Karen Swyszcz 0:00
You’re listening to The Bacon Bits ‘n’ Bytes Podcast. I’m your host Karen Swyszcz. This is the podcast where a bit of business and a byte of technology come together.
I first found out about Arlan Hamilton through an interview on the Makinthebacon blog with Sophia Ruffalo of femmebought. It’s a great interview to read, by the way, so go check it out. In the interview, she had mentioned Arlan Hamilton as being one of three women investor entrepreneurs that she admires. So naturally, of course, I had to go check out what Arlan was about. And her story is nothing short of incredible. Arlan Hamilton built a venture capital fund from the ground up while homeless.
She’s the founder and managing partner of Backstage Capital – A fund that is dedicated to minimizing funding disparities in tech. By investing in high potential founders who are people of colour women and/or LGBTQ. Started from scratch in 2015, Backstage has now raised more than 10 million and invested in more than 130 startup companies led by underestimated founders. In 2018 Arlan co-founded Backstage Studio, which launched four accelerator programs for underestimated founders in Detroit, Los Angeles, Philadelphia and London. Arlan was featured on the cover of Fast Company magazine in October 2018 as the first black woman, non-celebrity to do so. She also recently released her new book, It’s About Damn Time, which I quickly added to my must-read list while I was preparing for this interview. I’ve listened to this episode several times already and each time I get so fired up and think yeah, it’s about damn time, and I think you’ll get fired up from it too.
Welcome to another episode of The Bacon Bits ‘n’ Bytes Podcast. I am super excited today to have a very special guest on the show Arlan Hamilton, Founder and Managing Partner of Backstage Capital, a fund that is dedicated to minimizing fund disparities in tech by investing in high potential founders who are people of colour, women and/or LGBTQ. Her book It’s About Damn Time, will be releasing on May 5. Welcome to the show, Arlan and congrats on your book launching.
Arlan Hamilton 2:24
Oh, thank you so much. I really appreciate it.
Karen Swyszcz 2:27
Yeah, no problem. And so I feel this interview was meant to be because last year I actually like made a big, hairy audacious goal to want to become a VC myself in the near future and invest in underrepresented communities. So I’m really excited to chat with you.
Arlan Hamilton 2:40
Oh, that’s so cool.
Karen Swyszcz 2:42
So what made you want to become a venture capitalist in the first place? Because it’s like some secret club and I don’t think it’s something that a lot of people aspire to be.
Arlan Hamilton 2:50
(laughs) Yeah, I definitely didn’t aspire to be it for most of my life. And really, I am using the asset class and the capital itself as a tool more than anything. It’s not something that I woke up and said, Oh, I want to be a venture capitalist. But I think there’s a lot of power and disrupting that buzzword but disrupting these institutions that have been around for a long time. And, and it’s also is in line with the type of funding that I wanted to get into the hands of more underrepresented underestimated people. This small sliver relatively of private equity, which is that small sliver is about 130 billion per year.
Karen Swyszcz 3:30
Mm-hmm. You’re a self-taught venture capitalist. So you don’t have a background in finance. So what were some of the resources that you would recommend to people who are looking to get into the scene?
Arlan Hamilton 3:40
Oh, I love that question. Yeah, I definitely came from a different background and I’m a gay black woman. I was in Texas when I first started thinking about this and I was from there and was broke and didn’t have any connections to Silicon Valley as such, but I started building those connections just through email and social platforms and just kind of adding value and giving an opinion.
I think that’s really important thing that people skip sometimes is that sort of developing a voice, and a presence that people can not only relate to but can refer to when you’re there, it’s all part of branding and then building a reputation on top of that.
And then as far as resources, I would listen to every podcast possible that I could and back then, like, five, six years ago, it really, I mean, seven, eight years ago, it really wasn’t a lot of there weren’t a lot of podcasts about it. But there were things like the Berkley Venture Capital School that was on I remember is on Apple iTunes and I downloaded that I think it was free. And I listened to a lot of audiobooks. So Brad Feld’s books really helped me and in fact, I just spoke to him today on email, because he is an investor in one of our funds now. Before he even knew me or before we even met, he was teaching me by his books. His Venture Deals 101 and his Startup Communities books and things like that. And so I read a lot, I read a ton. And even if I couldn’t afford the books all at once, at the same time, I would go and read them or I would, you know, save up for them. And then I kept up with trades. I mean, there are things like TechCrunch and VentureBeat and all that Fortune, Forbes Inc, all of those are free, free to us. They have a different business model.
And then you have things like The Plug that Sherrell Dorsey does or the information that you pay. I think both of them are like $100 a year. And you get all sorts of insider information and these deep-dive reports on and those I think are just like really invaluable when it comes to someone who wants to build either a venture capital fund or any kind of investment fund.
