San Diego Startup Week’s Keynote this year was a Fireside Chat with Arlan Hamilton & Liane Thompson.
Arlan Hamilton is the high-profile investor behind venture capital firm Backstage Capital, recently dubbed “America’s hottest VC.” As a lesbian black woman, Hamilton is a pioneer in the overwhelmingly white and male world of VC, who is dedicated to minimizing funding disparities by investing in founders of color, women and/or LGBT. Backstage has invested into San Diego-based Aquaai, founded by CEO Liane Thompson, which uses biomimetic platforms to gather marine data. Thompson was a media executive at the NY Times and journalist in her past so interviewed Hamilton for this keynote.
More About Arlan
- She was homeless while building Backstage Capital, and talked about living in an airport. “I was literally putting the $1 together for a Taco Bell taco, my meal for the day, while planning in my head the $25M investments I’d make in the future.”
- She had a family member pass away and chose to give $500 at a time to underrepresented people with creative projects instead of spending it on herself. Before that $500 project, she gave away business books because there was a time when she could not afford them. Now that book program is a nonprofit.
- She thought it was strange that 90% of venture capital went to straight, white men. The more she wrote about it, the more she thought she may just have to do something herself. When sharing her goal to fund women, minority and LGBT founders, she was laughed out of the room. ”I was called a lot of things…like crazy…now I just get called.” (Possibly the best quote of the evening.)
- On her mom, who travels with Arlan doing what she calls “fan momming:” “We’re best friends, Thelma and Louise. Mom is super transparent and from day one I’ve felt loved and appreciated. We fight every day still, we’re two sides of the same coin: intelligent, interesting, and creative.”
- On San Diego, Arlan said Backstage Capital principal Lolita Taub lives here, that San Diego was the first place in California she lived after following a girlfriend out here in her 20s, and that she started her previous magazine here.
- She respects what others are doing, naming Monique Woodard, first black partner of 500 startups, and Shauntel Paulson of Reach Capital, recently in Forbes. She described it as a friendly competition, because “there’s not one way to be black, we are investing while black.”
More About Backstage Capital
Arlan knew Backstage Capital had to exist, there was never a time it was acceptable for it not to happen. She started Backstage in order to be someone’s apprentice, but she couldn’t find a black female founder to shadow at the time.
Her goal was to invest in 100 companies by women, minorities, and LGBT by 2020. She started that in September 2015 and achieved that goal in June 2018. Arlan’s next goal is a just-launched venture fund that specifically invests in black women one million dollars at a time.
Several years ago, investors asked her many times if there were enough women-founded companies to seed. “It makes no sense to me. Are they living in a bubble with no women? Will they just adopt? It makes me so mad [that women aren’t even on their radar],” she said.
She is thankful for the first companies who allowed her to invest in them. “As much as founders say I or Backstage has been helpful, they had to trust [Backstage] would be something, by allowing me to invest in them.”
Choosing Companies to Invest In
“It’s about the journey, their story, what they’re willing to do and how they are willing to do it,” she said.
Arlan looks for people she can identify with when investing, and jokes, “That doesn’t mean I look for incredibly attractive black women who are queer, that just happens.”
“I doggedly search for justice. I know that life isn’t fair but I want to get as close to fair as possible … I’m going to make it my life’s work to try to close that gap.”
“I haven’t met any underestimated founder who wanted a handout. They just want a fair shake or fair start to get there on their own merit,” she said, about clearing that investment roadblock for people.
“If you really get nitty gritty, the only reason you wouldn’t want to let us in is if you were afraid that we would do better than you if we’re given a fair shot,” she said.
She was chatting with a mom watching her kids on a playground and thought “My god, she can multitask, I want her running something,” whereas men may think the mom is distracted so may not offer her any jobs, promotions, or investments. “It’s about looking at people individually and restructuring what we consider potential,” she said.
When asked if she needs to deeply understand the product she’s investing in, she said not necessarily, because she doesn’t want to fall into the trap of the other investors she accuses, who say things like “Let me ask my wife about this” when asked to invest in female-focused products. She made the point that bald men have invested in men’s hair care products, “so figure it out! I don’t need to understand the tech behind it, that’s why we have 18 employees and limited partners to vet things.”
Another audience member asked about the right time in a business’s development to approach her about investing. “I don’t mind being the first or last check,” she said.
She said today she has very few fears, except for a fear of going backward. “I run from that quite a lot.”
She was terrified of public speaking and didn’t do it until March 2017. She said she was comfortable blogging, video, tweeting, etc. She approached public speaking with an attitude of giving it a try and if it doesn’t work, then at least she tried.
Being in the Headlines
“It’s been a wild ride, but it’s still hard, I don’t think we’ve made it yet. We’re still the underdog, and I still get rejected every single day,” she said.
“For 35 years I had no money, then I had a little bit, now I’ll be a millionaire in 2 years, that’s my goal, but nothing else has changed,” she said. She told a story about recent headlines about her such as in the Wall Street Journal. She was in New York that week and said she walked around carrying it, so when someone gave her an attitude of “you don’t belong here” she would casually open up the paper to her headline. “I find a lot of humor in it, it’s ironic that a number of exes are now very interested in how I’m doing after years of ghosting,” she said. She says that she’s had funny situations and crazy meetings lately, like how Ava DuVernay sat with her a few hours after getting back from a week with Oprah. “Meetings are awesome but I’m still the exact same person. After 35 years of being poor, I’m not going to have gold chains and spinning wheels. In the last week, my mom had to buy me a belt because mine was falling apart but I was still piecing it together like, ‘hey, this still works,'” she said.
“Someone tried to frame it once like weren’t you glad you were poor – no. Nuh uh. But yes, we can do more with what we have,” she said.
- “I always want to leave saying please let me be an example of staying true to yourself and being authentically you, even if it means you miss out on money, or an investor, or a job, because you have to live with yourself.”
- Practice self care. “You can’t take care of others if you can’t take care of yourself.”
- She has a practice of writing drafts in email, writing her own headline for 6 months from now. “It’s about being something rather than being an aspiring something.”
- If she could choose one investor to support her, she named Richard Branson, Ellen, Janet Jackson, or Oprah. If one of those investments happened, “I would faint everywhere over and over, it would be a faint fest.”
Stay tuned for an overview of part 2 of the Keynote, Getting Funded: With The Area’s Top Women Investors, with Victoria Lakers, President, Frank M&C • Ellen Chang, Chair, Wharton Angels • Arlan Hamilton, Managing Partner, Backstage Capital • Jenn Kercher, President & General Counsel, Section 32 • Allison Long Pettine, Founder & President, SEED San Diego • Caitlin Wege, Partner, MooDoos Investments.