My Moral Compass: Venture Capitalist Arlan Hamilton is Amplifying the Talent and Power of ‘Underestimated’ Founders
By Stacey Lindsay
Take one look at Arlan Hamilton today—she’s the founder and managing partner of the impactful venture fund Backstage Capital, she’s graced the cover of Fast Company, she speaks at global sold-out events—and you’d be pardoned for thinking: She was a shoo-in for this success. She had loads of opportunities from a connected network. She earned an MBA from a prestigious university. Or simply: Her story follows the classic venture capitalist’s path to achievement.
In truth, it’s none of that.
Arlan Hamilton built every inch of her venture fund career by taking a road that no one has traveled. She relied on her wits and appetite. With no money and often no home for the majority of her adult life, she spent late nights at bookstores reading everything about the finance world. She cold emailed and called. She found ways to get in front of seasoned industry players to pitch her ideas. And she followed her intuition—an intuition that traces its roots back to her watching her community of smart, multitasking Black women get overlooked by the finance world—and world at-large—again and again. These women, of which less that 1 percent get any VC funding, are classically seen as underrepresented or financial risks. Hamilton sees them as the biggest opportunity out there.
These nuances explain why Hamilton is thriving. She considers everything and everyone. In 2015 she built Backstage Capital as a way to invest in BIPOC, women, and LGBTQ+ founders. Today the company has invested more than $7 million in more than 130 companies. Hamilton and her team have built a portfolio that echoes the modern, real, inventive world. They’ve created Green Room, a curated mix of education, stories, and behind-the-scenes information about the finance world. And most recently, they launched Backstage Crowd, a syndicate that opens up the world of VC funding to the masses.
Everything Hamilton does is unexpected, which is why it is so needed. This summer she released her book, It’s About Damn Time, which is an insightful read for anyone, in or out of the finance world, seeking a nudge to keep going. It’s filled with the wisdom you always needed to hear.
That’s the thing about Hamilton, which is so evident in the conversation we recently had with her. She gives energy to what matters.
A Conversation with Arlan Hamilton
In your book, you write about the “bizarre belief” that underrepresented founders only serve underrepresented customers, but in reality, they’re just as likely to capture a market that serves a large swath of the population. Furthermore, you write that women founders, LGBTQ+ founders, founders of color aren’t underrepresented, they’re underestimated, a term you attribute to the CEO, KG Charles-Harris. Would you expound on this?
When talking to investors, especially early on, and trying to explain what I wanted to do with Backstage Capital, and what I was eventually doing with Backstage, anytime I would say that I was investing in underrepresented founders—or Black founders, women founders—you would see [a look] in their faces, and their tone would change. It would become: Oh, you’re talking about the little people. People that I can be helpful to, that I can mentor, that I can write a check and check that off for the year. And that was the positive version. The lesser version was: They’re not even viable to have this conversation. I started thinking about this coming from not only people who already show signs of entitlement, but also people who were actually more earnest and more woke. So, I thought that maybe some of [the issue] is in the language. Maybe some of it is in what we are so programmed to think of when we hear the word “underrepresented.”
It’s the same issue I have with the word “minority.” Of course, it is literal that we are a minority. It is literal that we are underrepresented. But those words come with connotations that are debilitating. When you flip it to something, that makes it very clear that what you’re talking about is your competition, your fellow person, your fellow human who is in the arena with you. And in some cases, because they had to do so much to overcome that systemic bias to get where they are, they’re trajectory is most likely going to outperform your own if you don’t start to open your eyes as someone with privilege and see that we’re not talking about someone who needs charity, which has its own place. We’re talking about people who have deserved to be there the whole time and have been shut out.
Now, if you take that line of reasoning and you talk to someone with some sense, and then they still don’t want to back those founders, the only conclusion I can come to is that they don’t want the competition. They say on the streets, you’ don’t want this smoke. They don’t want this competition.
It is something I have thought about for a long time and KG summarized it perfectly.
