Yahoo Finance Startup Radar: VCs on Black-founded startups you need to know
Marlon Nichols speaks at the Revolt Summit x AT&T in 2019.
(Phillip Faraone/Getty Images)
Black founders have long been overlooked by the venture community, raising only a tiny portion of VC funding.
In 2022, Black founders raised only 1% of total US funding, according to a report from McKinsey, and the downturn has cause the progress made over the last few years to reverse.
"There's been a noticeable tapering in VC investments after [2021's] blockbuster year," said Shila Nieves Burney, general partner at diversity-focused Zane Venture Fund. "The decline underscores the need for sustained momentum and commitment from the investment community to ensure that the growth observed in 2021 isn't just a one-off event but a foundation for the consistent backing of Black founders in the years to come."
We asked five VCs who invest in Black-founded startups to highlight two businesses—one in their portfolio and one not—that they believe will perform well this year.
Goalsetter (US) "Goalsetter is a goal-based savings and gifting platform made for kids and families. Most importantly, the app teaches kids financial literacy, savings and investing, directly addressing the worsening problem of the lack of knowledge about basic financial issues among Americans.
"In recent months in 2023, we have been seeing news in the market reporting valuation decreases in many fintech companies that were once 'hot,' however, we believe that there is still opportunity within fintech—in particular, within segments of the market that have been overlooked. In the case of Goalsetter, building an innovative solution for financial literacy for kids and families is solving a need in the market that has largely been unmet." Air Protein (US) "Air Protein is a startup that's creating protein from particles in the air. Using a proprietary probiotic process, Air Protein develops protein-enriched food made from CO2. This new source can be used to make meat-free burgers, protein-enriched pasta, cereals, beverages and more.
"The valuation for the popular alternative meats on the market has declined, creating an opportunity for the next wave of innovative meat solutions. In comparison, Air Protein's production process is more sustainable and can produce a higher variety of foods than what we've seen with Impossible and Beyond. This is increasingly important in this consumer market that is demanding more protein in various foods and becoming more conscious of sustainability. Additionally, in recent months, the company has more than tripled its total funding and partnered with one of the world's largest crop producers and traders, ADM."
Freeing Returns (US) "In the rapidly evolving tech landscape, very few startups have caught my eye as much as Freeing Returns, helmed by the brilliant Barbara Jones. With a distinguished military background, Barbara brings a blend of discipline and strategic insight to a pervasive challenge in retail: total loss prevention. Her enterprise platform isn't just a remedy; it's a revolution, pioneering a data-driven profit optimization approach that's both groundbreaking and highly effective.
"Barbara's venture has garnered backing from prominent figures in the investment arena, including Serena Ventures and Morgan Stanley, underscoring her platform's vast potential and credibility. The Retail Industry Leaders Association, a notable retail association, recently accepted the company as a strategic partner. Barbara is an exceptional asset because of her position as one of the few Black women tech founders in Atlanta. Her journey speaks to unmatched tenacity and a deep understanding of retail intricacies that many overlook. If there's one founder and venture you should watch, it's Barbara Jones and Freeing Returns. Their potential isn't just promising; it's transformative for the retail industry." Young King Hair Care (US) "In a market saturated with hair products, very few cater explicitly to the unique needs of Black boys. This glaring gap became a personal quest for Cora and Stefan Miller when they couldn't find suitable grooming products for their young son. Rather than settling, their entrepreneurial spirit took charge, leading to the birth of Young King Hair Care in 2019. This Atlanta-based brand is not just another product on the shelf; it's a revolutionary line of grooming essentials explicitly tailored for boys of diverse backgrounds.
"Since its inception, Young King Hair Care has filled a niche and dominated it, evolving into a multimillion dollar venture. A testament to its immense success and resonance with its target audience, the brand proudly graces the shelves of renowned department stores, including Target. Cora and Stefan's journey from identifying a personal pain point to establishing a thriving business has caught the attention of many, leading to features in retailers like Target and prominent magazines highlighting their story."
SPILL (US) "SPILL, a new social media app founded by Black ex-Twitter executives, is the only social media platform out there that is built by and for the culture. Before SPILL, social media lacked inclusion, and many creators—especially Black creators—weren't supported enough to share their voice online and get the recognition they deserved. SPILL solves this using blockchain technology to credit and compensate the creators bringing life to the app, such as those making viral memes, starting important conversations and more.
"Social media is oversaturated, but SPILL is a standout. To thrive as a new way for people to connect online, social media apps need to uplift the diverse range of voices on their platforms and ensure that original content creators are properly compensated throughout the life of their works. SPILL is leading the charge and is celebrating Black cultural contributions to social media." SoLo Funds (US) "For working class people, there are only predatory lending solutions for small cap loans. SoLo Funds has changed that with its community lending platform that puts the power of setting borrowing terms in the hands of the borrower, while ensuring that lenders are protected from borrowers with risky repayment history.
"Founded by two Black men, SoLo Funds has achieved success despite being grossly underfunded—a testament to the scrappy nature of Black founders. It is one of the fastest growing fintech companies in the last 10 to 20 years based on loan volume and is an impact and financially motivated B Corp."
CarpeDM (US) "Black women have a harder time finding love online than almost any other ethnic group. CarpeDM is a tech-enabled matchmaking platform designed to scale matchmaking and help Black women find the loving relationships they deserve. The matchmaking market is a rapidly growing industry, and when I saw the way CarpeDM was prioritizing security for Black women and hosting in-person events for people to find meaningful connections, I knew they were doing something different that Overlooked Ventures had to be a part of." Richualist (US) "I first heard Dawn Myers pitch her company, Richualist, in a Clubhouse room during the pandemic. She described the challenges Black women face with textured hair and shared her solution using styling pods, similar to Keurig K-Cups, that are inserted into a hair care tool and dispensed into the hair, streamlining the process of detangling, conditioning products, and applying products to highly textured hair, making the process 50% faster, easier, more convenient and more portable."
QuickStay (UK) "QuickStay [is] a game-changing hospitality management platform set to redefine the landscape of short-term rentals and premium hospitality. Designed to alleviate the challenges often encountered by hosts—whether they're juggling day jobs or running professional management companies—QuickStay offers a fully integrated, cost-effective solution for seamless property management.
"Accessible via its online platform and soon through a dedicated mobile app, QuickStay has rapidly expanded its inventory to include over 350 quality-approved properties in a mere two years. By streamlining the hosting experience and optimizing booking opportunities, QuickStay stands as the comprehensive answer to the evolving needs of today's short-term rental market." GigBridge (UK) "GigBridge [is] an innovative platform that aims to revolutionize the construction industry by addressing the challenges faced by contractors and subcontractors. With a mission to bring construction work into the digital age, GigBridge provides a marketplace-as-a-service solution, enabling contractors to discover, manage and pay subcontractors in one centralized platform.
"The platform also offers tools for subcontractors to confirm work, create invoices and request payments, while contractors can approve work, rate subcontractors and make payments. GigBridge has already made significant progress, with positive reviews, gross bookings of £470,000 (around $596,000) and a growing customer base."
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This article originally appeared on PitchBook News
