Venture capital investments are the lifeblood of entrepreneurs and startups, but the money is not distributed equally across racial, gender, and ethnic lines. Black entrepreneurs typically receive less than 2% of VC dollars every year, CNBC reported, citing Crunchbase data. Black female entrepreneurs don’t even get 1% of the VC money each year.
One woman determined to bring those percentages up is Aurora James, founder and creative director of luxury accessories brand Brother Vellies. Three years ago, she founded the Fifteen Percent Pledge. This non-profit advocacy organization aims to close the racial wealth gap by partnering with retailers to commit 15% of their purchasing power to Black-owned brands and businesses.
Photo Courtesy Fifteen Percent Pledge
The Fifteen Percent Pledge was launched in 2020 in the wake of the Black Lives Matter movement. As noted on the organization’s website, what “initially began as an Instagram post” has now expanded into a significant force with over ten full-time staff members and partnerships with 30 leading retailers and brands, including Macy’s, Nordstrom, Sephora, Ulta Beauty, Vogue, Crate & Barrel, Gap, West End, and Yelp.
More than 625 Black-owned businesses have developed relationships with Fifteen Percent Pledge partner companies, Forbes reported. The organization aims to drive $1.4 trillion of wealth generation by Black entrepreneurs by the end of the decade and increase Black business representation by nearly 15%.
Photo Courtesy Fifteen Percent Pledge
James is taking things a step further through a new collaboration with Alisa Williams, a partner at the private equity firm VMG Partners. The pair plan to tap into an $850-million VC fund with an initiative called the Friends and Family Collective, which will focus on investing in Black-owned businesses, Fast Company reported.
As of mid-June, James and Williams had already invested $25 million in brands such as Ghetto Gastro, Beauty Stat, Melanin Hair Care, Proudly, and Danessa Myrick Beauty.
Photo Courtesy Melanin Hair Care
“People in private equity and venture capital are making bets on founders that they feel are going to be successful,” James said in an interview with Fast Company. “But there’s a lot of unconscious bias in that process. If Mark Zuckerberg or Larry Page is their archetype of a successful founder, where does a Black founder fit in?“
She called the fund a “natural extension” of her work with the Fifteen Percent Pledge – only with a more significant emphasis on delivering investment dollars to Black-owned businesses.
“We can get all the shelf space in the world, but if we don’t have the resources we need in order to help Black-owned businesses take advantage of the opportunity, then we’re just stuck,” James told Fast Company.
Accessing VC money is particularly challenging for Black women. Forbes cited a J.P. Morgan study that found that black women “are the fastest growing demographic of entrepreneurs” in the United States but face “disproportionate financial headwinds.”
Photo Courtesy Proudly
As recently as 2021, Black women entrepreneurs received only 0.34% of the total venture capital spent in the U.S., Forbes reported. That’s the case even though 17% of Black women were in the process of starting or running new businesses, according to the Harvard Business Review.
The Friends and Family Collective plans to find Black-owned businesses with a proven track record that need a financial shot in the arm. Fast Company cited the experience of Ron Robinson, who has been a cosmetic chemist for 25 years at companies such as Lancôme, Avon, and Revlon. He launched his own company, BeautyStat, in 2008. Although the brand has developed “a loyal following among professional makeup artists,” it still has struggled to broaden its reach.
“We wanted to make sure [Robinson] was equipped with everything possible to make sure he had the best shot at the market,” James told Fast Company.
