they’re paired with an angel or local investor, with whom they meet regularly. Each local program works with a different organization that acts as a supporting partner. For example, in Philadelphia, the partner is Ben Franklin Technology Partners, a public-private partnership that invests in early-stage companies.

So far, two companies that participated in the program have raised seed funding. One is Qoins, an Atlanta-based startup with an app that helps people put aside money to pay for credit card and student loan debt. After attending the Atlanta session earlier this year, co-founders Christian Zimmerman and Nate Washington raised $750,000 from 14 angels; their second investor was one of their VC Pathways mentors.

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