How FundBlackFounders is reimagining the Friends & Family round to reduce racial wealth gaps
For North American startups, the early connections and enthusiastic cash flow of the “friends & family round” launch the typical new business with an average of $100,000 to $150,000. For Black entrepreneurs, that figure hovers around $35,000. That staggering disparity is why a growing number of funders and founders are taking on the inequality that starts with the pre-seed round.
“That startup capital gap is the problem. Black entrepreneurs are starting businesses with less capital. They are using their personal credit. They are using their day job salaries; they are putting everything on the line to do this,” says Renee King, CEO and founder of FundBlackFounders, a crowdfunding platform with a namesake mission to level the pre-seed playing field.
Since the platform’s debut in early 2020, FundBlackFounders has engaged over 4,000 investors, providing $1.4 million in capital to over 70 Black founders, a current roster that comprises skincare lines, legal tech, a running apparel brand, e-commerce marketplaces, community yoga centers, and a plant-based breakfast cereal. The platform’s support extends beyond crowdfunding to include business coaching, as well as formal networking for professional services (accounting, legal, marketing, etc.) that have traditionally played a key role in “friends and family rounds” successfully launching a startup.
“We're a connected ecosystem that is solving the problem of making the entry to entrepreneurship more accessible for Black founders. We put real money in the pockets of real founders and create a way for Black entrepreneurs to raise a friends-and-family-round,” adds King. “There’s a data point that shows we spend two times what a white entrepreneur does to start the same business, right? The reason why we do that is because we don't have access to networks that we can say, ‘Oh, my friend's a lawyer. Can you look over this? Oh, I know a PR company, how do I get prepared for this?’”
From the NBA to The Breakfast Club, real-world connections power online platform
FundBlackFounders’ online crowdfunding is fueled by real-world partnerships King has secured from her base in Mt. Vernon, an inner suburb of New York City. For two years running, FundBlackFounders has been the lead partner on the JLH Social Impact Fund, which annually provides $1 million in collective funding to Black-led businesses, to increase their capacity to survive and thrive. King and other staff members train these selected small businesses on funding opportunities, crowdfunding campaigns, and social impact. The high-profile fund was founded by a multimillion salary pledge from NBA All-Star and Milwaukee Bucks guard Jrue Holiday and two-time Olympic soccer gold medalist Lauren Holiday to grow Black-owned businesses in Milwaukee, New Orleans, Indianapolis, and Los Angeles.
To land this high-profile deal, King credits her recent participation in Google for Startups Founders Academy, a four-month program that helps Black and Latinx founders learn skills to grow their revenues and obtain access to capital. The program included sales training which King credits with helping her startup scale.
Not long after completing that milestone, King was awarded as one of 50 recipients of the 2021 Google for Startups Black Founders Fund, earning $100,000 in non-dilutive capital along with Google Cloud credits, Google.org Ads, and ten weeks of hands-on support to help her startup grow. The Black Founders Fund brings the best of Google’s programs, people, and technology to Black founders, while fostering a robust community of support and innovation among high potential, Black-led, Seed to Series A tech startups based in North America.
“The Google for Startups Black Founders Fund has been a really amazing experience. I loved the beginning sales training and breaking down the process of how I should approach my meetings,” said King. “For me to have that framework going into my meetings with the JHL who provided that million–was major.”
From startup life to big box retailers
FundBlackFounders’ largest campaign to date raised $100,000 in working capital for Chantel Calloway, the founder and CEO of Rhyme Antics, a breakout hip-hop inspired kids’ board game and made history last year as the first Black-owned game to be carried in the toy aisles of Walmart and Target.
To make their funding case and drive potential investors to the FundBlackFounders site, King and Calloway appeared together on The Breakfast Club, a massively popular NYC radio show with a morning drivetime audience of 8 million largely Black and Latino listeners. Co-host DJ Envy asked the gamemaker, “When you do Target and Walmart and these stores, and they say ‘Give me 100,000 games,’ now how you do that?”
