Venture Capital Firm "BackStage Capital" Focuses On LGBT, Women of Color Owned Businesses

Via Forbes In a sector where black women receive only 0.2% of all funding, Backstage Capital overwhelmingly -- and intentionally -- backs underrepresented founders. 72% are people of color; 62% are women; 44% are women of color, that most under-funded of groups; and 12% openly identify as LGBTQ.

Put another way, a full 98% of its portfolio companies are led by someone who isn't a straight white man.

The L.A.-based firm is relatively small. Its two funds total around $5 million -- "Andreessen Horowitz's Christmas party budget," jokes Arlan Hamilton, founder and managing director. But it's growing fas

This past week, Backstage welcomed its 50th company into the fold. When Forbes first covered the firm in fall 2016, its portfolio consisted of 19 startups. Hamilton hopes that number will be 100 by 2020, if not sooner.

On Monday, a second partner officially joined the firm as chief of staff: Christie Pitts, who spent 13 years at Verizon, including two at its venture arm.

And speaking of mega-firm Andreessen Horowitz, Backstage has its blessing: cofounder Marc Andreessen is an investor in both of its funds. Other big-name backers include Slack's Stewart Butterfield, known for prizing diversity in his workforce, and Ellen Pao, a new investor and advocate for gender equality.

In fact, as recent sexual harassment allegations in the VC sector have brought discussions of sexism (and racism) to the fore, Hamilton has found herself on the receiving end of more calls than usual from much larger firms.

"When these billion-dollar mammoth funds reach out to Backstage Capital, even if our companies aren't ready for that stage of investment, they're proactive and they get ahead of it," she said. "It sends a strong signal of what's to come."

In most cases, Backstage invests between $25,000 and $100,000 in its portfolio companies. Many of the entrepreneurs backed by the firm don't have access to traditionally white, male networks other founders rely upon for early funding.

"In some cases, we're their very first check -- their friends and family check," Hamilton said.

As a black, gay woman, Hamilton was as much an industry outsider as some of the entrepreneurs she's backed when she arrived in Silicon Valley in 2014. The Texas native had no investing experience; she'd been working as a concert production coordinator for acts like Toni Braxton and Jason Derulo before applying to "dozens and dozens" of low-level apprenticeships and assistant gigs at VC firms.

She's committed to hiring more folks from outside the Silicon Valley (white) boys' club. Backstage recently brought on its first recruiting assistant, Detroit-based Arnulfo Valadez, Jr. A business administration and marketing student at Michigan's Baker College, his goal is to ensure more Latinx entrepreneurs secure the venture funding they need to get their businesses off the ground.

As the firm grows, former Verizon exec Pitts will be responsible for ensuring its portfolio founders have access to mentors; Backstage already has staffers at tech giants including Airbnb and Pinterest offering its CEOs advice.

Pitts had been working with Backstage part-time for a year, with Verizon's blessing, before deciding to take the plunge full-time. It was in part the recent spate of sexual harassment allegations in the industry that spurred her on.

"The bravery of these women coming forward inspired my career move," she said. "It really didn't feel like a risk for me. I know what the potential is."

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