Every industry has its unwritten rules. It has its established networks and codes of conduct. As the industry grows, it disproportionately favors its members and those who resemble them. It makes it exceedingly difficult for outsiders to get in. The others are always kept outside the gates.
Who are these others? People from marginalized and underprivileged backgrounds with no connections to the ones inside. People who don’t resemble the members of the industry, people with different stories and challenges. They’re doomed to be outside, surviving on the crumbs the industry occasionally throws at them.
That is, until, a rank outsider decides not to knock on the doors anymore. That’s what happened to the world of venture capital when Arlan Hamilton created her own network and opened the doors to those who are otherwise denied entry.
From homeless to Backstage
Hamilton is the outsider among outsiders. She’s black, queer, and homeless. And she was sleeping at the San Francisco airport when the idea struck her. In 2015, the 38-year-old launched Backstage Capital, a venture capital firm for women, people of color, and those in the LGBTQ community.
She realized that these are the sections traditionally ignored by the investors and VC firms of Silicon Valley. Unless you’re white and male, Hamilton knew, it would be exceptionally difficult to get entry into the venture capital club. Backstage Capital was her answer to the problem.
Before she started her firm, Hamilton had to educate herself. She couldn’t buy the necessary books, so she spent hours at Barnes & Noble. There she read books on technology and investing and watched countless videos on YouTube and Vimeo to learn about the world she was planning to enter.
She also wanted to be close to the action. So she spent time outside Houston and Austin and finally at Silicon Valley. What she learned was that women, people of color, and those belonging to the LGBTQ community received negligible interest and funding from investors and trendsetters in the tech world.
Seeking to correct the wrongs, she sent hundreds of emails to VC firms, only to be repeatedly rejected. But she wasn’t deterred. She blogged about the injustice toward founders from marginalized communities. She wrote about how the system was created and institutionalized to prevent the disempowered from joining it. And the world started taking notice.
One post in particular, “Dear White Venture Capitalists” took the venture capital industry head-on and criticized them for excluding deserving candidates from underrepresented communities. That went viral and caught the attention of both the media and entrepreneurs.
To learn more about financial inclusion and empowerment, she attended a pilot program at Stanford University. It was a two-week workshop for training future investors. With her scholarship and some money raised through crowd-funding, she attended the workshop. After that, when resources ran out, she made the San Francisco airport her home and attended several conferences.
Finally, her efforts paid off. Susan Kimberline became the first investor and Backstage Capital officially entered the scene. Instead of sitting around for decades, waiting for someone to recognize those like her, Hamilton decided to do it herself.
Empowering and how
Hamilton couldn’t have predicted the success of Backstage Capital. The VC firm has so far invested in more than 180 companies that are led by those from underrepresented communities. The investments range from $25,000 to $100,000 and have been made in companies that create everything from short sports videos to bold bridal wear.
In 2018, the company launched a $36 million fund specifically targeting black female entrepreneurs. The firm also established Backstage Accelerators, a three-month program to support and guide founders from marginalized communities. So far, the program has worked with entrepreneurs from Detroit, Los Angeles, Philadelphia, and London.
Values above everything else
But it isn’t money that Hamilton is interested in. In fact, she was never comfortable with the concept of money. Her goal was never to earn it, but “tame it,” as she says. She wanted to empower others to generate wealth and uplift those communities.
Her beliefs are shaped by two powerful women; her mother and Janet Jackson. At times having to work two jobs, Hamilton’s mother showed her the importance of perseverance and independence. From Jackson, she learned how a black woman could be creative, bold, and highly successful while being true to herself.
That’s also the overriding value for Hamilton. Despite the phenomenal growth of Backstage, she is careful not to make it another VC firm. That’s why, in 2016, she turned down a substantial investment offer from Peter Thiel. She doesn’t want to be part of the system that excluded people like her in the first place.
An important principle that she has instituted at Backstage – and encourages all her entrepreneurs to follow – is self-care. To Hamilton, individual well-being is more important than vanity metrics or the toxic macho culture of constant growth hacks and 70-hour weeks.
She supports her founders when they face criticism and constantly encourages her employees to take time off. She also shares her challenges and hopes and frustrations with those who work with her. This encourages the employees to open up and share their ideas, concerns, and problems.
Backstage Capital is an organization where she wants every employee to feel that they’re making an impact. Beyond the quarterly reports and valuations, she wants them to know that what they’re doing matters in the long term.
Hamilton has come a long way from the days of sleeping on the floors of the San Francisco airport. She has been featured on the 2018 New Establishment List from Vanity and on the cover of Fast Company. She has shared her story on podcasts and at conferences.
She has also written an autobiographical-plus-how-to book, that follows her life, from receiving food stamps to managing million-dollar investments. Arlan Hamilton’s life and mission can be summed up by the name of that book: “It’s About Damn Time: How to Turn Being Underestimated into Your Greatest Advantage.”