![Ryan Williams, Cadre Systems]()
- Black-founded startups have accounted for just 1% of VC-backed companies between 2014-2019, research shows.
- With the rise of the Black Lives Matter movement, VCs have promised to do better. Some have launched funds. Others are taking more pitch meetings.
- But why have minority founders been so left out to begin with?
- Business Insider talked to four Black founders, including Ryan Williams, the 32-year-old founder CEO of Cadre Systems, who has raised $158 million from people like Josh and Jared Kushner, Goldman Sachs, Khosla Ventures, Mark Cuban, Peter Thiel's Founders Fund, others.
- We also spoke with serial founder Asmau Ahmed (Plum Perfect, I am _) and founders-turned-investors Mac Conwell and Brit Fitzpatrick.
- All of them have experienced, and had to overcome, challenges as Black founders trying to pursue the startup dream.
- Visit Business Insider's homepage for more stories.
In the spring of 2018, Asmau Ahmed appeared on the cover of Vanity Fair along with 25 other women of color entrepreneurs. They were being heralded for breaking through the notoriously male culture of industries like technology.
It should have been a shining moment for Ahmed. Instead, she felt stressed. Her marriage was on the rocks. And after successfully raising $2 million for her startup Plum Perfect in 2014 — an astronomical amount for a Black female founder at that time — she needed a fresh infusion of capital. Ahmed had been trying for years to raise a Series B round of funding without luck.
Raising money "is hard for everyone," she says. "But it's definitely harder for women and it's hardest for Black women. It affects stress levels; how we show up in the world."
Ahmed, an engineer from an elite school (University of Virginia) with an Ivy League MBA (Columbia), had built an ahead-of-its time AI visual search engine. It took a photo and matched it to other similar photos. The tool had a multitude of potential uses, like advertising, but Ahmed founded Plum Perfect to first focus on the multi-billion dollar makeup market: show us your picture and we'll find your perfect cosmetic shade.
In the first few years, she had landed some early partnerships. "I was meeting all my metrics," she said.
So her initial investors were baffled when VC after VC turned her down for fresh funding.
In an attempt to be helpful, the investors began showing her resumes of white men who could become her cofounder and simultaneously solve her fundraising problem.
Ahmed refused the advice.
Her experience illustrates a difficult reality Black founders face while pursuing their startups, and the challenge facing Silicon Valley as it tries to fix the egregious lack of representation within its privileged realm.
Ahmed never experienced explicitly racist remarks or behavior (although she did experience rudeness such as VCs growing instantly bored or taking a phone call in the middle of her pitch). She says she did experience obvious bias though.
"I don't think the VC world is any more biased than anyone else. As black women in society, we tend to be viewed as higher risk by VCs. I was seen as a risk," Ahmed said.
The worst part for this always top-of-class, top-of-her-profession engineer was the feeling of failing those who did believe in her by no fault of her own.
"My initial investors believed in me. but I don't think they were aware how much trouble we would have raising rounds for financing," Ahmed said. "So for them, the lesson learned is that backing a female black founder is a risk to their capital.'
It became a self-fulling prophecy. Plum Perfect never raised more money and, while it's still in business, Ahmed has moved her focus onto other startups.
She felt so burned by the system that she's hasn't tried to raise money again.
Ahmed is now a highly-paid executive in the banking world, so she is bootstrapping all of her startups including Plum Perfect and a new diversity-hiring tech startup launching this week called I am _. I am _ helps people create CVs using 14 attributes including race, gender, sexual orientation and hobbies and lets corporations track the diversity of their business networks.
![Asmou Ahmed]()
"Is venture capital always racist? Not really. Is it systemic? More often than not."
Ahmed's story is hardly unusual. Black-founded startups have accounted for just 1% of VC-backed companies between 2014-2019, according to a 2019 study of thousands of transactions by RateMyInvestor and Diversity VC.
As for how small a number that is, a group of Black techies are compiling a list of every Black-founder startup that has ever been VC backed. As of mid-July it listed less than 400 companies, including companies that are no longer active. Compare that to 32,800 VC deals in 2019 alone for $294.8 billion, according to Crunchbase estimates.
With the rise of the Black Lives Matter movement, change is in the air. Venture firms have launched new funds and new initiatives aimed at funding more minorities, particularly Black companies.