Karen Swyszcz 5:46
Thanks so much for sharing those resources. I’ll have to check them out. So one thing I was curious to know and if you don’t mind me asking what was it like being homeless and building Backstage Capital from scratch?
Arlan Hamilton 6:00
Wasn’t easy. It wasn’t easy. It was difficult. It was frustrating, demoralizing in some cases. But it was worth it in the end because I was able to go past that and push past it and think about the greater good of what was being built. And I had a lot of help along the way that started to come together. And I always want to tip a hat to that. I talked about all of that in the book, including the part about not being self-made.
Karen Swyszcz 6:33
And how did you end up like getting that first contact in Silicon Valley? I can imagine you know, the amount of emails you’ve had to send the amount of meetings and the amount of no’s or no responses you received.
Arlan Hamilton 6:43
It took years. I probably started raising in earnest in 2011 or 12. And I got my first 25,000 in the Fall of 2015. And zero before then, and so it took years of staying the course and reaching out to people and being very intentional and how you reach out and like talking to them directly and not necessarily as you know, just throwing whatever against the wall and seeing what sticks. More so like doing the research of every single person and finding out what value they might get from you, and explaining that articulating that to them. And so it was like, it’s not an easy answer.
It’s not a pill that you take, it’s very much so going into the gym as it were day after day after day and working on it. And then I moved myself a little bit further when things were getting a little stagnant. And I got myself into a course at Stanford that was a two-week course on Venture Capital and I was the poorest person there. There’s no one else who was poor there. I was poor. But I just kind of looked around and took whatever I could in. And I did more. So I mean, I learned a lot I really did. But it was more about what I observed and how I took the opportunity and ran with it and established relationships that the person that I’m that made, the first investment was in that class, and it took her more than three months to say yes, though. So it wasn’t like, Okay, got this great thing. I’m in the class now I’m here. And then where’s my check? Yeah, you have to really establish a long term and it’s uncomfortable, and it challenges you. And it definitely kind of humbles you.
But if you really believe in what you’re doing, and it’s really meant, not just meant to be, but it’s supposed to exist in the world, you’re going to find a way and I try to do no harm. But other than that, I just try to go for it.
Karen Swyszcz 8:30
Nice. I always like to think of, you know, Nike’s motto, Just Do It.
Arlan Hamilton 8:34
Yeah, as long as you’re doing no harm. And you know, if you know why you’re doing something, I say go for it.
Karen Swyszcz 8:41
Mm-hmm. And I can only imagine how many startups pitch to you. So in addition to the qualifications that the founder would be either a woman, a person of colour or someone who identifies as LGBTQ or all three, what other factors help you decide on who Backstage Capital should invest in?
Arlan Hamilton 9:00
We look at a lot of things. We have several people, either who are currently working with us as partners or associates, or people have worked with us in the past who are scouts for us and representatives, we have several people across the country in some other countries that look for multiple things and have different tastes. So the first thing to do is if you’re a company, you know, don’t only focus on me because I’m only going to be able to see so many companies and have my opinion about so many companies.
What you might do is look at our website backstagecapital.com. Look at some of our current and our historic team members and see, learn a little bit about each one and say, well, they might like what I’m doing. This seems interesting and go to our portfolio page, click on something that looks interesting to you. See if you can reach out to that founder and don’t reach out to 100 of them. Reach out to maybe one or two and say hey, what was your experience like with Backstage and how do you think, how did you get their attention and what are you looking at but to go back to your initial direct question, I’m looking for personally all the things in a founder, sure, not just their profile, but their ability, I say you need to be hungry, not thirsty, you need to be willing to do what we talked about before, which is, go for it. But you also can’t be desperate because I’ve been both, and I know which one is more effective. And so it’s about seeing if someone is able to take constructive criticism. If so, how someone iterates on your feedback and on your ideas. It’s about what they’re working on, to begin with, is it life-changing? Or is it they say, Is it a vitamin or is it a pill? You know, is it a medicine or a vitamin? Is it something we need or something that’s nice to have?
And I like things that are world-changing and life-changing. They don’t have to be billion-dollar ideas. I mean, it’s a little different than what most venture capitalists will say to you. They don’t have to be a billion-dollar idea, but it does need to be something that shifts the energy. And one way of measuring that for me has been, I asked myself if I’m interested, I say If I had 10 years, could I create this myself. And if I feel like I could create it myself, it’s not bold enough. And that’s where I am today in 2020, or five years ago, I would have had the same thing. So you evolve as an investor yourself. But that’s where I am today. And then there are people on the team, we’re looking at certain verticals, and certain metrics and certain stages and certain things and I’m still looking at the person and looking at the people on the team and that and what you’re able to put together with very little resources.