“I have to be able to supply that demand immediately. Now that I am in a big box retailer, I need to sustain that success,” said Chantel Calloway on the show. “Yes, there’s partnerships, or you can take out loans, but for someone like me, an entrepreneur who has bootstrapped from the bottom up, I have put my personal credit on the line to fund the business. Black entrepreneurs do not have the access to the capital that white entrepreneurs necessarily do. I used to wonder why more Black-owned brands are not in these stores. Now I know why. It’s because Black-owned businesses do not have the working capital to support the relationship.”
In just days, 554 crowdfunders on FundBlackFounders met Rhyme Antics’ 100K goal–with roughly half of the contributors investing just $20. For King, that’s proof of concept that culturally relevant, targeted crowdfunding can effectively provide the equivalents of pre-seed capital and friends and family funding to emerging Black startups.
“Crowdfunding is an answer for us. When we do group economics, and we all come together, we can all make sure Chantel [Rhyme Antics’ CEO] stays on the shelves. No one understands the magnitude of that,” said King. “She is on the shelves with Mattel and other huge businesses. They have unlimited resources, and this is what she is competing with. Our community and everyone who is socially conscious, we can all come together and help her stay there.”
Why FundBlackFunders never says no (but always provides coaching)
According to King, FundBlackFunders has never turned down an applicant–though that’s far from an open door policy. King looks at five metrics for evaluating FBF’s featured startups. These metrics include:
- Both the Founder & Business have a digital presence
- First version of product or MVP in market
- Founder has a clear vision and launch strategy
- Founder is making traction with limited resources ie. has some initial customer feedback
- Founder is leveraging customer data/research to guide decision making
First-time applicants to the crowdfunding must first take a cheeky, online quiz – ”Let us help you make sure you're ready to secure the bag”– with survey questions that suggest FundBlackFounders’ coaching curriculum (incentivizing donors, campaign strategies, video marketing). One test question, in particular, serves as a well-worded litmus test for would-be entrepreneurs: Are you good at tracking down people who are willing to spend money on your services or products?
Measuring what matters: How a Google approach shapes the crowdfunding platform
Through mentorship and support from the Google for Startups Black Founders Fund, King learned to push the ambitions and fastrack the goals of her startup using OKRs (Objectives and Key Results), a business methodology widely practiced within Google.
“That goal-setting process is helping me roll out a better quarterly strategy, tracking metrics that matter and in turn will help me send better investor updates,” said King. “I also improved my internal operations to set up a solid foundation that will help my business scale.”
In addition to the weekly training on sales, scaling, and business infrastructure, King experienced a supportive community that included fireside chats with Black founders, as well as therapy sessions where founders could address the stress and loneliness involved in being a startup founder.
“Therapy. The fact that there was this intentionality around understanding what Black entrepreneurs are going through while building our businesses, that was key,” said King. “ I applied a lot of it into my business, to the point that I want to figure out giving therapy through our platform, too.”
While FundBlackFounders’ crowdfunding platform focuses on recruiting potential investors, King found the accelerator as a place to step outside the grind of finding funding and develop a fleshed-out, long-term version of FundBlackFounders.
As FundBlackFounders continues to grow, King continues to evolve the platform with wraparound startup business services that could put BIPOC entrepreneurs on equal footing. One question that preoccupies King in her ongoing development of the platform is asking “What does pre-seed capital look like for Black entrepreneurs in a country with a long history of suppressing generational Black wealth?“
After all, FundBlackFounders has its early origins in a 2019 business meeting King took with an angel investor, who bluntly asked her, “If you can't raise a friends and family round, what does that say about you?” King has never forgotten how hollow that inquiry rang.
Three years later, King can answer that question with a platform, a startup, and the secured capital to advance her vision. “When you see Black entrepreneurs, right now, their journey, it's really unrealistic expectations that are placed on them and their process, right?” said King. “So if we can change this and make it acceptable of how they're going to do it and make the starting point equal, right, then the world is going to have more diverse founders, and more diverse founders build more diverse solutions, right?”
To learn how you can tap into your crowd to find funding for your business, check out this minicourse curated by Fund Black Founders in the free Google Primer app.