Most startups fund their earliest days with money from friends and family, as well as angel investors. But what if your friends and family are not wealthy—and, in fact, are more on the struggling side of the equation?
That’s the stark reality for many entrepreneurs, especially those from diverse backgrounds. The average white household has more than seven times the wealth of a black family and five times that of a Hispanic family, according to 2016 data.
To tackle the early funding conundrum, social enterprise accelerator Village Capital created an initiative called VC Pathways to help early-stage African American, Latinx and female founders get on a solid path to raising money. First launched last year as a pilot in Washington, D.C., in conjunction with The Rockefeller Foundation, it more recently ran in Philadelphia, Chicago and Atlanta, with partner UBS. Each cohort included 10 startups.
“Something important was missing from the ecosystem and we wanted to see how we could help,” says Director of US Ventures at Village Capital Ebony Pope, who created the program.
The program is aimed at founders who are too early stage for the usual three-month Village Capital program, but who have a prototype and, perhaps, a pilot underway. There’s a one-to-two-day training during which entrepreneurs receive the most important parts of the usual Village Capital training. But the focus is on setting milestones for important points in the process, from friends and family fundraising up to an IPO.
Specifically, entrepreneurs receive several milestones to reach over three months. To help achieve those goals, they’re paired with an angel or local investor, with whom they met regularly. A typical milestone might be “I will sell 100 units at my current price point to prove initial marketplace interest and survey 25% of my customers to learn what is working/not working with the current product.” Or, “I will hire a VP of sales.”[…]
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