How Dawn Dickson Overcame the Bias of Venture Funding
When you break down social barriers, everybody wins, or perhaps this is better said as everybody has the same chance to win. The process has earned the name “leveling the playing field” for a reason.
In the US, the process of raising capital remains one of the last bastions where you can see extreme bias. It’s hidden and tucked away in term sheets that are not available to the public, but recent studies have shed light on the issue. It’s no secret now that startup funding is heavily biased and that problem is particularly acute in venture capital funding.
Traditionally, venture capitalists predominantly invest in well-educated white men, and this is a bias that needs to be broken down because not only is it unfair, it’s also bad for business. Opportunities abound in the US economy, and the classic white male from Stanford cannot possibly build every company for our country.
At StartEngine (an equity crowdfunding platform of which I am the CEO), we are breaking down the barriers to raising capital and enabling entrepreneurs of all types to raise capital from the crowd and achieve their dreams (a second disclosure: Hacker Noon successfully raised over $1M on our platform this year).
The story I’m telling today is about Dawn Dickson, who is the founder and CEO of PopCom, an innovative vending machine and kiosk technology company. Her plan is to disrupt retail and how adults purchase items only available in pharmacies, liquor stores and dispensaries (i.e. what if you sold alcohol or prescription medication through a vending machine?). Dickson plans for PopCom to use blockchain technology to allow the company’s solution to be trustworthy and secure and make sure that the controlled goods are only sold for their intended recipient.
I met Dickson in person at a business conference StartEngine threw in Los Angeles a few weeks ago, where I had invited her to give a keynote presentation, and she is a real leader, one who with the right capital in hand, can achieve great things.
However, how is she supposed to get the capital she needs to grow her business as a black woman? That question is ingrained in the venture capital bias that we first began discussing above.
Digitalundivided’s demographic study ProjectDiane reveals just how little capital black female founders raise, and the results paint a stark picture.
As of 2017, there were 6,791 funded startups with a female founder, and less than 4% of those companies were led by a black woman. For context, there are roughly 157 million women in the US, and black women make up 14% of the female population in the US.
Furthermore, since 2009, black women have received $289 million in angel/venture funding, which represents just 0.0006% of venture funding raised for all tech companies in the same period ($424.7 billion).
The numbers reveal a powerful bias. It’s worth noting that part of the disparity in funding is due to the fact that there are fewer black women starting companies than is proportional to their demographic, but the disparity worsens when looking at the number of dollars committed, which suggests that there is VC bias at play as well here.
So, if you are a black woman, where do you go for funding? PopCom’s Dawn Dickson knew the numbers, so she opted out of knocking on the doors of venture capital firms. Her existing investors also did not want to invest any more money in the new round.
Being a hard-charging entrepreneur, she decided to raise the money directly from her community and from the people who care the most about her mission. And that’s where her connection to me, and to StartEngine, begins.
On December 19, 2018, Dickson launched a $1M campaign on StartEngine. Within the first month, she had raised $310,000 and by the beginning of March, her campaign had reached $682K in funding. With a growing press interest around the offering, Dickson appeared on the Breakfast Club on March 11, a nationally syndicated radio show, and within a week of the interview, Dickson raised the final $300K+ to reach $1M.
In 122 days, PopCom’s campaign passed $1M in funding, and the offering was oversubscribed with eager investors, waiting to get off the waitlist (the legal maximum raise amount for Regulation Crowdfunding is $1.07M).
The element of this story that I find remarkable is the ease with which she was able to raise that money. There was no one slamming the door in her face or giving the classic rejections of Silicon Valley, such as “your business is at too early a stage” or “you don’t have a lead VC investor.”
Dickson broke a barrier that seemed as big as The Wall at Westeros’ northern border. Raising capital is critical for entrepreneurs: how can you grow a business if you don’t have the money to fund its development? This was true for Steve Jobs, for Mark Zuckerberg, for Dawn Dickson, and for any other founder building a business from scratch.
With the decision to bypass venture capital, Dickson has shown the way for everyone, her friends, community, and all women of color in the US, that there is another way to fund your startup and that 0.0006% of VC capital just isn’t good enough.
This is a true revolution, and Dickson is at the forefront of it. She is one of the first 40 black women to raise $1M or more in the US when she raised her first $1M for PopCom in November 2017, and with this raise, she becomes the first black female founder to raise over $1M in a security token offering.
Her raise is a big win for PopCom, for funding equality and for proving that equity crowdfunding is a viable funding model for entrepreneurs everywhere.