There are likely many well-intentioned investors who want to be more equitable, but they may prevent themselves from doing so because they feel compelled to follow the conventional path, or the way things have always been done. Is there a universal element of your due diligence process that you feel would help the investing world be more inclusive and perhaps keep things from getting, as you write, “stale.”
This is something that I would love to dig into and create something out of. It would have to do with these markers, these indicators of potential; they’re being a new set of rules, a new set of guidelines, even if they’re unspoken. I think I, and a lot of us, have an advantage because we don’t have to train ourselves to think or see that way—because that’s already how we’re able to see things. But I admit that I am, too, pattern-matching. I admit that I am, too, just like these others, but I just have a different pattern from which to match. When I see a middle-aged Black woman multitasking—which is what I am today—that’s what I grew up with. Those were my heroes. Those were my people that I thought were the default and were able to do it. So absolutely, there are some general guidelines that start there and then go beyond.
You write that privilege is something that everyone has to some degree, and there is nothing wrong with it if you use it to help others. This feeds into your idea of Augmented Privilege, a term you coined. What is Augmented Privilege, and why is it important?
I’ll be forty this year. For thirty-five of those years, so about 85 percent of my life, I had a certain life. I didn’t have any money. I had very little access to capital. I was in a very specific place. I knew my place walking into a room, down to walking into a restaurant, into public transport, all of that. Then things started to change because I was grabbing at things with my bare hands, through the mud and the dirt, to get to what I was needing. It was never handed to me. So, I got to see, through working for other people and now being the principal, how people are treated. I got to see what power there is in already having money. I got to see how power is collected and then wielded.
I am in a really interesting, observational place now. I am like my own case study, seeing where I was, and now knowing what it’s like to wield power. Because I’ve spent 85 percent of my life not feeling that way, not having that perspective, it’s not something I’m in love with. It’s just happening, and I’m just playing it like a board game. But what I can do, because I am not intoxicated by it, is very methodically siphon that privilege, through access and proximity. Then I can bottle it and express it. I can articulate it and I can open it for it to be out in the ether, as if it were a wine. And I can, of course, share it. So, I think of Augmented Privilege as I wasn’t born into this club, nor did I work myself into it through schooling or networks, but I can put on the suit every once in a while. I got myself in.
So, it’s not that it [Augmented Privilege] is important, but rather the important part is what I do with it. If I were to just take it and keep it safe and protect it, what a waste that would be. What I am doing now, to be really harping on this metaphor, is bottling that into smaller pieces and handing those out—for the rest of my life.
So many things in your career and in your book speak to making an impact. One anecdote that stands out is when you discuss how you once sold a part of your personal investment percentage, a decision you made for the betterment of Backstage. You write that you’d like to retire wealthy but making sure that Backstage is healthy and able to invest in overlooked companies is more important. Do you see a future where this inclusive, equitable mindset is more common in the investment world?
I think it’s going to be forced for a while. This year is undeniable, in that point. Things have changed more so in the last six months than they have in the last six years. So, I think it’s going to be more acceptable. And there are so many followers in the finance world in that the acceptable thing then becomes the norm, at least for a period of time. I never think anything is going to last forever. It’s never going to last for decades and decades, because one day the underdogs are going to be the haves and the have plentys. So, there will be a new group, as it should be. It should be the fact that as Black founders find our way into getting more of what is already ours. And we should be saying, “well let’s make sure our Latinx friends have that same path. Let’s help them, and let’s talk about Native Americans, and et cetera.” So, I see it changing. I don’t know if it’s going to be ubiquitous, or something that is just a given. But I think the drastic change will be plenty for us to work with over the next few decades, and I’m very excited about it.
I say this definitely tongue-in-cheek, but I’m looking forward to the day when there will be more entitled Black people. I’ll be the first in line.
To learn more about Arlan Hamilton and Backstage Capital, visit: backstagecapital.com and backstagecrowd.com.
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