The number of African American venture capital investors is small, but growing. The good news is that many of these investors are entering the space looking to take strides in closing the wide funding gap that has traditionally kept minority startups at a competitive disadvantage.
BlackEnterprise.com recently chatted with the founder of investment firm, Impact America Fund, Kesha Cash, to find out what’s being done to even the playing field. Check out what she had to say.
BlackEnterprise.com: What was your motive behind founding Impact America Fund (IAF)?
I grew up economically disadvantaged in Orange County, California, supported by food stamps and Section 8 housing. However, I attended an excellent public high school and had access to opportunities my mother and father never had in South Carolina.
After graduating from UC Berkeley with a degree in mathematics and working as a mergers and acquisitions analyst on Wall Street, I returned to Southern California to provide technical consulting to small minority-owned business owners in Los Angeles. Over the next five years, I saw firsthand the enormous amount of entrepreneurial spirit in the community. This time on the ground also deepened my awareness and knowledge of large, underfunded market opportunities. At the same time, I was disheartened by the lack of market transparency, overpriced products and services, and the shortage of available capital and support necessary to these scale these businesses.
I founded IAF on the belief that economically disadvantaged communities want and deserve quality products and services, a fair piece of the income pie, and the opportunity to enhance the quality of their lives. IAF believes technology, when appropriately applied, can disrupt supply chains and operating inefficiencies in industries with archaic operating practices, which in turn, will accelerate the sustainable development of disadvantaged communities.
How is your company going about closing the funding gap that has traditionally kept minority startups at a competitive disadvantage?
There is a capital gap. Most black and brown people donâ€™t have angel investors in their family and are unfamiliar with the technology startup funding continuum. When you look at the racial wealth gap, blacks and Latinos have $0.06 and $0.07 cents, respectively, for each $1.00 of white wealth.
Understanding the racial wealth gap and the important role that high net worth family members and friends play, as often the first investors to fund a startup, black and brown communities are clearly disadvantaged.
In addition to the racial wealth gap issue, many of the black and brown founders we meet are developing solutions to pain points in markets that are unfamiliar to the angel investors and VCs who have money to invest.
While IAF is not exclusively focused on investing in minority entrepreneurs, we appreciate diverse teams and our cultural competence lens uniquely positions us to evaluate business opportunities that are often overlooked by investors relying solely on their â€œtraditionalâ€ investment lens.
Our sweet spot is to invest 12 to 18 months before a company is ready to raise a Series A round. Typically, theyâ€™ve participated in an accelerator, raised capital in a seed round, and are demonstrating good growth but still donâ€™t have enough traction to attract larger venture capital dollars for a Series A. In preparation for the A round, we work as partners with our portfolio companies to assist with business development goals, leadership skills, and operational fine-tuning to push growth.
We also assist the team with translating their business model and impact mission to investors and strategic partners. Our network of co-investors seeks access to traditionally underfunded high-growth market opportunities and welcome IAFâ€™s insight on investment opportunities. They also share our belief that well-run companies led by business savvy visionaries who genuinely care about their community of key stakeholders have strong competitive advantages.
Learn more from Kesha Cash and other financiers who are changing the face of investing at the 2016 Black Enterprise Entrepreneurs Summit, May 4â€“7, Loews Hotel Miami, Miami, Florida.Â Register now.
For more information, visit www.impactamericafund.com and follow KeshaCash on Twitter @KeshCashIAFund, @IA_Fund