Top Insights

  • She’s a black female gay, grew up in the south raised by a single mother.
  • She became a VC, very underrepresented, very underestimated.
  • Her firm is Backstage Crowd, open to accredited and non-accredited investors.
  • She published a book: It’s About Damn Time, about her experience becoming a VC.
  • Has a podcast: Your First Million.
  • Made a course: How to Raise Capital for your Company from Scratch.
  • She believes and preaches: Acknowledging privilege doesn’t take it away.
  • She raised $7m over 7 years.
  • On larger investors for her fund: They are invited to come back to her found but she doesn’t want to be beholden to them.
  • Prefers small like-minded investors to big LPs: it’s more fun.
  • She believes 80% of the companies could do without any funding and bootstrapping.

It’s been pushing a boulder up a mountain.

Arlan Hamilton

Intro

  • Arlan Hamilton is black, female and a lesbian. She’s from the south, and was raised by a single mom.
  • She has a podcast called Your First Million. There’s another unrelated episode with the same name.
  • She’s happy to talk about race unlike others.
  • She published a book It’s About Damn Time.
    • She read the whole book for Audible.
    • She got rejected a lot.
    • She describes how hard it was to break in and how she did it.
  • There’s a lot of scrambling of people reaching it out to her that previously rejected her.
    • Some people are guilty because of Black Lives Matter, and George Floyd’s death.
    • Some people now have more leverage so they can work with her.
  • Arlan doesn’t accept any and all money she is offered.
    • Integrity is very important for her.
    • She’s very protective: 
      • Of her companies.
      • Of her brand
      • Of her people.
    • She doesn’t want to be someone’s saviour, the token black person that shows the caught up with the times.
    • She treats everybody as though they are good at first, but quotes Rihanna: “Don’t mistake my kindness for weakness
    • There’s a difference between someone that finally got that black lives matter and someone that just doesn’t want to look bad.
    • She doesn’t respect people that are just giving crumbs of what they actually have to the unrepresented crowd, that’s insulting.
    • Even if you were on her bad side, you can get on her good side, but it can take work.

On Privilege

  • Acknowledging privilege doesn’t take it away.
    • She can acknowledge it’s harder for someone to get on an airplane when they are in a will chair without feeling bad about about her ability to walk.
    • Recognizing a privilege doesn’t put someone down.
    • Life being harder for a black person to get to the same level doesn’t mean a white person didn’t work as hard.
  • She wants everybody to have the same opportunity, not necessarily the same outcome.
    • She says “What I would love to be able to do, and all black founders and other founders would love to be able to do, is to wake up and start working on their thing and not spend 80% time defending myself.”
  • She raised $7m over 7 years.
    • The whole Backstage Capital experiment is a drop in the bucket, barely a series A round.
    • People that don’t want her on the industry are nervous.
  • Arlan and Jason had a lot of conflict at the beginning because she thought Jason was advocating lowering the standard to let women in.

That was the worst tweet I ever did

— Jason

Backstage Crowd

  • We’ve had multiple investors that promised the world and backed out last minute.
  • Invested in 100+ different companies.
  • Invests pre-seed, usually 25k to 100k. Starting off with small checks.
  • The impact is starting to bear with companies starting to raise series A.
  • On larger investors for her fund: They are invited to come back to her found but she doesn’t want to be beholden to them.
  • She prefers to have like-minded people as her investors
    • Operators, big tech employees, etc.
    • Started 100k only last year.
    • Half the people that signed up are accredited, half are not.
    • 1200 people.
    • Now we can start putting $250k to $1m.
  • She doesn’t like to say that underrepresented founders have lower valuation to same performance, but that white men tend to be overvalued while underrepresented founders are correctly priced. Otherwise she believes people will think something is wrong with the underrepresented founders.
  • She has great deal flow, even white men pitching her, who are doing well: high quality and quantity.

If I didn’t want to, I would never have to source a deal for the rest of my life.

On NOT investing

  • Gives appreciation to companies she doesn’t invest on:
    • She built a lot of content:
      • Podcast
      • Meetups
      • Investor weeks, in and outside her portfolio.
      • Office hours
    • Slack for top 100 of the accelerator even if she couldn’t accept them.
  • Accelerator in 2019
    • 1900 applications in 5 weeks
    • Selected 24, in 4 cities, 2 countries, invested $100k
    • Top 100 got to be part of the Slack even if not invested on.

On joining the crowd

  • She thinks it wasn’t necessary to be in Silicon Valley to be a great investor even before the pandemic.
    • ⅔ of her companies are not in Silicon Valley.
  • She wouldn’t consider investing in white men, her deal flow is too good.
    • She made exceptions, but they are very rare.
    • Underrepresented founders want her on their cap table.
  • What was it meeting by the big LP?
    • They are mostly guys.
    • They ask questions that make no sense.
    • They want explanations on startups that went to 0, when 80% will.
    • She feels her clothes get ripped and they point at each part of her body asking why it is fat.
    • Jason’s description of the experience of talking to the big LPs was triggering to her.
    • They don’t want to take a chance on the new.
  • Silicon Valley is a place of favours, she has a chapter on her book about how nobody is self-made.

Go to Atlanta and hang out for a couple of weeks. […] It’s happening, you are missing it.

Fleeting, a good example of her investments

  • Backstage Crowd has two lanes: accredited and non-accredited.
  • Fleeting: trucking company.
    • On the non-accredited track.
    • Raising fast on Republic.co, crowdfunding.
    • Founder wanted to be a doctor, he got to drop out of school, ended up working as a trucker.
    • He got taken advantage by a web developer company.
    • He knew what he was talking about, a perfect match for Backstage Crowd.
    • More than $1m in revenue.
    • Thousands of matches.
    • Her mother and brother invested in it, their first investment.

All of these founders are going to make me so incredibly wealthy that I can’t stand it

The future

  • She tried to raise a $100m fund, it’s impossible. She can do the same model with a syndicate and have a great relationship with investors downstream.
    • It’s more fun with the syndicate than with giant LPs.
    • She says “I don’t think anything could have been more tailor made for us at this moment than syndicates.”
  • She is going to try to get one or two deals a month. What makes sense organically.
  • She’s doing an online course: How to Raise Capital for your Company From Scratch.
    • 80% of the companies could do without any funding and bootstrapping
    • You want to have the investors chasing you and not the other way around.
  • She doesn’t like the idea of being seen as “having broken in”
    • She’s an outlier.
    • She has a way of thinking that most people don’t have.
    • It shouldn’t be this hard.
    • The first four years she didn’t feel she broke in.
    • If everybody has to do this, it’s not worth it.
    • There’s more work to do.

If I didn’t felt hopeful I wouldn’t be able to wake up in the morning and do this.

Arlan Hamilton