The question is, what was stopping them from investing in the first place?
The answer is much more complicated than blatant racism, serial-founder-turned-VC Mac Conwell says.
"Is venture capital always racist? Not really. Is it systemic? More often than not," he says.
Conwell is a software engineer who's launched an array of startups over the years, including one that went through the famous NewMe accelerator in 2012, the first Silicon Valley accelerator for minorities. In its heyday, NewMe founders were mentored by a who's who in the Valley during the eight week live-in program. (NewMe slowly declined from its height of fame and was sold last year. It is now a traveling bootcamp.)
Conwell's first startup was basically an idea and a website: no customers, no revenue, no growth (in other words, no "traction," to use the VC term).
While his cofounders coded the website, he drove himself to exhaustion trying to raise funds for it, meeting with anyone who gave him a business card and tromping around the country entering pitch contests, thinking that was the way to raise capital and meet VCs.
"I was complaining I was not getting funding because I was Black for a long time, and being furious and disenfranchised of the process. Yes, some of it is for being Black, but if you strip that way and make it equal, I didn't have a startup that was investable. All the investors were really nice but they don't explain that," he says.
He learned that one measure VCs use to determine if a young company that hasn't yet generated revenue is "investable" is how much other funding it has raised, beginning with the bootstrapped friends-and-family round. And that can become a Catch-22.
"There are investors who won't write a check unless the founder can get someone to invest $50,000," Conwell says. "I've literally heard them say that out loud. That's the way the VC was taught. That's a hard barrier to get over. That's the systemic part."
In the VC's defense, Conwell understands now, VCs are running their own for-profit business under pressure to deliver high returns to their own investors. They don't want to back founders who haven't, at the very least, risked their own money and have yet to convince an angel investor to believe and mentor them.
But to the founder who doesn't have rich family and friends such an attitude can feel like "these white guys don't care about Black people," Conwell says.
Conwell is now trying to address that hole directly. He runs what he calls a "pre-seed" fund at the Maryland Technology Development Corp. (TEDCO), funded by the state of Maryland.
Through grants and convertible notes, it seeds underprivileged founders who can't bootstrap the initial $50,000 or more from friends and family, giving them runway to build a prototype, find a beta customer, and obtain other key startup trappings to help them woo other investors. TEDCO also has later-stage investment funds.
![Mac Conwell]()
Raising venture capital is all about who you know, and that can hold Black founders back.
The biggest problem, Black founders say, is that venture capital is all about who you know and Black founders have precious few ways to get into investors' inner circles.
"I'm not at the VC's wedding, playing golf, going to same grocery stores, my kids are not in same schools. So they don't know me. And they don't trust me because they don't know me," Ahmed said.
One of the most successful examples of a Black founder who did break into the who's who of finance is Ryan Williams, the 32 founder CEO of Cadre Systems, a real estate investing platform that allows accredited individuals (people who earn more than $200,000 a year) to buy shares in institutional-investment grade real estate deals. The platform also helps institutional investors scout out deals.
![]()
Williams has raised over $158 million for Cadre, according to Pitchbook from famous investors like Josh Kushner (via his VC firm Thrive Capital), brother Jared Kushner (Donald Trump's son-in-law and adviser), Goldman Sachs, Khosla Ventures, Mark Cuban, Peter Thiel's Founders Fund, and many others.
Williams tells Business Insider that landing these big fish was the result of decades of deliberate networking, hard work and luck.
Williams grew up in a working-class neighborhood in Baton Rouge, Florida, an area where "not a lot of people get out," he describes.
But his talent for business had him launch his first business at age 13 (an apparel company), sell it and, later, get into Harvard.
Harvard gave him access to people and a "playground of resources," Williams, says.
But he had to first navigate what he didn't know: his working-class background didn't expose him to the kind of life his rich college peers had. He had to learn how to fit in, how to get himself included.
One way he did that was by launching another company. During the economic crises of 2008-2009, he and his best friend in college, another Black student, saw an opportunity in depressed real estate. They built a website that tracked foreclosed homes, bought and flipped them, convincing some of their wealthy college classmates to invest.
Harvard and his flipping-business led to a job at Goldman Sachs and that job, plus his real estate background, led to a job at Blackstone Group. And with that, his credentials and his network, became sterling.
