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The lead-off story itself was enough to give one pause.
Arlan Hamilton, a now-39-year-old Texas gal who in 2014 was on food stamps before coming to California and sleeping on airport floors because she was homeless, starts a venture capital fund and becomes a darling of the boys’ club investment community. But the pause? Mostly having to do with the unspoken narratives about what you believe is likely for a woman — never mind a gay Black woman — to be able to pull off without the pedigree that drives Sand Hill Road success stories. Specifically: a penis. Also, as the cartoon McGruff the Crime Dog sometimes suggests, “if something seems too good to be true, it probably is.”
Except in Hamilton’s case, it was true. She was homeless after she arrived to attend a Stanford program for budding venture-minded folks, just a music tour manager from Pearland, Texas, with zilch in the way of money or connections. And if the storyline was that she could not afford a place to live, it was probably just as true that she didn’t have the time to find one, because if Hamilton’s story is about anything, it seems to be about indefatigable will.
I can’t tell you how many times I’ve been given a no, only to find that a better, brighter, bigger yes was around the corner.
Despite there being half a dozen reasons Hamilton’s success wasn’t guaranteed, her time at Barnes & Noble reading books on how to start a fund paid off and, after four years in the trenches, Hamilton’s Backstage Capital invested in 100 startup companies. But there was a twist: The companies she funded were led not only by women but also by people of color and LGBTQ folks.
This is right about the time that the train of hype hit the rails and started rolling. Hard. Forbes, Fortune, Inc., Fast Company, Vanity Fair, fer chrissakes. It was a virtual feeding frenzy of folks drawn by both the heat and the light thrown off by Hamilton’s feel-good mission of giving the underserved but deserving a chance to Zuckerberg it up. Tonally correct for fin de Obama, and even more so in the time of Trump, Hamilton’s Backstage Capital venture fund raised $2 million last year with about $1 million in revenue — leaving Hamilton a long way from the floors at San Francisco International Airport.
But then something happened, and depending on your worldview, it was either a product of hubris (less likely) or the vision thing (as easy to catch in Silicon Valley as it is to catch the measles in Oregon). Hamilton set out at the end of 2018 to raise $36 million for a fund that would muscle up Backstage’s mission of getting capital to women, who in 2017 got only 2.7 percent of it, and to women of color, who only got less than 1 percent of it.
It was big, bad and bold. Everything seemed to be clicking and then, in the realm of unintended consequences, Backstage lost two anchor investors. And because when it rains, it pours, when Renault-Nissan-Mitsubishi Alliance CEO Carlos Ghosn was arrested in Japan, Backstage lost $5 million for an operations deal. Smelling the smoke, others who might have been inclined to give were just as inclined now to not give and Hamilton, a sage student of exactly where the bottom might be, got ahead of the story and did the tough but necessary thing of indefinitely suspending fundraising and laying people off.
Hamilton, for her part, is pivoting to Backstage Studio, an accelerator that’s generated almost $3 million from corporate sponsorships. “You still haven’t seen my potential, and I’m looking forward to showing you that,” she said in an audio clip to her investors.
And despite the press scuttlebutt concerning Backstage having been spread too thin, and a Valley that’s still searching for answers to how Elizabeth Holmes’ hucksterism deceived some of the best and the brightest, Hamilton’s optimism is believable. Her employees were all given severance packages and are being helped in finding new jobs.
Moreover, on Sand Hill Road, where some of the VC giants roam, as hard as it is to fathom for non-Valley dwellers, $36 million is really not that much. “Believe it or not,” says Gady Nemirovsky, general partner at Inspiration Ventures, “these days anything under $100 million is considered ‘Micro-VC.’ So yes, $36 million is small.”
And on Hamilton’s healthily active Twitter feed you can find a picture of her 70-year-old mother sitting in front of a wall at one of her launches. Emblazoned on the wall behind her smiling mom, Hamilton’s quote in deep purple says, “I can’t tell you how many times I’ve been given a no, only to find that a better, brighter, bigger yes was around the corner.”
Which is precisely where hope springs eternal.
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