It is no secret that in venture capital, the decision makers and the beneficiaries of those decisions look very homogeneous. It is also implied that in order for startups to be successful, they better be located in the Bay Area of California, New York City, or Boston.
The fact that San Francisco and Silicon Valley alone account for 45% of the venture capital invested in 2017* supports this idea in the minds of entrepreneurial talent. Some investors claim there is a pipeline issue, but more realistically there is a power issue. It is widely acknowledged that this is a problem, but inertia tends to win out and the industry has be slow to adopt change.
We know the highly ambitious, future Fortune 500 founders are equally distributed across the country and will represent the whole spectrum of gender, race, and religion, but right now venture capital is missing this enormous opportunity to capture and support talent that is outside the geographic innovation hubs and homogeneous expectations.
Research is continuing to show that diverse, women-led companies grow faster and are proving more sustainable, but still receive only 5 percent of all venture capital awarded to entrepreneurs. Rarer still are the female founders of color who only see 2 basis points of venture capital. Shockingly, Inc. Magazine shares that only 26 female founders of color have raised more than $1 million of outside capital…ever.
Chloe Capital, a seed stage VC firm focused on women-led innovation companies, is embarking on a National Tour to employ a localized investing strategy and invest half a million dollars over the next six months.
They are leading the movement to close the gap in venture capital given to underrepresented entrepreneurs in overlooked communities by seeking out diverse, high growth potential companies to add to their growing portfolio.
In each of the 5 tour stops in cities across the US, there will be an investment workshop and pitch event, open to the public, where 5 local finalists will compete for a $100K top prize and an additional opportunity for follow-on funding.
The first tour stop is Rochester, NY. This rust belt city is the perfect location to represent the many overlooked and underserved markets with untapped talent, lower valuations and operating expenses, and increased regional support. All five of the Chloe Capital finalists on this stop have some relationship to the Upstate New York Region. BetterBred (betterbred.com) a DNA based conversation software preserving historic breeds and beloved pets, Immersed Games (immersedgames.com) creating video games that power students to love and learn STEM subjects, and Outgift (outgift.com) a retail-tech company changing the way you gift are all based in Buffalo, NY.
The remaining finalists BrandVerge (gobrandverge.com) a marketplace and workflow tool for advertisers to plan scalable media partnerships, and It’s by U (itsbyu.com) DIY flower arrangement kits delivered straight from the farm, either have family or grew up in the Upstate Region. If you’d like to attend the pitch event you can register at CHLOESrochester.eventbrite.com.
One can predict the powerful ripple effects from the rest of the industry following this tour and the movement it represents, especially as Chloe Capital sees above-average returns from these investments. The firm is changing the statistic of which entrepreneurs have access to capital, but they are also creating a new power base to diversify the decision-makers who control those decisions.
This movement is a call to be an ally and advocate for awareness and intentionality in investing.
If you are an investor, you can diversify the leaders in your organization and be more aware of your own biases when assessing your pipeline. If you are an entrepreneur, you can also ensure your leadership teams are diverse and be bold to inform where the industry is falling short to support you.
If you are a subject matter expert or mentor, offer your talents to coach and guide promising entrepreneurs that are more representative of all entrepreneurial talent.
It is always good to examine the status quo, but in this case, is not being challenged for the sake of controversy. Within the innovation ecosystem, continuing to overlook and underserve certain markets and entrepreneurs is damaging to everyone involved.