Hamil­ton Makes His­tory


Back­stage Cap­i­tal founder Ar­lan Hamil­ton’s un­likely jour­ney to be­com­ing an in­flu­en­tial ven­ture cap­i­tal in­vestor rep­re­sents an op­por­tu­nity for the in­dus­try and di­verse founders alike.


Back­stage in the green­room of the pod­cast fes­ti­val where she’s sched­uled to ap­pear, ar­lan Hamil­ton is qui­etly singing the lyrics to Janet Jack­son’s “con­trol.” She’d like to walk on stage as the song plays, but the fes­ti­val crew has copy­right con­cerns. So in­stead, she is shim­my­ing off­stage in her chair, half-hum­ming the cho­rus un­der her breath: “i’m in con­trol / Never gonna stop / con­trol / to get what I want /con­trol / I like to have a lot.”

Like every­thing Hamil­ton does, the song re­quest is equal parts self-aware and unapolo­getic. Hamil­ton knows that she stands out—she is the only black, queer woman to have ever built a ven­ture cap­i­tal firm from scratch. She also knows that she has a rep­u­ta­tion for be­ing di­rect, par­tic­u­larly when it comes to Silicon Val­ley bi­ases, and how her own story is por­trayed. (In­deed, the song is a jab at Gim­let Me­dia, the pod­cast fes­ti­val hosts, who de­voted an en­tire episode of their Startup se­ries on her to what they saw as her some­times coun­ter­pro­duc­tive need for con­trol.) But Hamil­ton ex­udes calm, even as she at­tempts, through her L.a.-based firm, Back­stage Cap­i­tal, the near im­pos­si­ble task of dis­rupt­ing the way that ven­ture in­vestors pick win­ners and cre­ate wealth.

“It was crazy to me that 90% of ven­ture fund­ing was go­ing to white men, when that is not how in­no­va­tion, in­tel­li­gence, and drive is dis­persed in the real world,” she tells me. “I had no back­ground in fi­nance, but I just saw it as a prob­lem. Maybe it’s be­cause I was com­ing from such a dif­fer­ent place that I could rec­og­nize it.”

Three years ago, the then 34-year-old Hamil­ton ar­rived in Silicon Val­ley with no col­lege de­gree, no net­work, no money, and a sin­gu­lar fo­cus: to in­vest in un­der­rep­re­sented founders by be­com­ing a ven­ture cap­i­tal­ist. The story of how the for­mer mu­sic-tour man­ager stud­ied up on in­vest­ing from her home in Prairieland, Texas, and pushed her way into the rar­i­fied world of ven­ture cap­i­tal, scor­ing in­vest­ments from the likes of Marc An­dreessen and Chris Sacca, has be­come leg­endary in the in­dus­try. Af­ter mak­ing con­tact with Y Com­bi­na­tor pres­i­dent Sam Alt­man, she bought a one-way ticket to San Fran­cisco. For months she stalked in­vestors by day and slept on the floor of the San Fran­cisco air­port at night. She was broke. Fi­nally, in Septem­ber 2015, she got her first check, for $25,000, from Bay Area an­gel in­vestor Su­san Kim­ber­lin, who be­lieved in Hamil­ton’s vi­sion that the Val­ley’s lack of di­ver­sity wasn’t a tal­ent-pipe­line prob­lem as much as a re­sources prob­lem: Di­verse en­trepreneurs needed money. With Kim­ber­lin’s en­dorse­ment, Hamil­ton cre­ated Back­stage Cap­i­tal and be­gan in­vest­ing. Other fund­ing soon fol­lowed, from back­ers in­clud­ing Slack CEO Ste­wart But­ter­field and Box CEO Aaron Levie. This past June, Hamil­ton an­nounced that Back­stage had ex­hausted its first three seed funds, dol­ing out be­tween $25,000 and $100,000 to 100 star­tups in every­thing from beauty prod­ucts to busi­ness an­a­lyt­ics. And at all 100, at least one founder is a woman, per­son of color, or some­one who iden­ti­fies as LGBTQ.

