It’s no secret that Wisconsin continually falls behind peer states when it comes to attracting venture capital. When it comes to getting founders of color connected to VC opportunities, the stats are even more dismal. Only about 1.2% of all VC funding in the U.S. went to Black entrepreneurs in 2021, according to Crunchbase.
That’s the problem Northwestern Mutual’s Black Founder Accelerator seeks to address. Launched in 2021 with the help of Milwaukee-based gener8tor, the 12-week program helps Black entrepreneurs in the areas of fintech, digital health, insurtech or data analytics by providing them the opportunity to pitch their business to over 70 different potential investors. Each startup also gets a $100,000 cash investment and mentorship from a Northwestern Mutual executive mentor.
During the summer of 2020, following the murder of George Floyd, Milwaukee-based Northwestern Mutual began to look at the different ways it could further racial equality. One obvious way the company could do that was through entrepreneurship, said Craig Schedler, managing director at Northwestern Mutual Future Funds.
“Black entrepreneurs are frequently left out of this viable and most vibrant source of funding, which is venture capital,” Schedler said.
The team at Northwestern Mutual prioritized having a more intentional accelerator focused within the industries the company already invests in. That way, they could also provide the mentorship often needed by new entrepreneurs.
“We felt good about the fact that we decided to focus on the areas we know best. That’s been a huge success for us in that regard because we really can provide specialized expertise,” Schedler said.
This year’s Northwestern Mutual Black Founder Accelerator cohort includes: Pagedip of Boulder, Colorado; Pruuvn of Atlanta; SnapRefund and Stimulus of Philadelphia; and Xcellent Life of Lexington, Tennessee. Milwaukee startup Tip a ScRxipt is a past participant.
Northwestern Mutual uses a variety of metrics to monitor the success of the accelerator, including how much follow-up funding a startup has raised, how much their teams have grown and how close they are to going to market.
“We monitor very closely how much venture capital each of the companies is able to raise. We’ve had great success in the number of companies that have been able to raise over $500,000,” Schedler said. “It’s pretty close to two-thirds. For us to have that success in the first year, we view as a real proof point of the program.”
In the future, he hopes the accelerator can become the premier program for Black entrepreneurs in the Midwest.
The Northwestern Mutual Black Founder Accelerator is not the only way founders of color can find VC opportunities. A newly launched organization, VC MKE, is serving as a connector between entrepreneurs and VC funds from across the country.
Tarik Moody, director of digital strategy and innovation at 88Nine Radio Milwaukee, serves as one of VC MKE’s five founders.
Rounding out the rest of the organization’s leadership team is Dana Guthrie, managing partner at Gateway Capital; Ed Javier, entrepreneurship program director for the Wisconsin Economic Development Corp.; Maggie Fernandes, software engineer at MacGregor Partners; and Que El-Amin, co-founder of Young Enterprising Society.
The group first began discussions at the start of the year surrounding venture capital in the Midwest and how opportunities for founders of color are lacking.
“The Midwest is kind of flyover country for every type of founder, and when you add in BIPOC, people of color and women, it’s even worse. We realized cities like Nashville, Pittsburgh and Atlanta were really trying to change the narrative and change the investments in their respective cities,” said Moody.
The group thought Milwaukee was behind the curve, leading to the creation of VC MKE. The organization provides opportunities for founders to network and meet one-on-one with national VC funds. VC MKE’s first event was held this past June during Summerfest Tech. Approximately 30 founders and 20 investors from across the country came to the inaugural event, which included an investment dinner and one-on-one interviews.
“It surprised me. It exceeded my expectations,” Moody said of the event. “The initial feedback we got was positive on both the investors’ side and the founders’ side. Just to have this in Milwaukee was a huge step forward.”
Moving forward, VC Milwaukee will continue to operate as a yearly event. The metrics VC Milwaukee is keeping track of include how many out-of-state investors come to the event and what segment of the market each startup covers.
“These founders are in business just like any other founders. This is not for charity. This is for investment,” Moody said. “They have good ideas, they have a good target market and all the same pieces that a white founder has. I don’t want these efforts to be looked at as charity.”
