From Homelessness to Venture Capital: Arlan Hamilton of Backstage Capital
In this episode, we’ll be talking to Arlan Hamilton, founder and managing partner of Backstage Capital. Arlan built a venture capital fund from the ground up — while homeless. Backstage Capital is a venture fund dedicated to minimizing funding disparities by investing in high-potential founders who are people of color, women, and/or members of the LGBTQ community. Since its founding in 2015, Backstage has invested more than $20 million in more than 180 companies with plans to raise up to $30 million for its newest fund. In 2018 Arlan co-founded Backstage Studio which launched four accelerator programs for underestimated founders in Detroit, Los Angeles, Philadelphia, and London. She was featured on the cover of Fast Company magazine in October 2018 as the first Black woman non-celebrity to accomplish this venture. Arlan’s book “It’s About Damn Time” published in May 2020 chronicles her journey from being homeless in SF to running a multimillion-dollar investment fund and the lessons learned along the way.
Highlights from our conversation
Arlan Hamilton ignited her journey with a blog post titled “Dear White Venture Capitalists,” in which she outlined the ugly truth of the VC world: “all the capital was being channeled to white men, even though they are only ⅓ of the country’s population.”
“I met people from all over the country and noticed that they had vastly different experiences with fundraising for their companies depending on what they looked like, who they were, and where they came from. That just did not seem smart to me.”
As a result, Arlan co-founded Backstage Capital, which focuses on shining a light on the missed opportunities in the venture capital world, in which many venture capitalists are blind to the talents of women, African-Americans, LGBT+ individuals, and those belonging to other underrepresented groups.
She reinforces that there are so many minority-led companies out there. Backstage looks at least 1,000 companies every year. They are only able to invest in 2% of these companies, indicating greater need for VC firms like Backstage.
“Competition for investment has been larger than ever for the groups we work with. Finally some money is coming our way, but it took way too long,” Arlan reflects.
You deserve to be here
Arlan does not shy away from describing the harsh reality of minority founders.
“I know so many black founders who would not put their own picture on their company’s website because they know that some people would not be their customers if they knew what they looked like.”
However, she is actively trying to change this. When founders meet Arlan as part of Backstage’s process, she often notices that they may act unnaturally, trying to fit into some stereotype of what a founder should look and act like. They are often so used to doing this when interacting with other investors.
“I reassure them that they do not need to sell me on them, they don’t have to sell me on why they should be in this room. I want to know about their company, of course their background story and why they started the company is important. But we are pushed against the wall to have to explain why we should even be there so many times. I have been in that position so many times, so I get it.”
Arlan also encourages our listeners to remind themselves that they deserve a spot in every room they walk into. On her educational platform, Arlan Academy, she recommends the free 20–30 minute module on “Finding Your Edge” to inspire the confidence founders need before pitching their companies to VCs. The module is focused on your perceived disadvantages into advantages.
A word on authenticity
“Time will always reveal the true self,” Hamilton reminds us.
While it might seem appropriate to play a role to raise capital, “it takes a lot of energy to pretend to be someone you are not.”
Of course there is professionalism and trying to highlight the best version of yourself, but Arlan notes that founders frequently try to fit into a cookie cutter mold, thinking it will give them an edge. “It gets old after a while,” she warns.
“Either you will have to play that role for the rest of your life with those people, or you will eventually lose energy to pretend and reveal your true self. Both can be problematic.”
So she advises entrepreneurs to walk into those rooms prepared: know the answers to questions that might be raised about your company, know your numbers, and most importantly, know yourself.
“But be ok losing a deal because someone is not feeling you, because it’s not worth it to partner with someone that does not value you for who you are. There will be plenty of other ways to find money.”
“I can also tell you as someone who has spent the first 35 of my 40 years without money, like in the poverty line, that there is no check that is worth changing who you really are.”
Interested in Venture Capital, investing in underrepresent groups, or a more equitable world? Check out Spotlight on Women in Healthcare Ventures on Spotify and Anchor!
Theia is a 501(c)(3) non-profit dedicated to inspiring and empowering the next generation of women entrepreneurs and investors in healthcare. Visit our website to join our community and access resources that will support your entrepreneurial journey and pursuit of changing healthcare.
Story written by Luiza Perez , Priya Kumar, Katie Donahey, Ankeeta Shah, Anna Kroner, Nikita Gupta.