Karen Swyszcz 11:32
I like how you compared it to like medicine and vitamins like, do I really need it? Or is it nice to have?
Arlan Hamilton 11:40
Yeah, I’ve heard that. And it’s a great way of thinking about it. And a lot of times we think, you know, well, let me just start any old company. Let me just start something that I’d be good at, or that’s least bit interesting, but you got to really think about especially if you’re younger, you got to really think about what you want to be working on for like seven to 10 years do you really want to be working on this thing for 7-10 years? Or do you want to wait and find something else? Do you want to get experience elsewhere? First, do you want to start something and learn, you know, be a little bit more humble and work on other things for someone else and kind of learn the ropes and then go, there’s a lot of ways you can look at it.
Karen Swyszcz 12:15
So I’d like to address the current state, we’re in and ask you, in your own opinion, how has the global pandemic affected the VC landscape?
Arlan Hamilton 12:24
Yeah, I think that what I’m seeing I’m observing is without looking at trends, because I don’t ever look at trends no matter what’s going on. But just what I’ve observed is that there is still dry powder, there’s still money flowing in venture capital, it didn’t just dry up automatically, because a lot of people were either already sitting on capital, or they were, they had just raised which happened to a lot of funds that I heard about a lot of that, let’s call it two thirds. It’s not an exact but let’s call it that. A lot of that is earmarked for follow on investing into companies that they’ve already invested in. So that’s not going to be out in the world. But it is interesting because they are going to be able to shore up those investments that they already made. And you really want that in an investor, you want an investor who is willing to come back to you, even if they can’t, like Backstage doesn’t have a lot of follow on capital, we wish we did. And if we did, we’d go into that follow on but you want to have that. So that’s not a bad thing. The other third or so again, pulling a number but the other third or so is going to go into new investments. And so people are having Zoom calls and Google Hangout calls and Skype calls, and they’re meeting people for the first time. Investors are meeting founders for the first time, virtually, and there are deals happening. And so right now, you’re only going to get a deal most likely if you’ve already been in conversation with someone, but you can start conversation that maybe three to six months out, yield something so I would just be very realistic.
Look at things with a sober view. And in the meantime, if I’m not able to raise right now, I would look at alternative methods. I look at crowd equity funding, which is going to Republic or going to wefunder etc, I would look at bootstrapping. I would look at angels who may not have the same connections to these highly competitive deals. So they may be looking for ways that they can stay in the game. Maybe they’re not spending as much as they thought they would. But they’re spending some and they’re wanting to be part of it. Still, I would look at those different ways. And I talk about a lot of this. I have a fundraising course at itsaboutdamntime.com, which is also where you can find my book, and it talks about this into great detail.
Karen Swyszcz 14:33
And unfortunately, like nobody is immune to the situation. It’s been affecting people in so many different ways. And I’d like to know how are you personally handling the situation? Do you have anything like any hobbies that you do just to help like cope? Do you meditate?
Arlan Hamilton 14:48
No, I don’t meditate. What I do is try to be like a creature of habit. It helps me soothe a little bit, self-soothe. I also have been self quarantined for more than eight weeks. And in a time where I’m not sure when this is playing, but in a time where most people were at the most like six weeks or four, and I haven’t been outside, but once and for 30 minutes to pick up a prescription. So it’s been almost like a meditation in that I’ve had to really find strength in different places, and I’m with my wife, which is very helpful. Most of my hobbies are around photography and just kind of learning new things. And so I have been taking more online courses, and is why I started my own really to be honest. Like I started taking more online courses because I was like, I don’t want to just be like a wasted day. It just can’t be and I was working so much and so I start taking them and I was like, Oh, you know what, I want to have one because this is fun. So I’ve been doing that. I’ve been trying to help other people as much as possible. That’s part of my routine is that helps me again, feel calmer and feel safer. And also the thing that helps me feel safer too and soothes me a lot is listening to a lot of podcasts about Coronavirus. Not so much that I’m like freaking myself out. But like, you know how when you’re in an airplane, and if you’re afraid of flying or even if you’re not, if you kind of like listen to that channel, there’s a channel that lets you sometimes listen to what the pilot is saying to the ground, or says like, you know, we’re gonna, we’re gonna dip by 5000 feet, and we’re gonna do this, you know, before what’s going to happen, so it feels a little bit better and things aren’t the turbulence isn’t so scary. That’s what I do with listening to podcasts about it. And Rachel Maddow, because it helps me like say, Okay, today I can handle this today. Today, I have enough information.
Karen Swyszcz 16:35
So I’d like to ask some questions about your book. And what made you decide to write the book, It’s About Damn Time and I love the title too, by the way.
