Deals are big and the venture capital dollars are everywhere!

…except for women and Black founders

Photo of Janine Sickmeyer and Brandon Brooks, GPs of Overlooked Ventures

Let’s be real for a minute. It’s been well over a year since companies and venture capitalists pledged to fund diverse founders and we’re not even CLOSE to making change 😒.

According to a recent Crunchbase report, Black founders received only 1.2% of the $137 billion invested in U.S startups in the first half of 2021, and women-only companies saw only 2.3% of venture capital dollars. Yes, you read that right. Let it sink in…

  • 1.2% went to Black founded companies
  • 2.3% went to women-led startups

Of a record-breaking $137 billion dollars in the U.S for the first half of 2021.

*screams into a void*

Ok, moving on… We all know how to change these numbers. The more Black investors writing checks, the more investment in Black entrepreneurs. The more women investors writing checks, the more investment in women entrepreneurs. You get the idea.

Sure, we’ve seen great strides from companies like Google and Softbank, and our peers at Harlem Capital, Collab Capital, Backstage Capital, and so many other firms that continue to prioritize diversity. While we celebrate the work that has already been done (yay, thank you! 🎉), we also need to acknowledge that we need to do more. We need more support, more opportunities, and more capital for Black, Latinx, and entrepreneurs who are a part of historically ignored groups.

When my partner, Brandon Brooks, and I set out to start Overlooked Ventures, we had big dreams of changing venture capital and access for all founders. We committed to being more transparent, founder-friendly, and prioritizing diversity internally and in our portfolio. As emerging fund managers (EFMs), we kept these commitments at the forefront while making decisions. That’s what it takes to make change! Diversity shouldn’t be an afterthought.

We started Overlooked Ventures to put money into the hands of founders who have been historically ignored. Why, you ask? Simply put, overlooked founders have higher returns. It’s proven.

  • Morgan Stanley says VCs are leaving more than $4 trillion on the table by not investing in diverse founders
  • Companies with a female founder performed 63% better than investments with all-male founded teams, according to First Round Capital

Our thesis is simple: Invest in overlooked founders.

To support these founders, we are raising for our ambitious $50M Fund I*. Over the last five months, my business partner and I have seen 1,000 startups apply through our website - ONE THOUSAND STARTUPS! 💥

These founders believe in us as a firm and want us to invest in their companies because although we don’t have a lot of venture capital experience (yet). we do know what it’s like to startup and build a company from scratch and that is a value-add no matter how you slice it. We have spent years in the trenches of startups and new companies, and have amazing connections and networks within the space. The benefit is that now we can roll up our sleeves and make a difference for these portfolio companies.

When it comes to transparency and diversity in VC, there are so many people who talk about making a change in venture but then just keep going the same way with no action behind their obligatory D&I statements. I got tired of the lip service and status quo. A year ago, I published a piece about the continued lack of diversity in tech, calling for companies and VCs to follow through with their BLM pledges and to be transparent about diversity stats in their funds and businesses.

Now that I’m on the other side of the table as a venture capitalist, it’s my turn to put action behind my words and I am proud of the progress that my fund Overlooked Ventures has made in the last five months.

With five investments made so far into historically ignored founders, and millions of dollars committed to Fund I, now is a great time for me to share Overlooked Ventures’ progress and diversity stats openly.

But first, let’s talk about the process

Overlooked Ventures doesn’t offer special treatment. We don’t rely on warm intros (just like Del Johnson shares in this post) or existing networks for founders. Every founder who wants to apply for funding goes through the same application and review process. Overlooked Ventures has an open application form on our website so that everyone has the ability to apply and an equal opportunity.

Review Process

Brandon and I review each submission independently and then decided to pass or meet with the founder(s). Each application goes into one of three buckets: Meeting / Conflicted / Pass. If Brandon and I are conflicted, we deliberate together and come to a decision. The other two sound self-explanatory, but our team makes an effort to go beyond industry standards:

  1. Meeting: When a startup falls into this category, we schedule a meeting with the founder(s) as soon as we can. After the meeting, we make it a point to be quick with our decision, and often we come to a decision within five days, sometimes sooner, to be sure not to waste the founder’s precious time.
  2. Pass: If we decide to politely pass, we send an email with candid feedback that we personally take time to write.

Now to the Stats

In the past five months, we have received 1,000 submissions entirely inbound, all coming from social media, press, and word of mouth. A majority of our applicants, 82%, self-elected as Overlooked. That’s 820 of our 1,000 applicants. From this percentage alone, it’s clear that there is NOT a pipeline problem.

a graphic showing that out of the 1,000 applications, 82% of those were self-classified as “overlooked”

As a VC, if you aren’t willing to invest in diverse candidates, you are doing a disservice to not only the startup ecosystem, and these founders, but you are also doing a disservice to your limited partners.

Another common excuse the VC industry has for not having a diverse portfolio of investments is that diverse founders don’t have a viable product or enough traction. Over 67% of Overlooked Ventures applicants thus far have fully built products. In the graphic below, you can see the breakdown of the product stage our applicants are in.

a graphic showing that over 67% of applicants have fully built products

And lastly, great founders are building amazing products all over. Over 96% of Overlooked Ventures applicants were outside of the San Francisco Bay Area. Look outside the major tech hubs and you’ll find big opportunities for companies struggling to find capital.

a graphic showing that 96% of applicants came from outside the Bay Area and 80% are classified as US Based

The Team

Overlooked Ventures is a team made up of startup people, analysts, marketers, and community-oriented individuals who are passionate about standing behind and shining the spotlight on diverse founders. When Brandon and I were building the Overlooked Ventures’ team, we knew an important part of authentically investing in and supporting overlooked individuals starts with a diverse team. A powerful reminder from Katrina Kibben, that diversity, and inclusion are principles, not just items on a checklist. You need to start and BUILD with diversity from the beginning, not the end.

Meet our team of 11. Many of whom are remote, freelancers, and founders themselves, working at Overlooked because they LOVE startups and want to work at a VC firm while building their companies.

  • 3 Black women
  • 2 Black men
  • 2 White women
  • 1 Indian woman
  • 1 Latina
  • 1 Asian woman
  • 1 White man
a few of the Overlooked Ventures team members in Columbus at an event

I am proud of who Overlooked Ventures is and what we’ve been able to do to support historically disenfranchised founders. However, it’s important to us to not act as voices of the voiceless.

Instead, we are giving the mic to people by opening our doors and giving them access and opportunities beyond capital. And we know that, as investors, we get the lucky opportunity to join their journey, not the other way around.

To change the stats, we need to KNOW the stats. Everyone in the startup ecosystem should be transparent about the diversity stats in their funds and businesses and make efforts to change the stats by hiring and wiring to Black, Latinx, Indigenous, Women, and people of color.

And just like Chris Sacca said in this recent Twenty Minute VC podcast episode, hire diverse candidates and back diverse founders. Don’t just invest because you feel bad or guilty because of the wealth gap and the hundreds of years of systemic discrimination, but also because it’s a smart investment decision because diverse teams outperform monoculture.

We’re just getting started

If you’re an LP who wants to be a pioneer on this journey with Overlooked Ventures, apply here and visit our site at overlookedventures.com to learn more about who we are and our mission.

*We have filed as a 506(c), which allows us to market and raise publicly.

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Janine Sickmeyer

Janine Sickmeyer

Founding Partner at Overlooked Ventures