Fast Company, September 13, 2018: Memo to the Silicon Valley boy’s club: Arlan Hamilton has no time for your BS
Three years ago, the then 34-year-old Hamilton arrived in Silicon Valley with no college degree, no network, no money, and a singular focus: to invest in underrepresented founders by becoming a venture capitalist. After making contact with Y Combinator president Sam Altman, she bought a one-way ticket to San Francisco. For months she stalked investors by day and slept on the floor of the San Francisco airport at night. She was broke. Finally, in September 2015, she got her first check, for $25,000, from Bay Area angel investor Susan Kimberlin, who believed in Hamilton’s vision that the Valley’s lack of diversity wasn’t a talent-pipeline problem as much as a resources problem: Diverse entrepreneurs needed money. With Kimberlin’s endorsement, Hamilton created Backstage Capital and began investing.
Now Hamilton is gearing up for Backstage’s next chapter, a $36 million fund dedicated exclusively to black women founders, a demographic that’s glaringly absent in Silicon Valley: Just three dozen black women entrepreneurs, nationwide, have raised more than $1 million in venture funding. Hamilton calls her latest initiative the “It’s about damn time fund.” In an industry where privilege begets privilege—and at a time when racial justice in this country seems precarious, at best—she is claiming her seat at the table.
Though she is still a small player in a venture landscape awash with money, Hamilton has proven adept at connecting entrepreneurs to a robust network of top-tier VCs and executives from Airbnb, Google, and more. Silicon Valley runs on warm introductions, and Hamilton, by force of will, is now able to offer them. Hamilton is gaining prominence at a time when black female founders are increasingly giving up on venture capital entirely. Reham Fagiri, cofounder and CEO of used-furniture marketplace AptDeco, is one of the rare black women to have raised more than $1 million in venture funding. She cashed her first VC check in 2014, before Hamilton arrived on the scene, but has since soured on the standard startup path, due to her interactions with VCs.
Many black female founders turn their backs on venture funding out of sheer fatigue for “having to defend themselves as human beings,” says Jean Brownhill, cofounder and CEO of Sweeten, a matching service for homeowners and contractors. (Backstage is not a Sweeten investor.) Brownhill recalls meeting with an investor whose first question was whether her father was around while she was growing up. Hamilton knows that feeling well. She recalls the fellow VC who once told her that for Backstage to be taken seriously, it needs to be an “outlier” in terms of its performance.
As for Hamilton, she is thinking long-term. “I definitely am aware that the majority of my [investors] are older white men who are rich, and who will get richer by my work and the work of others,” she says. “But right now the focus should be on getting that money to the founders so that they themselves can have massive exits.”
What follows from all these potential IPOs and acquisitions, in her vision, will be nothing short of revolutionary. “What will come of that,” she says, “is decades and decades of generational wealth for black people.” If Backstage and other such firms succeed, “[this country] will be a different picture.”