When the time came to raise funds for Cadre, he mined his Harvard, Goldman Sachs and Blackstone contacts.
Split between worlds and it's 'exhausting'
Even with his background, Williams still heard no more than he heard yes.
"For every person that ended up supporting me, there's a lot more who said no," Williams said. "I always knew I needed to go above and beyond. I don't fit the bill for most CEOs who run real estate tech. I knew there would be preconceived notions."
He also experienced some racism. "There were a number of meetings I went to where there was a sort of surprised looks on people's faces. In some cases, some of them asked where Ryan is," he remembers.
"There were a number of meetings I went to where there was a sort of surprised looks on people's faces. In some cases, some of them asked 'where Ryan is.'"
He shrugged that off and, after some of his Harvard classmates backed him, like Joshua Kushner, they introduced him to other wealthy real estate families who also invested.
He had spent time during his Goldman years talking to people about his entrepreneurial ideas and some of them backed him, too, and introduced him to others. And so it went.
"I'd be lying if I said that it was just through my sheer will and determination. I was many places, many times, at the right place at the right time," he says, acknowledging "there's a lot of talented people that just don't have the opportunity."
Ultimately, he says, no one can do it alone. "There's also got to be someone who really believes in the person, is willing to take a shot and invest in them," Williams says. And it's not just about writing their own checks, they need to advocate for the founder to other wealthy investors every time a new round must be raised.
![]()
As good as all of this sounds for Williams, there's a downside to his success in the classic investment world, too, he says.
"There's two people, two personas if you will, that you've got to manage. One feels more authentic and real. It's who I spent time with growing up and what I can talk about and feel safe," he says.
The second is his professional persona in a world that can't relate to his journey or his challenges. And living between these worlds is "exhausting" the 33-year-old said.
Black startups leave Silicon Valley
So, if the problem is that most Black founders don't have access to a network of wealthy investors in the VC world who will believe, back and advocate for them, what's the solution?
That's what Brit Fitzpatrick is working to solve. At age 33, she's the first Black person to lead an innovation office for the state of Kentucky at an organization called Blue North, funded by the state's economic development office.
"The challenge we have as Black founders is not that we're under-prepared, don't have great ideas, don't have traction, it's that we're under networked," Fitzpatrick says. "The VC industry was not built to be an open system. It's like a country club applied to the funding model."
![Brit Fitzpatrick]()
In her 20's, Fitzpatrick raised a $190,000 seed round for her startup Mentor Me, a tech platform to manage employee mentor programs. She also went through the famous NewMe accelerator during its heyday.
And after that, she experienced the same sort of no-thank you's as the others, battling bias (one VC walked around the room and texted on the phone during her pitch meeting, others promised to connect her with others and then ghosted her).
Investors only seemed interested in chasing the next unicorn, she concluded, not a company that was supporting itself from customer revenue. And her company was based in Memphis, Tenn, way outside of Silicon Valley.
She ran it for five years without VC funding before shutting it down in 2018. Then she moved back to her home state of Kentucky and turned her attention toward solving the network/access problem.
She believes there's no point in trying to turn Silicon Valley into a haven for Black founders, she says. A better tactic is to turn the South East into such a hub since that's where there's already a large Black population and a wealth of Black businesses.
Because her region (Kentucky and Ohio) is known for its manufacturing industry and has large outposts for Kroger, P&G, DHL and others corporations she says, she's building an epicenter for supply chain startups.
With access to big customers to partner with, these startups can focus immediately on growing a business with profitable, self-sustaining revenues.
"We are seeing the shift," she says, "from a startup always raising money, versus [a startup] focused on business revenue from customers."
And once that chain of needing to constantly raise money at ever-higher valuations to satisfy earlier investors is broken, Black founders will succeed on their own, she says.
Are you a venture capital insider with insight to share? Contact Julie Bort via email at jbort@businessinsider.com or on encrypted chat app Signal at (970) 430-6112 (no PR inquiries, please). Open DMs on Twitter @Julie188.
Join the conversation about this story »
NOW WATCH: We tested a machine that brews beer at the push of a button
![]()
Williams has raised over $158 million for Cadre, 
In her 20's, Fitzpatrick raised a $190,000 seed round for her startup Mentor Me, a tech platform to manage employee mentor programs. She also went through the famous NewMe accelerator during its heyday.
