In this episode of 20vc, host Harry Stebbings is joined by Arlen Hamilton, the trailblazing founder and managing partner of Backstage Capital, a seed investment fund that focuses on underrepresented founders. Hamilton shares her unconventional journey into venture capital, from her beginnings with no financial background to establishing a fund that has invested in over 100 companies, a feat achieved with limited resources but abundant determination. She also discusses her strategic approach to amplifying her mission and her intention to generate significant wealth over the next decade, aiming to return at least a billion dollars to investors. Hamilton emphasizes the importance of equal capital distribution and calls for LPs to invest in diverse managers, reflecting the demographics of those who contribute to their funds. Throughout the conversation, Hamilton's passion for nurturing talent and her commitment to catalyzing change in the venture ecosystem shines through, as she envisions a future where her work at Backstage Capital continues to disrupt and inspire.
"Joining me on 20 vc today, we have, you guessed it, Arlen Hamilton, founder and managing partner at Backstage Capital, the seed fund that's paved the way, investing exclusively in startups that are led by underrepresented founders."
The quote introduces Arlen Hamilton and the mission of Backstage Capital, highlighting its unique focus on underrepresented founders in the startup ecosystem.
"Around 30 is when I started seeing more and more about this place called Silicon Valley. This magical land called Silicon Valley. And it was mostly through, like, seeing stickers of Airbnb on Ashton Kutcher's laptop or hearing Justin Bieber talk about investing, or Ellen DeGeneres hearing through the grapevine in West Hollywood that she had been investing in startups."
Arlen's curiosity about Silicon Valley was piqued by observing celebrities' involvement in tech investments, which led her to explore the startup and venture capital world.
"I came across the statistic that 90% of venture capital and investment money into startups was going to white men. Now, I don't know if you know this, Harry, but I am not a white man. I am a black woman. I'm in the LGBTQ community. I am a gay woman. And I didn't see myself in those statistics."
This quote highlights the lack of diversity in venture capital funding and Arlen's realization that her identity did not align with the predominant demographic receiving investments. It was a pivotal moment that steered her towards her mission with Backstage Capital.
"I do what I call pattern matching for grit. I do the same thing that other investors do with the data that they are used to and the profiles that they're used to, and I just supply that to my lived experience."
Arlen Hamilton explains her unique approach to identifying promising founders by using her own experiences and insights to detect the qualities of grit and resilience that other investors might overlook.
"If you can find someone, which I often do, who has both at the same time, and then on top of that, they have something in their background, maybe they worked for their family, at their family company, washing dishes, but they watched their parents for ten or 20 years build something from nothing, something like that."
This quote illustrates the type of entrepreneurial background and experience that Arlen values, emphasizing real-world learning and the observation of business growth as formative experiences for potential founders.
"So when I pattern match, I'm looking across the table to see myself, are you hungry, not thirsty, as I call it."
This quote highlights Hamilton's approach to identifying founders with a strong drive and ambition, differentiating between mere eagerness ("thirsty") and a deeper, more authentic hunger for success.
"A lot of people may misconstrue what my intentions are, like, what my goals are, and why I'm doing the things that I'm doing."
This quote addresses the misunderstanding that can arise from Hamilton's public presence and the complexity of her long-term strategic goals.
"The first pillar was vision. The second was execution, and the third was amplification."
This quote succinctly outlines the foundational elements of Backstage Capital's strategy, emphasizing the importance of a clear vision, effective execution, and widespread amplification.
"But I say, is this going to make me look really good, but not have really any other outcomes for anybody else?"
This quote reveals Hamilton's altruistic approach to decision-making, prioritizing actions that benefit others over those that serve only to enhance her image.
"My relationship with money is that I don't have any reverence for it. It doesn't control me, it doesn't impress me. It is simply a tool."
This quote indicates Hamilton's pragmatic view of money, emphasizing its utility in achieving broader goals rather than its intrinsic value.
"I am proud of myself for many things."
This quote captures Hamilton's ability to recognize and celebrate her accomplishments, which serves as an inspiration for others to do the same.
"How did I get here? How did I go from sleeping on the floor of the airport to being able to just provide so much for so many different people?"
This quote reflects Arlen's moment of introspection and pride in her accomplishments, considering how far she's come in her life and career.
"We're here for what, 8100 years, if we're lucky. We have this finite amount of time. Hopefully we are good people."
Arlen muses on the brevity of life and the importance of being good people and making a positive impact during our time.
"What is the issue then with saying to yourself or maybe celebrating those small wins?"
Arlen challenges the notion that taking pride in one's achievements is boastful, advocating for the recognition of personal successes.
"Yes, they do hurt. Certain types hurt more than others."
Arlen confirms that negative comments can be hurtful, indicating that some criticisms are more impactful than others.
"Let me think about all the things that I've done... and then let me weigh that against this one person's opinion of me who most likely does not know me."
Arlen describes her coping mechanism of reflecting on her achievements to put criticism into perspective.
"I say, there's a lot of opinion about me. I am happy to hear that opinion from the person who has accomplished as much as I have or is doing the work that we're doing at backstage capital."
Arlen sets a standard for whose opinions she values, focusing on those who have similar achievements or understand the work she does.
"I have a goal for myself, to return at least a billion dollars in capital in the different ways that I do."
Arlen sets a clear financial goal for the next decade, demonstrating her ambition and commitment to her work.
"The fact is that the work that we do at backstage has changed the game in venture capital and will continue to do so."
Arlen expresses confidence in the lasting impact of Backstage Capital on the venture capital industry.
"We're still somehow black founders, Latinx founders, et cetera, are still put into this bucket of, like, us versus them other HR, charity, et cetera."
Arlen points out the problematic way in which minority founders are viewed in the venture capital industry.
"It's about capital being distributed equally and fairly based on demographics."
Arlen advocates for a more equitable distribution of venture capital that aligns with the demographics of the population.
"Don't come to me with crumbs when we came for the cake."
Arlen uses a metaphor to demand substantial investment in underrepresented founders, rather than token gestures.
"It's more like I don't have to have backstage in order for you to see me, I get to have backstage."
The quote reflects Arlen's perspective on her personal identity as distinct and independent from her venture, suggesting that her existence and worth are not conditional on her professional success.
"It has been one learning experience after the other... we've always been resource strapped... I've learned that I can't do everything. I can't be everything for everyone."
This quote summarizes the continuous learning process Arlen experienced while building Backstage Capital and the realization that as a leader, she must make decisions based on more than just compassion.
"Every few months, something else would hit us... it was, every single person had come to backstage as friends and family... I started thinking of backstage as less of a company... and more like a university where hopefully we are the stepping stone for you."
The quote reveals the emotional challenges of downsizing and Arlen's evolution in viewing her company as a developmental platform for her team, akin to a university.
"Right now, it's still 'What I Know For Sure' by Oprah... The hardest is managing my expectation and my vision with the lack of resources... Biggest misconception is that I am fame hungry... I think founders skip steps... I think that LPs should have mandates... I think Oprah's successful... Next five years, I think we're building our assets under management."
These quotes capture Arlen's responses during the quickfire round, providing insights into her influences, challenges, misconceptions about her, advice for founders, views on the venture ecosystem, her definition of success, and her future plans for Backstage Capital.