Arlan Hamilton 16:43
Thank you. Yeah, I wanted there to be a place where people could go at an accessible price point where they could go and find most of my, the highlights of the things that I’ve learned and the things that I’ve experienced so they could be inspired and also they could have some tactical and practical tools to use to go and do the thing they want to do. Maybe they’ve been sitting on an idea, or they have a company they’ve been working on for a while, and they’re just kind of stuck. And now of course, I didn’t write it with the pandemic in mind. But of course, it applies so much more even today, and just want to give people some hope and optimism, but also, I don’t want to do one without the other, I don’t want to send you out with a bunch of optimism without any way of getting there. And I also didn’t want it to be this dry book that was just like, this is how you write an email. You know, so I have some, there’s some like really personal stories in there that that are kind of funny now. They weren’t funny, then but they’re kind of funny. Like, this is how I messed up. And this is what happened. And this is that and it just kind of takes you on this journey to feeling. Like people who have read it in advance say that they feel very empowered at the end of it. They feel like wow, I can go do whatever. I can go do anything that I want to and I’m going to do the thing that I’ve been wanting to do for years.
Karen Swyszcz 17:53
I feel like honestly, it’s gonna be trending as a hashtag, like what are you waiting for, #itsaboutdamntime.
Arlan Hamilton 17:58
Oh, that’s cool.
Karen Swyszcz 18:01
I’ve co-authored a couple of books myself. And I’m curious to know, what was the process like because you know, it’s very creative and you’re making yourself vulnerable. Did you find it easy or difficult to share your story and why?
Arlan Hamilton 18:12
I thought it was easy to share my story to be transparent, to share that I’ve been sharing my life with the world for a long time. So that was easy for me. But organizing it wasn’t as easy. And so that’s I had a co-writer, Rachel Nelson, who is featured on the cover of the book as well. And I’ve known her for 15 years or so. She’s a really good friend of mine. And she helped me organize things because I had all these different stories and I had all these different things I wanted to get across. But together, we were able to say, Okay, what are the sections we can talk about? How does this you know, how can we get this across the best way? And so the hard part for me was just the organizing. And then also, I have two companies. And when I started writing the book, I had 45 employees and consultants that worked for me and with me in two different countries, and 100 plus portfolio companies that we worked with. And so it was just like finding the time like that was because I didn’t want it to be a ghostwritten book. I just have no interest in that. So I wanted to write the book. And so that part was hard, too. But we ended up funny enough, even though it was hard to find time for it, we ended up turning it in early. I guess when you’re passionate about something. That’s fun. It turns out that way.
Karen Swyszcz 19:27
I think we have time for one last question.
Arlan Hamilton 19:29
Okay.
Karen Swyszcz 19:29
What advice would you give to someone who is looking to follow in your footsteps to become a VC?
Arlan Hamilton 19:35
Honestly, don’t do it to become just a venture capitalist. Do it for a different reason. It doesn’t have to be altruistic. It doesn’t have to be a mission-driven thing but have some purpose behind it rather than just the gig itself. Because the gig itself whether you start the company, the fund yourself and from scratch like I did, or you have to work your way up for years as into till you become a partner at a fund. It’s gonna be tough. It’s not glamorous in any way. It’s like becoming a doctor or becoming a lawyer like you’re gonna have to go through your paces. So you really need to have something bigger behind that, that even if you didn’t become a venture capitalist as such, you could take the same thesis and use it in a different way. I would say definitely do that. And I would say, sincerely, I would say pick up my book, It’s About Damn Time, because I just kind of laid it out. I don’t know if anybody else in a book has laid out how to build a fund from scratch, like I have. There’s just I don’t know, another book that exists like mine. A lot of books are like “This is how you build a fund.” And you know, you start with your Ivy League education, and then you start with your dad’s connections, you know, and it’s like, this is a very different story. Very different story. There’s, I’ll just say this. There’s talk of lesbian drama at IHOP. I mean, do you have that in Brad Feld’s book? I don’t think so. So, I would say for real for real, check it out. See if you even want to start a fund after you read it, and then follow what drives you and makes you happy because we only get a few years on this planet. So let’s, let’s make the most of it.
Karen Swyszcz 20:57
I’m really excited for it. Thank you again so much for being on the show and looking forward to reading the book. And hopefully the launch goes well.
Arlan Hamilton 21:05
Yeah, I hope so. itsaboutdamntime.com is where you can pick up the book, the audio version or the ebook if you want it right away.
Karen Swyszcz 21:13
All right. Thanks everyone again for tuning in and stay tuned for more episodes. Ciao for now.
Transcribed by https://otter.ai
This is so inspiring. Such bravery and dedication. Wow!