By Ryan Velez
For many people, the best way to end up with money at the end of a venture is to have money in the beginning. This may sound a bit defeatist, but it’s a reality. Entrepreneurship is a way for Black people to get ahead via starting their own businesses, but they still need that infusion of capital to get their concepts off the ground. Black Enterprise recently compiled three Black business experts to get their insight on ways to fuel your business with seed money.
For serial entrepreneur Michael Lythcott of Uplift Equity Partners, it all begins with your own network, even if this means working with your family and friends. “You have to start within your own personal circle of friends,” Lythcott said. “I had to go back to my friends and family members and beg them for the money.”
Lythcott said it was the capital he raised within his own inner circle that kept him going on days when he wanted to quit the business.
“There were days when everything [wasn’t] going according to plan and I wanted to throw in the towel,” Lythcott said. “My investor, who is wealthy, was going to be fine but I just couldn’t go back to my friends to tell them that I’d lost their money.”
Ita Ekpoudom, the founder and CEO of Tigress Ventures, applies a similar mindset to women. “Other women investors want to invest in other women,” Ekpoudom said. One story she shares is that of Amanda Johnson and KJ Miller, founders of Mented Cosmetics.
“Johnson and Miller, both Harvard University graduates had pitched Mented Cosmetics, their cosmetics startup at a competition. They didn’t win.
A friend, Ekpoudom said, called to tell her about how the two female founder’s business was misunderstood by the investor-judges. Ekpoudom, who graduated from Princeton University, connected with Johnson and Miller.
While the business wasn’t at the level Ekpoudom could invest yet, she said she was able to connect the founders with another friend who advised and helped them weigh the decision of applying to Y-Combinator, a seed accelerator that has funded companies like Airbnb, Dropbox, and Stripe.”
Ron Busby, president of the U.S. Black Chambers of Commerce, adds that it’s important to reach out to a bank as well, preferably one that’s black-owned. In 1994, there were 54 African American-owned banks according to the FDIC. Now, there are only 21, according to Busby.
“These banks were created to serve you,” he said. “You need to start thinking about a way for the bank to serve you,” he said. “Go to a black-owned bank in your region and open an account there.” These assets total approximately $4.7 billion or approximately 0.43% of black America’s $1.1 trillion in buying power, according to the U.S. Black Chambers of Commerce.