Now Hamil­ton is gear­ing up for Back­stage’s next chap­ter, a $36 mil­lion fund ded­i­cated ex­clu­sively to black women founders, a de­mo­graphic that’s glar­ingly ab­sent in Silicon Val­ley: Just three dozen black women en­trepreneurs, na­tion­wide, have raised more than $1 mil­lion in ven­ture fund­ing. Hamil­ton calls her lat­est ini­tia­tive the “It’s about damn time fund.” Her first two $1 mil­lion in­vest­ments, to be an­nounced be­fore the end of the year, will go to ex­ist­ing Back­stage port­fo­lio com­pa­nies. And that’s just the start. This spring, Hamil­ton will launch the Back­stage Ac­cel­er­a­tor to foster early-stage star­tups with lo­ca­tions slated for L.A., Philadel­phia, and Lon­don. She’s also lay­ing the ground­work for a $100 mil­lion fund to pro­vide un­der­rep­re­sented founders with even larger checks.

Every nascent VC is un­der pres­sure to demon­strate suc­cess— Hamil­ton even more so. Those in Silicon Val­ley who be­lieve that the next Face­book will be cre­ated by a woman or per­son of color are watch­ing her port­fo­lio closely. Oth­ers view Back­stage with more skep­ti­cism, see­ing her funds as rel­a­tively in­ex­pen­sive ways for in­vestors to ap­pear com­mit­ted to di­ver­sity with­out hav­ing to do the hard work in­ter­nally.

Hamil­ton shrugs it off. In an in­dus­try where priv­i­lege begets priv­i­lege—and at a time when racial jus­tice in this coun­try seems pre­car­i­ous, at best—she is claim­ing her seat at the table. “How much of a fist in the air would it be to just be ob­nox­iously wealthy as a gay black woman?” she won­ders. “And [how pow­er­ful] to be able to help other peo­ple do the same?”

En­tre­pre­neur Stephanie Lamp­kin had an en­gi­neer­ing de­gree from Stan­ford and an MBA from MIT.

But she couldn’t get a job at Google when she ap­plied there in 2014. “They told me I wasn’t tech­ni­cal enough,” she says. Shortly af­ter­ward, she de­vel­oped the idea for her startup, Blen­door, which sets out to elim­i­nate bias in hir­ing prac­tices through soft­ware that anonymizes job-can­di­date data and an­a­lyzes tal­ent pipe­lines. She was soon ac­cepted into a Stan­ford-run ac­cel­er­a­tor pro­gram, but strug­gled to per­suade in­vestors to back her ef­forts. “I went through the demo day, and noth­ing con­verted to a check.”

Ad­vis­ers sug­gested that Lamp­kin, who is African Amer­i­can, seek out women-fo­cused ven­ture funds. There has been an ex­plo­sion of an­gel syn­di­cates and early-stage funds in re­cent years that tar­get women en­trepreneurs. But as Lamp­kin dis­cov­ered, the founders in such funds’ port­fo­lios are al­most ex­clu­sively white or Asian. In the end, she shifted gears and looked for VCS “who un­der­stood the prob­lem re­ally well,” in­clud­ing Hamil­ton, who put $25,000 into the com­pany in 2017. (Las­zlo Bock, the for­mer head of peo­ple at Google, is an­other early backer.)

“There are a lot of peo­ple who are talking about in­vest­ing in women and founders of color, but when you look at their port­fo­lios, it’s still ma­jor­ity ho­mo­ge­neous,” says Ellen Pao, a Back­stage in­vestor and ac­tivist who filed the land­mark sex dis­crim­i­na­tion

law­suit against VC pow­er­house Kleiner Perkins in 2012. She sees Hamil­ton as the real deal, ca­pa­ble of lever­ag­ing her net­work to iden­tify tal­ent that everyone else has ig­nored.

Though she is still a small player in a ven­ture land­scape awash with money, Hamil­ton has proven adept at con­nect­ing en­trepreneurs to a ro­bust net­work of top-tier VCS and ex­ec­u­tives from Airbnb, Google, and more. Silicon Val­ley runs on warm in­tro­duc­tions, and Hamil­ton, by force of will, is now able to offer them. “Time and time again I’ve seen Ar­lan tell the world, don’t count me out. It’s her per­sis­tence that I’m most in­spired by,” says Un­charted Power founder and CEO Jes­sica Matthews, whose seven-year-old re­new­able en­ergy startup has raised more than $7 mil­lion, with back­ing from Back­stage.

