10 Ways To Attract Capital To Your Tech Start-Up
Though the need for greater diversity + equity in Tech funding has been talked about for years, Black and Latinx founders still lag behind their peers when it comes to support, venture capital and other investments. Check out the following stats:
As of Aug. 31, 2020, Crunchbase found that Black and Latinx founders raised $2.3 billion in funding, representing just 2.6% of the total $87.3 billion in funding that has gone to all founders so far in 2020.
When looking at the 10 leading venture firms in the U.S., Crunchbase found that just 3% of the companies they’ve invested in since 2015 are led by a Black or Latinx founder. The report also highlights data from the nonprofit organization BLCK VC that shows 81% of all VC firms don’t have a single Black investor.
A recent study conducted jointly by RateMyInvestor and DiversityVCkey findings examined publicly available VC-backed deals over the last five years and polled over 10,000 founders. The study found the following (https://ratemyinvestor.com/pdfjs/full?file=%2FDiversityVCReport_Final.pdf):
77.1 percent of founders were white—regardless of gender and education.
Just one percent of venture-backed founders were black.
Women-funded startups received only 9 percent of investments
With these stats in mind, we wanted to come up with some solutions as it relates to attracting capital to your start-up. These 10 things will relate to Tech or any other type of start-up for that matter:
#1- RUN A SYSTEMS BASED BUSINESS
#2-TELL A GREAT STORY
#3-USE AN INVESTOR FRIENDLY BUSINESS STRUCTURE
#4-USE SWEAT EQUITY TO BUILD YOUR TEAM
#5-PROVIDE AN EXIT STRATEGY FOR INVESTORS
#6-HIRE AND ATTORNEY AND FINANCIAL ADVISOR
#7-BUILD A SOLID BUSINESS PLAN
#8-ENTER PITCH COMPETITIONS
#9-KNOW YOUR NUMBERS
#10-INVEST PROFITS BACK INTO THE BUSINESS
Check out this video our Founder, Eric McLoyd, did with Scott Steward, Founder of Genius Lab (https://www.geniuslabchicago.com/) :