We at Backstage Capital celebrated our 4-year anniversary on September 15, and it made me reminisce and reflect on what it has taken to get here, our hits and misses, and everything in between. One of the things I often get asked is, “Are there any companies you regret not investing in?”
This question is a hard answer, because I know what the person means when they ask it. They’re saying, “Is there a company who you had a chance to invest in but passed on, only for them to go on and do well and you later regret it?” Well the answer to that is no! I can confidently say there has never been a company I can think of where I had the opportunity, flatly said no, and then it did great. And any company led by an underrepresented, underestimated founder that does well is good for the ecosystem at large, so I’m a champion on the sidelines.
However there’s a different take on this: the companies we had to turn down because I or we didn’t have enough money to invest in, that then went on to do well. Now those, those sting!
I often say this, but rarely do I get to so clearly convey what I mean as I will right now. Today I came across an email from my sent box from more than 3 years ago that was addressed to 10–15 companies I had in what I used to call my ‘queue’ for investment. These were companies I’d spent time working with, doing due diligence on, advising in some cases, and trying to get investors with the means to back.
Below is that email in full, along with a list of companies that were cc’d. If this doesn’t illustrate why Backstage should have at *least* an extra 0 behind the amount we’ve raised and deployed, I don’t know what does.
July 15, 2016
Long (confidential) post but wanted to update you!
If you’re receiving this, you’re one of a few founders that I’ve been engaging with and have shown interest in investing in your company. (I’m also sending this to current portfolio headliners bc I want us all to be on the same page). I wanted to update you on Backstage bc I have been heads down fundraising, and weeks have gone by in a blink of an eye. I know some of you have been waiting,…and waiting..and waiting… :)
As you know, I launched Backstage so that I could help “change the face” of tech investing and do deliberate pattern match: with a black gay woman on the check-writing side of the table. I knew it wouldn’t be easy — it took 2 solid years before I received my first LP check in Sept 2015, so I know what an uphill climb looks and feels like. I was prepared. But I have to say that its been tough. Really tough. You all can probably relate, right?
Look, we have an AMAZING lineup of LPs and have invested in 9 amazing companies in as many months! That’s amazing and I’m so proud. I had one family office recently tell me that they’ve “never” seen an LP list as impressive as Backstage’s. Investors in the fund include Stewart Butterfield, Chris Sacca, Marc Andreessen, Brad Feld, Marc Andreessen, Heather Hiles, and a handful more. I’m very honored and humbled.
But there’s more work to do. I have lots of plans that I will reveal to you soon that will help support our portfolio of headliners even more. And there’s lots more raising to do to reach our modest goals. Because of SEC regulations I can’t get into details with you here, but I will say that we invest $25k-$100k into companies (usually 1% of the perceived valuation) and we want to invest in 100 companies by the end of 2018 (to truly help “seed the ecosystem” as I said in my blog post “Dear White Venture Capitalists”). So you can do the math on how much we’ve raised so far and the size fund we’d need to even do half of our goal. It’s the size of a large seed or a normal Series A round. It’s obtainable. We can get there and we will!
Transparency is hugely important to me. I don’t want anyone thinking that I’m stringing you along or making promises for the sake of hype or aesthetics. The truth is that we’ve had a lot of false starts. And in order to attract investors to the fund, we have to have strong deal flow and be a working machine. It’s very catch 22. The past 3 months especially have been tough, but we have lots circling now, and we have until September to raise the rest of the fund. So my hope is that each week until mid-September, we can bring in new funding bit by bit and deploy it in a savvy and discerning manner. The goal is to complete diligence in your company as soon as possible so as not to be any more of a distraction.
In the meantime I will continue to try to help as much as I can with introductions when appropriate, answering the phone at all hours of the day, and offering my bowling skills to anyone who needs to vent. I receive approx 100 emails per day and try to keep up, but if its taking me a while to get back to you, forgive the limited hours in the day and not the heart. Believe me, if you’re receiving this email, your name and the name of your company is written on countless papers and dry erase boards around my live/work space in WeHo! :) I have NOT forgotten you and will be in touch.
I’ve found recently that the BEST investor leads have not been from big investors or strangers, but from FOUNDERS…I’ve helped or worked with in the past. So if you know of any investor in your round, or network…you think would dig what we’re doing at Backstage, and who writes $50k-$250k checks, please don’t hesitate to introduce us via email. I’ll take it from there.
Also helps to RT @ARLANwashere and @Backstage_Cap posts to spread the word. We can’t blatantly advertise our raise online (and neither can you for us) due to serious and important SEC regulations, but we can bring attention to the work we’re doing on the surface, and build our network, which organically leads to investors being interested.
I know that in a few weeks this will be a different story, and I look forward to it. You guys are amazing, and I want to support you the best I can. I’m honored that you’re letting me be part of your journey. I won’t give up. “
Some of the companies cc’d on that email?
Uncharted — Jessica has been on the cover of Forbes Africa 2x, was invested in by Disney in 2018, and wants to be the first unicorn to have launched out of Harlem. We thankfully invested in a subsequent round a few months after this email, but of course at a much higher valuation, so there was and is crazy value left on the table.
PlayVS — Delane has raised a total of $96mil including $50mil announced this month, Sept 18. I was around during the first iteration of PlayVS as Delane was also helping me link with LPs, and was asking people to invest in him that faithful SXSW where he met Peter Pham and launched the PlayVS iteration we know today. A back of napkin prediction is that my pre-Seed investment would have been worth 50–100x today.
TomboyX — They raised nearly $20mil in 2018 where several investors were bought out. I got a hold of the multiple and so I know that a $25k investment would have most likely returned our entire first fund.
Partpic — Jewel and I go way back and have helped each other for years. I was *sold* early. Jewel went on to masterfully sell Partpic to Amazon.
Bae — Another one. Acquired by (if)we top of 2017 at an unknown amount.
Blavity — Morgen and team raised $6.5mil Series A (with a Series B on the way I’m sure)+acquired a thriving travel brand and launched Afrotech, THE destination for the Black in tech community.
I’m over the moon about our current portfolio of badass Backstage headliners (!!) and can think of at least 8 companies in it off the top of my head that will most likely return entire funds for us over the next few years. And I mean it with all of my heart and soul when I say I that am cheering for everyone in the ecoystem from the sidelines, whether I am invested literally or not. But I think the founders of the companies listed above would be the first to say that it’s a shame Backstage and so many funds led by underrepresented managers have had so much trouble raising capital in general. Not to mention the companies in our portfolio who have value that is being left on the table every day by the lack of follow-on funding from larger funds. So whether it’s through Backstage or the hundreds of investors who will see this, these founders are underestimated and should have your FULL attention by now. Institutionals, family offices, angels, VC funds…invest in these founders and you’ll invest in the future. See more about them at www.BackstageCapital.com/headliners
Good news is, there’s still time:)
P.S. Backstage is going on tour in 2020! Check out our announcement for more info.