Hamil­ton is gain­ing promi­nence at a time when black fe­male founders are in­creas­ingly giv­ing up on ven­ture cap­i­tal en­tirely. Re­ham Fa­giri, co­founder and CEO of used-fur­ni­ture mar­ket­place Apt­deco, is one of the rare black women to have raised more than $1 mil­lion in ven­ture fund­ing. She cashed her first VC check in 2014, be­fore Hamil­ton ar­rived on the scene, but has since soured on the stan­dard startup path, due to her in­ter­ac­tions with VCS. “I al­ways got asked who was run­ning the tech, even though I ran a team of en­gi­neers at Gold­man Sachs for six years,” she says. Th­ese days, Fa­giri prefers to boot­strap her com­pany.

Crowd­fund­ing is also be­com­ing pop­u­lar: Repub­lic, a plat­form that al­lows founders to raise money from non­pro­fes­sional in­vestors in ex­change for eq­uity, re­ported in May that founders of color ac­counted for 25% of the in­vest­ment dol­lars gen­er­ated through its site, while women ac­counted for 44%. (In­dus­try-wide, the per­cent­ages are 1% and 2%, re­spec­tively.) And fa­cial-recog­ni­tion startup Kairos, one of Back­stage’s port­fo­lio com­pa­nies, has raised mil­lions through an ini­tial coin of­fer­ing—a type of crowd­fund­ing that re­lies on cryp­tocur­ren­cies—this past sum­mer.

Many black fe­male founders turn their backs on ven­ture fund­ing out of sheer fa­tigue for “hav­ing to de­fend them­selves as hu­man be­ings,” says Jean Brown­hill, co­founder and CEO of Sweeten, a match­ing ser­vice for home­own­ers and con­trac­tors. (Back­stage is not a Sweeten in­vestor.) Brown­hill re­calls meet­ing with an in­vestor whose first ques­tion was whether her fa­ther was around while she was grow­ing up. “I said some­thing very pleas­ant with a smile on my face. But where do you go from there?” Matthews, for her part, cites the unique pres­sure of rais­ing money as a black fe­male founder: “When­ever you are

a black face in a white space, your pres­ence rep­re­sents all black peo­ple. You don’t have the abil­ity to be flawed. Any mis­take you make, that will be the one data point to ex­plain an en­tire peo­ple.”

Hamil­ton knows that feel­ing well. She re­calls the fel­low VC who once told her that for Back­stage to be taken se­ri­ously, it needs to be an “out­lier” in terms of its per­for­mance. “He said I need to be bet­ter than everyone in or­der to be seen as an equal,” she says. “It’s very un­fair. But he can ship it to me; I’m not sign­ing for it. I don’t feel the pres­sure.”

Un­der a pas­tel blue sky in mid-june, Hamil­ton is

do­ing what she does best: host­ing a group of in­vestors and port­fo­lio com­pa­nies at a Los An­ge­les cowork­ing space for a day of founder-vc speed dat­ing. It’s an im­por­tant mo­ment for Hamil­ton. For every Back­stage startup that raises a Se­ries A or Se­ries B round led by a top-tier firm, Hamil­ton will be one step closer to con­vinc­ing prospec­tive in­vestors that she’s ca­pa­ble of pick­ing win­ners. She dis­penses hugs and greet­ings. But she’s here to work. “We def­i­nitely want to think about mak­ing deals to­day,” she an­nounces as she scans the room, eye­brows mock-sternly raised.

The at­ten­dees fan out to their as­signed meet­ing ta­bles, each dec­o­rated with minia­ture suc­cu­lents. The dozen-plus founders in the room mir­ror the over­all com­po­si­tion of Back­stage’s port­fo­lio: 80% peo­ple of color, 68% women, 13% LGBTQ. One com­pany makes dolls with nat­u­ral hair, one uses data to drive sports ticket sales, and an­other de­vel­ops an­a­lyt­ics for vend­ing ma­chines. In as­sem­bling Back­stage’s “head­lin­ers,” as she calls her com­pa­nies, Hamil­ton has avoided fo­cus­ing on par­tic­u­lar in­dus­tries. Through her pres­ence on the con­fer­ence cir­cuit, she en­deav­ors to at­tract the at­ten­tion of all un­der­rep­re­sented founders. But the wide-rang­ing re­sult can be chal­leng­ing to man­age and sup­port. The less-than-char­i­ta­ble in­dus­try moniker for such a strat­egy: “Spray and pray.”

