“I used to think I was so strange,” Hamilton said. “None of my friends were taking risks like I was taking. They had jobs with health insurance.”
Then she discovered the world of startups and was intoxicated by the potential those opportunities held.
“I was really excited about it. I was really hopeful, I said, “This is it, this is the thing. This is like the new frontier,’” Hamilton said. “Everybody has a chance and has a right,” she said, to pursuing their own business.
But then came another realization, explained Hamilton, speaking to a full-house last week in Seattle’s Capitol Hill office of The Riveter, a female-and diversity-focused co-working space.
She quickly discovered that woman-led enterprises don’t get a “fair shake.”
Hamilton, who is African American, decided to start what would become Backstage, a venture capital company to support women, minority and LGBT business leaders. So not only was she trying to sell herself as an entrepreneur, she was also pitching lots of companies run by women in a world where only 2 percent of VC funding went to female founders in 2017. Black women make up an even small portion, but Hamilton was undeterred.
“I like people who are underestimated,” she told the crowd. Amy Nelson, co-founder and CEO of The Riveter who is working with Hamilton’s firm at the co-working space’s new location in L.A., interviewed Hamilton at last week’s event.
Her moxie, determination and grit is personified in this tweet:
"My name is Arlan. I'm a 37-year old Black woman from Texas, based in LA. Four years ago, I was on food stamps. Today, I have built a venture capital fund from the ground up, and have invested in 100 startup companies led by women, people of color, and LGBTQ founders."✍?
— Arlan ?? (@ArlanWasHere) July 14, 2018
Where most investors saw CEOs who were too brown, gay or female to fit their model of a safe and sound investment, Hamilton saw potential.
But for more than a year, she struggled to raise money and was essentially homeless, reportedly sleeping on couches, in cars, motels and airports. What she lacked in cash, she made up for with grit and hustle.
Hamilton had not attended college. Her first job at age 15 was at a Pudge Bros. pizza in Dallas. She took phone orders, made the pizzas and performed other jobs.
“Soon I was doing the work of three people, essentially,” said Hamilton. “It was the first time that I understood that I’m going to do a lot of work for a lot less [money].”
She ushered Cirque de Soleil performances, was a security guard at a Stone Temple Pilots concert and worked her way into the music business in the early 2000s. She toured the U.S. in a van with a Norwegian punk-pop band. She booked and managed artists, including Toni Braxton.
Hamilton built an eclectic network of contacts and started reaching out, making her pitch for funding. She sent emails to folks she’d never met, pouring her heart out to them.
Then in May 2015, she attended the Venture Capital Unlocked program, a crash-course in startup investing run by Stanford University faculty and leaders from San Francisco accelerator 500 Startups. There she met investor and startup advisor Susan Kimberlin.
In September, Kimberlin took the leap with Hamilton, pledging her investment in Backstage. Kimberlin became Backstage’s first LP, or limited partner. She brought others onboard, including Joceyln Goldfein, a former Facebook director and startup investor, and Lars Rasmussen, lead engineer of the team that created Google Maps.
Less than three years later, Backstage has invested $4 million in 100 companies that are led by founders who are underrepresented in technology. In May, Backstage announced plans to raise a $36 million fund, with Hamilton tweeting at the time:
They're calling it a "diversity fund." I'm calling it an IT'S ABOUT DAMN TIME fund.
— Arlan ?? (@ArlanWasHere) May 6, 2018
Last week, Hamilton offered advice to other entrepreneurs in the Seattle audience. She reminded them that raising money is all about building relationships, that you might not get a “yes” for funding the first time you make your pitch to someone. She advised that if a funder keeps moving the goal post for what you need to accomplish before investing, they’ll never write you a check — and never intended to.
For her part, Hamilton is still hustling. Backstage only has three months of runway, which puts more money in play for investing, but provides a sparse financial safety net.
“I call myself the bootstrap VC. I wear the same thing every day. I don’t know why people think I’m personally so wealthy,” she said. “There is a lot of work that goes into Backstage.”
She’s optimistic that tech and startup leaders will soon be a more diverse bunch, and there’s data to back that dream. Black women-led startups raised close to $250 million last years — five times what they raised the year before, according to ProjectDiane, an initiative of digitalundivided, which supports black and Latinx female entrepreneurs.
“The tides are turning in general,” Hamilton said. “With more power this year — this year seemed very different — so maybe that means 2019 looks really different. That’s what I have to hope.”
Editor’s note: Hamilton’s unlikely journey into the buttoned-up and largely male-dominated world of venture capital is chronicled in Gimlet Media’s excellent Startup podcast, which you can listen to here.