Early on in a startup’s lifecycle, raising funding is one of the main ways it not only grows its business, but also shows its credibility. Across startup hubs from Chicago to New York and Silicon Valley, funding and venture capital is often what propels a company into startup stardom.
In Chicago, hundreds of startups have raised venture capital. Crunchbase data shows that Chicago tech companies have raised $7.8 billion since 1999. But of that financing, very little has gone to Black founders, which already account for only 2% of all Chicago founders, according to a 2017 report from Black Tech Mecca, the most recent available data. And the problem isn’t isolated to Chicago.
A 2018 study from diversity-focused VC firm Harlem Capital identified just 105 entrepreneurs of color (not just Black founders) across the U.S. who have raised at least $1 million, totaling $2.7 billion. And keep in mind that these entrepreneurs raised this money over a number of years. In 2018 alone, U.S. venture capital funding topped $130 billion, according to Pitchbook.
For a localized look at the Black founders who’ve crossed the seven-figure investment threshold, Inno has put together a list of those who are currently building companies in the Windy City and have raised more than $1 million in funding.
According to Inno’s reporting, Chicago only has nine Black-founded startups that fit into that category. Inno defines “funding” as financing raised through institutional venture capital, funding from individual angel investors, convertible notes and accelerator-based funding.
Compared with the hundreds of Chicago tech companies that have raised many millions of dollars, the nine listed below show the glaring disparity in how funding is dispersed.
“People have different expectations of Black founders than they do of White founders.”
“The numbers aren’t big,” said Ablorde Ashigbi, the co-founder and CEO of Chicago startup 4Degrees, who appears on the list below. “It’s absolutely nothing to celebrate.”
Not only are there only nine Black-founded startups that have raised more than $1 million in Chicago, but the amount of funding they’ve been able to raise lags considerably behind some of Chicago’s most heavily-backed startups.
According to available data, the largest amount of capital raised by a Black founder in Chicago is $8.6 million, which belongs to cancer-fighting startup CancerIQ. To put that into perspective, Chicago startups raised a total of $2.2 billion in VC funding last year, including several $100 million+ rounds from startups like Tempus, VillageMD and Phantom Pharmaceuticals. Tempus, led by Groupon co-founder Eric Lefkofsky, alone has raised more than $600 million to date.
Building a startup is challenging for anyone, but building one as a Black person comes with its own set of struggles. Black founders, and especially Black female founders, are underestimated, judged and often dismissed.
“People have different expectations of Black founders than they do of White founders,” Ashigbi said. “If you talk to any Black founder in this ecosystem or comparable ecosystem, you’re going to get stories of blatantly racist treatment.”
(Funding information included on this list was compiled from Chicago Inno’s reporting and startup data firm Crunchbase. Funding amounts listed as “>$1M” indicate that the startup has confirmed it has raised more than $1 million, but would not disclose the exact amount. Investors listed are the ones publicly shared.)
4Degrees, founded in 2017, is an artificial intelligence startup working to help people better leverage their professional network. The AI tool helps users create better connections and build stronger professional relationships. Focusing initially on industries like venture capital, private equity, commercial real estate and investment banking, 4Degrees’ platform identifies the right connections that users should focus on, and helps strengthen those relationships over time. The startup recently received backing from Harlem Capital, a New York VC firm known for investing in diverse founders.
Co-founder of 4Degrees $ Raised: >$1M Investors: Harlem Capital, Techstars, Pritzker Group Venture Capital, Chicago Early Growth Ventures, Zelkova VC, Techlete Ventures & Lofty Ventures
Marcus Cobb Co-founder of Jammber $ Raised: $5.7M Investors: Revolution Rise of the Rest Seed Fund, Revolution, Joe Galante, Clarence Spalding, InCrowd Capital & Project Music
Jammber creates FinTech products that help content creators get paid faster and more accurately for music streaming or any other online content. Founded in 2013 and co-headquartered in Chicago and Nashville, the startup has created a global payment platform that facilitates 1-to-many payments helping creators pay their collaborators and teams while tracking value contribution data along the way.
Co-founder of Rheaply $ Raised: $2.5M Investors: Hyde Park Angels, Concentric Equity Partners, M25, Techstars Ventures & Walter A. Winshall
Rheaply allows clients to sell, rent and donate items they no longer need. The startup sells its service in a subscription model to businesses and organizations across industries, including tech, government, retail and healthcare. In March, Rheaply raised $2.5 million in a seed round led by Chicago-based Hyde Park Angels. More recently, Rheaply teamed up with the City of Chicago to help source personal protective equipment (PPE) for local nonprofits and businesses as the city gears up to reopen this summer after shutting down due to Covid-19.
Founder of Flamingo $ Raised: >$1M Investors: New Stack Ventures & David Capital Partners
Flamingo helps apartment communities stand out with an all-in-one resident engagement platform. The startup helps its clients plan and host interesting events for tenants, build easy-to-use mobile apps, set up resident rewards programs and automate referral programs, among other things.
Founder of 4D Healthware $ Raised: $4M Investors: Esther Dyson
4D Healthware uses health data from wellness and medical wearable devices like Fitbit, blood pressure cuffs, scales and glucometers to help people with chronic conditions monitor their health more effectively, with information sent to your phone and computer that’s read like warning lights on a car dashboard. In March, the startup developed a tech-based method to care for COVID-19 patients at home. The solution includes live clinical wrap around care. It is tech-enabled human touch.
Kimberly and Tim Lewis
Founders of CurlMix $ Raised: $1.2M Investors: Sonia Nagar, Jeff Weiner & Arlan Hamilton
CurlMix, founded in 2013, makes beauty products for women with curly hair. The startup calls itself a “clean beauty brand” because all of their products feature 12 ingredients or less, and include natural oils from flaxseeds, grape seeds, aloe vera and avocado. The brand uses a four-step system that helps curly-haired women “achieve the wash and go of their dreams.” Last year, CurlMix appeared on an episode of Shark Tank, receiving a $400,000 offer in exchange for 20% equity from longtime Shark Robert Herjavec. Ultimately, CurlMix turned down the deal.
Feyi Olopade Ayodele
Founder of CancerIQ $ Raised: $8.6M Investors: Impact Engine, 1776 Ventures, Rock Health & HealthX Ventures
CancerIQ makes a software for healthcare providers that allows them to identify patients who have a genetic predisposition to certain cancers. Physicians can use CancerIQ to either catch a patient’s cancer early or prevent it altogether. CancerIQ originally got its start when it competed in the University of Chicago’s New Venture Challenge in 2013, but it didn’t fully commercialize until 2015.
Jeffrey Wright & Daniel Rogers
Founders of A.M. Money $ Raised: >$1M Investors: Lightbank, Octavia Impact, Michael Alter, Don and Liz Thompson, Shayne Evans & Tim Knowles
A.M. Money provides loans for both undergraduate and graduate students, and uses unconventional factors to decide whether students qualify for a loan. Unlike other lenders, A.M. Money doesn’t require student borrowers to have good or substantial credit, nor does it require them to have cosigners. Instead, A.M. Money gives students loans based on how long they’ve been pursuing a college education, what classes they take and the grades they get in those courses.
Co-founder of Abode $ Raised: $1.5M Investors: Six Thirty, Chicago Early Growth Ventures & Techstars
Launched in 2017, Abode gathers all the things that home buyers and sellers need, including realtors, properties, mortgage companies inspectors and attorneys. The platform uses data analytics to pinpoint the best realtor to negotiate home sales as well as pair users with digital mortgage companies for each user’s situation.