‘Full stop, this is a crisis’: Baltimore CEOs on fundraising — and the dearth of support for Black women founders

Startup fundraising is challenging for any founder — in any locale, of any background. COVID-19 has leveled certain playing fields, thanks to the rise of all-virtual-everything. But odds against certain underrepresented groups have persisted.

A panel of CEOs and one investor discussed the state of raising capital in Baltimore, the difficulties for raising capital for women and founders of color, and how things can change for the better during a Founder City event on Wednesday.

Founder City is a series of virtual events centered around the startup journey that will culminates in a venture capital pitch competition where the finalists present at a drive-in. The panel featured Anders Jones, CEO of Facet Wealth, which has raised $58 million; Nick Culbertson, CEO of Protenus, which has raised $36 million; Ellington West, CEO of Sonavi Labs, which has raised $4 million in seed and is closing in on a Series A round; and Calvin Young, VP at Camden Partners, an investment firm. SmartLogic CEO Yair Flicker moderated.

A trend the panelists noted is location-agnostic funding: With the pandemic-prompted rise in virtual meetings, investors don’t need to be local to be impactful in the region. Facet Wealth’s Jones is of the mind that it’s just fine to leave Baltimore to find funding.

“Now more than ever, VCs are comfortable investing in any geography,” he said. “The geographic barriers are totally gone at this point. VCs have been meeting teams and writing checks over Zoom for the last year-plus, and I don’t think that’s going away.”

(Of note: Cybersecurity has proven to be a good bet in the COVID-19 era, with national venture capital trends favoring cyber prominently on view in the DMV. Here’s a deeper look at the ways those investment are happening locally.)

That doesn’t mean the wealth is getting spread equitably. In 2020, 2.2% of total VC investment was deployed into startups with all-women-founded teams, down from 2.5% in 2019 according to Pitchbook data. That may be because investors — mostly white men — were more likely to invest in who was already in their networks, who they saw as a safer bet in uncertain financial times.

Black and Latinx women founders received .64% of all VC investment, per the latest ProjectDiane report — and that’s a four-times increase from 2018, West noted.

“Full stop, this is a crisis,” said West, whose Sonavi Labs is the only medtech company founded and run by a Black woman in the city. She posed this question: “What do African American women and women founders do now while they’re waiting for institutions to catch up?”

For her, that was using her network, including crowdfunding through her personal network, as a source of early-stage funding — which she acknowledged is a privilege in and of itself.

“I know the responsibility that I have ahead of me,” West said. “Not only executing beyond the expectation, but to then position myself to sell my company to then be able to contribute to these funds [that invest in minority-owned startups] because that’s the pipeline we need to create.” (Check out season two of Technical.ly’s Off the Sidelines podcast for more strategies on equitable wealth distribution and investor diversification.)

The rest of the panel hour long panel highlights the realities of high expectations that come with high valuation for a startup and the difference between a good investor and a great investor — along with the definition of a “lazy” investor. Check it out below, and register here for more Founder City virtual and IRL events that will take place over the next few weeks.

[youtube https://www.youtube.com/watch?v=hyiL2zWjQCM]

Donte Kirby is a 2020-2022 corps member for Report for America, an initiative of The Groundtruth Project that pairs young journalists with local newsrooms. This position is supported by the Robert W. Deutsch Foundation.