How I became the investor of my dreams

March 12, 2021 | By Arian Simone

As a student at Florida A&M University, I was raising money to open a clothing store in a nearby mall. I knew it wouldn’t be easy, but I was shocked at just how hard it was to convince investors to fund a Black woman’s business. I refused to give up and I was able to help raise the money needed to launch the store. But on the day of the grand opening, I stood in the storage room waiting for customers to stream in and made a vow: I would become the investor that entrepreneurial women of color, women like me, needed.

Though women of color are launching businesses at a staggering rate, they receive less than 1% of venture capital. And the picture is even bleaker for Black women: Between 2009 and  2017, only 0.0006% of VC funding went to Black women. Much of this gap comes from the fact that the VC business often depends on who you know. When a college-educated white male wants to start a business, he typically turns to his network of friends and family for seed money. By the time he is ready to seek venture capital, he’s already perfected his pitch and accrued enough of a track record to wow his audience.

But what happens when you remove “friends and family” from the storyline?  Without generational wealth to depend on, an entrepreneur of color starts out presenting to a VC, only to be told: You are too early, come back later. This is not about a lack of diverse investment opportunities, but a lack of diverse investors.

Fifteen years later, when I was running my own marketing and PR firm for billion-dollar entertainment companies, I was able to fulfill that promise I made on that fateful day at the mall. In 2018, I closed the firm and co-founded Fearless Fund, the first venture capital fund by women of color for women of color. We invest in businesses seeking pre-seed, seed level or series A financing across industries including banking, beauty, beverages and data analytics.

This is not about a lack of diverse investment opportunities, but a lack of diverse investors.

We originally planned to launch a $5 million portfolio to demonstrate how our concept would work. We must have met with 300 potential funders before we got any interest. I was pulling my hair out! But eventually we began making traction starting with the City of Atlanta and Fifth Third Bank. Since then, we have added investments from corporations such as Bank of America and Costco and are poised to deploy $25 million among 30 startups.

Encouragingly, as the Black Lives Matter movement continues to grow stronger, more investors are seriously looking to play a role in addressing minority equity. At the same time, a community of Black investors is slowly beginning to emerge. I was on a call the other day with about 100 Black venture capitalists to discuss the growing opportunities for investing in our space.

And we are also attracting investors outside of the traditional walls of finance. Before our launch, I put out a few teasers about our plans on social media. And within a few hours, the parents of actress Marsai Martin (known for her role as Diane on ABC’s “black-ish) called me,  eager to learn more. They soon became investors, as did Dr. Jacqueline Walters from Bravo’s “Married to Medicine” and social influencer Marie Forleo, named by Oprah Winfrey as a thought leader for the next generation. And actress Keshia Knight Pulliam is one of our founding partners. Suffice it to say, the typical VC profile does not look like us.

Simultaneously, we are charting a path for women of color entrepreneurs to follow. The Fearless Fund brand began a decade ago by offering a training program called the Get Venture Ready Program in which participants spend 12 months learning how to prepare a pitch to investors. Last month, we partnered with Mastercard to launch the Fearless Striver’s Grant Contest that funds Black women business owners in the U.S, as well as uses Mastercard’s digital tools to further bolster their digital presence. 

But the real rock stars of Fearless Fund are our entrepreneurs. Every week, we field roughly 1,000 pitches, many from women who have bootstrapped their way into earning seven-figure revenues without borrowing a cent. They did it through being frugal and creative and, so far, our bets on them are paying off. While 41% of Black-owned businesses closed their doors during the first few months of the pandemic, our portfolio companies experienced three to as much 10 times growth.

Give this group access to capital and they don’t just survive, they thrive.

Photo of Arian Simone
Arian Simone, co-founder , Fearless Fund