By Heather Cabot & Samantha Walravens
On paper, Asmau Ahmed could easily be typecast in the role of promising tech startup founder: honors degree in Chemical Engineering from the University of Virginia, MBA from Columbia University, patent holder and co-developer of a visual search engine that could revolutionize the way shoppers make decisions about everything from a lipstick shade to decorating a living room.
This is why she insists investors read her resume before they meet her in person.
“They get to judge me based on my credentials, not on what I look like or my gender, and that helps get the conversation started and get past the initial reservation — and there is an initial reservation when you see a black woman running a tech company,” the 37-year-old CEO says of her experience raising money to fund the growth of her company, Plum Perfect, which she founded in 2010.
Silicon Valley’s hesitation to invest in someone who doesn’t fit the profile of a white dude in a hoodie is not a new issue. But for black women, a new report quantifies, just how difficult it is to overcome biases that exist in the venture capital world.
“Women of color are so profoundly poorly represented in venture capital, both on the investment side and on the investee side. The research shows that they are the most hard hit by venture's hidden bias,” explains Sharon Vosmek, CEO of Astia Global, a nonprofit and angel investor network focused on high growth female entrepreneurs that has intentionally sought out a diverse portfolio since its launch in 2013.
While black women are among the fastest growing group of entrepreneurs, up 322% since 1997, they continue to be undercapitalized, according to the data analyzed by Digital Undivided, an organization that advocates for more diversity in the innovation economy. The study of 88 startups founded by black women since 2012 reveals that more than half raised funding with an average of $36,000, far below the $1.3 million raised industry-wide by startups that ultimately fail.
“The take away is that black women founders are not raising nearly enough to even test their ideas in the market and even the best black women led startups (as indicated by the amount raised) do not raise as much as failed startups led by others, namely white men,” writes Kathryn Finney, founder and Managing Director of Digital Undivided, who led the research for the #ProjectDiane Report with Marlo Rencher, PhD, executive director of the Center for Innovation and Entrepreneurship at Cleary University.
Only 11 companies founded by black women since 2012 have raised more than $1 million dollars in outside capital. Plum Perfect is on the list and Ahmed credits the success to the strength of the product and finding the right investors. Golden Seeds, an investment firm dedicated to delivering above market returns for investors through women founded and run ventures, led its $1.3 million Series A round in 2012.
“We are leveraging this culture of photo sharing and commerce and the ability to drive personalized recommendations with people's consumer photos is an entirely new space and potentially a massive space that we're just beginning to explore. I think all of those facts and the fact that we've aligned ourselves to some very smart investors, mainly woman investors that see our potential has gotten us where we are today,” says Ahmed, who grew up in Nigeria and came to the US for college.
Connecting with the right investors is one part of the puzzle, but diverse founders need to take some extra steps before they even get that far says Sarah Kunst, CEO of ProDay, a startup that offers virtual workouts with pro athletes. She advises fellow founders of color to apply for pitch contests and accelerators to cultivate early capital and lay the groundwork for success by building a business that turns a profit early so that it has metrics to support its viability in the market.
“It's unfair that these steps are required more of some groups than others, but over time while Silicon Valley bro startups may implode under the weight of their own overfunding, the companies built to last will reveal themselves and those founders will finish first,” says Kunst.
Note: The writer joined Golden Seeds in 2014 and does not have a financial stake in Plum Perfect.