Hamil­ton de­fends the tac­tic, which mir­rors that of high-vol­ume early-stage funds like 500 Star­tups. “It’s not like [I’m say­ing], ‘Ev­ery­body’s getting a check! I’m Oprah!’ ” she says. So far, she has in­vested in roughly 3% of the com­pa­nies that have pitched Back­stage, a per­cent­age that is on par with many ven­ture firms. For her $1 mil­lion checks, Hamil­ton says she’s look­ing for com­pa­nies that are trans­for­ma­tive and scal­able—and that “pro­vide some sort of dig­nity for the end user.”

She ap­proaches her in­vestors with sim­i­lar dis­cern­ment. Amid the grow­ing out­cry around Silicon Val­ley’s stub­bornly white, male norms, Hamil­ton seems to offer in­vestors a con­ve­nient way to ex­hibit their good in­ten­tions. “There are prob­a­bly a lot of peo­ple who see af­fil­i­at­ing them­selves with Back­stage as a quick fix,” says Mark Levy, the for­mer global head of em­ployee ex­pe­ri­ence for Airbnb and now a Back­stage in­vestor and ad­viser. “Ar­lan has a good nose for bull­shit. She’s pur­pose­fully not taken money from in­vestors when she thinks that’s the only rea­son they’re getting in.” Hamil­ton ac­knowl­edges that “there’s a bucket of peo­ple who are check­ing off boxes” by tak­ing meet­ings with her. But she cred­its in­vestors such as But­ter­field and Sacca with “think­ing about what the fu­ture looks like” and writ­ing checks.

With other in­vestors, she is less for­giv­ing. As the 2016 election ap­proached, she took to Twit­ter to an­nounce that she would no longer en­cour­age com­pa­nies to ap­ply for Y Com­bi­na­tor. YC part­ner Peter Thiel had just reaf­firmed his sup­port for Don­ald Trump, fol­low­ing the leak of Trump’s Ac­cess Hol­ly­wood com­ments, and Hamil­ton says she couldn’t stom­ach the idea of do­ing busi­ness with him. She also turned down an offer of more than $250,000 from an in­vestor who was speak­ing out in Thiel’s de­fense. “I re­ally weighed it, but I couldn’t do it,” she says. Later, she had to sell a por­tion of her Back­stage own­er­ship to cover pay­roll.

YC pres­i­dent Sam Alt­man, who lashed back on Twit­ter, might have greeted Hamil­ton’s de­ci­sion with more un­der­stand­ing if she had spread the word qui­etly. But that is not how she op­er­ates. On Twit­ter and In­sta­gram, she is dis­arm­ingly hon­est, post­ing about her lone­li­ness and her long­time bat­tle with al­co­holism, even at the risk of un­nerv­ing po­ten­tial in­vestors. “I had a re­la­tion­ship with Tito’s,” she tells me. “It was my best friend, my com­forter, the girl­friend that never cheated.” To­day she’s sober, help­ing to sup­port her mother, and en­gaged to a woman who lives in Bavaria.

Mean­while, the num­ber of di­ver­sity funds is grow­ing. Un­til re­cently, Re­think Im­pact, which has a $112 mil­lion war chest, was the only di­ver­sity-fo­cused fund ca­pa­ble of lead­ing a large, post-seed round. Now there is also New Voices, a $100 mil­lion fund cre­ated this year by Sun­dial Brands CEO Riche­lieu Den­nis, which has al­ready in­vested in eight star­tups led by black women.

At the same time, the tra­di­tional ven­ture world is start­ing to re­form, al­beit slowly. There are more women and mi­nori­ties in ju­nior roles, if not part­ner po­si­tions. And en­trepreneurs are start­ing to seek out di­verse in­vestors: Ooda Health, a healthtech startup with male co­founders, de­cided to raise its ini­tial round of fund­ing this year ex­clu­sively from firms with fe­male gen­eral part­ners.

As for Hamil­ton, she is think­ing long-term. “I def­i­nitely am aware that the ma­jor­ity of my [in­vestors] are older white men who are rich, and who will get richer by my work and the work of oth­ers,” she says. “But right now the fo­cus should be on getting that money to the founders so that they them­selves can have mas­sive ex­its.”

What fol­lows from all th­ese po­ten­tial IPOS and ac­qui­si­tions, in her vi­sion, will be noth­ing short of rev­o­lu­tion­ary. “What will come of that,” she says, “is decades and decades of gen­er­a­tional wealth for black peo­ple.” If Back­stage and other such firms suc­ceed, “[this coun­try] will be a dif­fer­ent pic­ture.”

Hamil­ton calls her new $36 mil­lion fund for black fe­male founders the “It’s about damn time fund.”

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