Our perspective

Black investors funding underserved entrepreneurs

Jackson Georges Jr.
28 Feb 2022
Black investors funding underserved entrepreneurs

Although a recent Crunchbase report found that funding to Black founders reached $1.8B by June 2021 — up from $1B for all of 2020 — there’s still much work to do. Of the record $161B in venture funding invested in the U.S., single-digit percentages went to Black, Latinx, or female entrepreneurs.

In celebration of Black History Month, we’re highlighting fund managers whose firms are supported by CapitalG as part of Alphabet’s $100M initiative into black-led firms. These fund leaders work to invest in companies that strengthen historically underserved or underrepresented communities.

Simeon Iheagwam is a founding partner at New York-based NOEMIS Ventures, which closed its debut fund in February with $25 million in total commitments. We talked with Simeon about his VC journey and the state of Black venture funding.

How did you start your VC journey?

Simeon: My journey is definitely unconventional, to say the least. I was born and raised in Brooklyn to Nigerian parents. I started as an undergrad in finance at Brooklyn College, earned an MBA at Cornell, and spent 10-plus years in finance, corporate finance, and investment banking — advising corporations and managing expenses. My toolkit is learning how to evaluate companies, which is what I still do every day as a VC.

I’ve also had a long-running interest in technology. My first job was managing technology expenses for JPMorgan Chase. Then as an investment banker at Wells Fargo, I focused on advising technology companies. I wanted to become a VC, but we all know just how hard it is to break in — there are not a lot of spots. I spoke to all types of funds but hit dead ends.

I decided to take matters into my own hands and use my life savings to start doing tech investments. I built a portfolio from a thesis:  to invest in pre-seed and seed-stage companies in areas such as fintech, marketplaces, AI, and machine learning, and back founders who are trying to change the world.

Read about Sean Mendy of Concrete Rose Capital in part 1 of our series on Black fund managers.

What qualities do you value highly in entrepreneurs?

I love supporting founders who are solving everyday problems that have a direct connection to me and my family. I can give you two examples.

One is Petal Card, a consumer card that uses cash flow to determine your creditworthiness, rather than a FICO score. Imagine my parents, who emigrated here from Nigeria without credit. Unfortunately, when they bought a house, they paid a very high interest rate because they had no credit. The FICO score prevented many immigrant families and underrepresented groups from accessing credit for years.

Two is Squire, a payment and booking platform for barbershops. Growing up in Brooklyn,  I saw that barbershops didn’t have a reservation system. You went to your barber, who had maybe six or seven people [ahead of you], which meant that it would be a three-hour time commitment. There wasn’t a way to schedule an appointment, pay for your transaction, and just show up.

What advice do you have for founders who are looking to raise money from a fund like yours?

Fundraising is just hard in general. I just went through this as a VC, which is very similar to fundraising for a startup. I would say the biggest thing is the story. The story needs to be clear. The problem they're solving, how differentiated is their solution from their competitors? And data supporting why their solution is going to win is key.

A founder who tells a good story immediately engages me to want to learn more. The other thing is making sure that the business model and the path to revenue is also clear. When investors think about founders in general, we ask, can this company provide a return to our portfolio? And founders should also think about down the road —  what their path is, and what the roadmap looks like to potentially provide the expected return.

Why do you think it's important for the VC ecosystem to be more intentional about investing in Black founders and other underrepresented groups?

It was not really a thought to invest just in Black founders or underrepresented groups. That’s just something we did naturally, and I think more VCs should do it. At the end of the day, there’s a lot of talent in this space and everybody should be given a fair shake. And the successes are so gratifying. We’re on the verge of seeing two Black founders from Squire go on to be a unicorn in the near future.

What should VCs do to spot these opportunities and open the door to more help?

I think the reason why a lot of Black founders have been overlooked is because people just weren't open-minded. There was perceived riskiness attached to Black founders. And VCs need to understand that there are unicorns and potential unicorn companies in this group. That’s where it starts.

As a solo GP raising a fund, there’s no way I could have done this without my tribe. My team currently consists of three venture partners and one scout. I also have an advisory board of three members, all of whom are just amazing and talented and have had a hand in the investments we’ve made in the new fund.  And we're grateful that several of them have already marked up and raised follow-on rounds at higher valuations. We feel great about the team and we’re in the process of hiring more full-time talent.

What does Blackness mean to you, and how do you think it should be celebrated in professional settings?

When I think about this two words come to mind: strength and excellence. We need to celebrate all the amazing Black men and women that are doing great work. It needs to be highlighted, not overshadowed or hidden. I’m trying to practice what I preach here:  I just closed my $25 million fund, and I’m not the best at celebrating. But I'm grateful for my friends who are forcing me to celebrate it and to share my story. With that in mind, I will continue to celebrate the excellence that’s out there.

Part of the reason why I built this fund was to take matters into my own hands in supporting founders who are doing amazing work. We’re excited about the work we’re doing and grateful to be in this position.

Click here to read about Sean Mendy of Concrete Rose Capital in part 1 of our series on Black fund managers.

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