Inspiring Story on How Arlan Hamilton Muscled Her Way into Silicon Valley

Inspiring Story on How Arlan Hamilton Muscled Her Way into  Silicon Valley

Backstage in the greenroom of the podcast festival where she’s scheduled to appear, Arlan Hamilton is quietly singing the lyrics to Janet Jackson’s “Control.” She’d like to walk on stage as the song plays, but the festival crew has copyright concerns. So instead, she is shimmying offstage in her chair, half-humming the chorus under her breath: “I’m in control / Never gonna stop / Control / To get what I want / Control / I like to have a lot.”

“It was crazy to me that 90% of venture funding was going to white men, when that is not how innovation, intelligence, and drive is dispersed in the real world,” she tells me. “I had no background in finance, but I just saw it as a problem. Maybe it’s because I was coming from such a different place that I could recognize it.”

Three years ago, the then 34-year-old Hamilton arrived in Silicon Valley with no college degree, no network, no money, and a singular focus: to invest in underrepresented founders by becoming a venture capitalist. The story of how the former music-tour manager studied up on investing from her home in Pearland, Texas, and pushed her way into the rarified world of venture capital, scoring investments from the likes of Marc Andreessen and Chris Sacca, has become legendary in the industry. After making contact with Y Combinator president Sam Altman, she bought a one-way ticket to San Francisco. For months she stalked investors by day and slept on the floor of the San Francisco airport at night. She was broke. Finally, in September 2015, she got her first check, for $25,000, from Bay Area angel investor Susan Kimberlin, who believed in Hamilton’s vision that the Valley’s lack of diversity wasn’t a talent-pipeline problem as much as a resources problem: Diverse entrepreneurs needed money. With Kimberlin’s endorsement, Hamilton created Backstage Capital and began investing. Other funding soon followed, from backers including Slack CEO Stewart Butterfield and Box CEO Aaron Levie. This past June, Hamilton announced that Backstage had exhausted its first three seed funds, doling out between $25,000 and $100,000 to 100 startups in everything from beauty products to business analytics. And at all 100, at least one founder is a woman, person of color, or someone who identifies as LGBTQ.

Now Hamilton is gearing up for Backstage’s next chapter, a $36 million fund dedicated exclusively to black women founders, a demographic that’s glaringly absent in Silicon Valley: Just three dozen black women entrepreneurs, nationwide, have raised more than $1 million in venture funding. Hamilton calls her latest initiative the “It’s about damn time fund.” Her first two $1 million investments, to be announced before the end of the year, will go to existing Backstage portfolio companies. And that’s just the start. This spring, Hamilton will launch the Backstage Accelerator to foster early-stage startups with locations slated for L.A., Philadelphia, and London. She’s also laying the groundwork for a $100 million fund to provide underrepresented founders with even larger checks.

Every nascent VC is under pressure to demonstrate success—Hamilton even more so. Those in Silicon Valley who believe that the next Facebook will be created by a woman or person of color are watching her portfolio closely. Others view Backstage with more skepticism, seeing her funds as relatively inexpensive ways for investors to appear committed to diversity without having to do the hard work internally.

Hamilton shrugs it off. In an industry where privilege begets privilege—and at a time when racial justice in this country seems precarious, at best—she is claiming her seat at the table. “How much of a fist in the air would it be to just be obnoxiously wealthy as a gay black woman?” she wonders. “And [how powerful] to be able to help other people do the same?”

Entrepreneur Stephanie Lampkin had an engineering degree from Stanford and an MBA from MIT. But she couldn’t get a job at Google when she applied there in 2014. “They told me I wasn’t technical enough,” she says. Shortly afterward, she developed the idea for her startup, Blendoor, which sets out to eliminate bias in hiring practices through software that anonymizes job-candidate data and analyzes talent pipelines. She was soon accepted into a Stanford-run accelerator program, but struggled to persuade investors to back her efforts. “I went through the demo day, and nothing converted to a check.”

Advisers suggested that Lampkin, who is African American, seek out women-focused venture funds. There has been an explosion of angel syndicates and early-stage funds in recent years that target women entrepreneurs. But as Lampkin discovered, the founders in such funds’ portfolios are almost exclusively white or Asian. In the end, she shifted gears and looked for VCs “who understood the problem really well,” including Hamilton, who put $25,000 into the company in 2017. (Laszlo Bock, the former head of people at Google, is another early backer.)

“There are a lot of people who are talking about investing in women and founders of color, but when you look at their portfolios, it’s still majority homogeneous,” says Ellen Pao, a Backstage investor and activist who filed the landmark sex discrimination lawsuit against VC powerhouse Kleiner Perkins in 2012. She sees Hamilton as the real deal, capable of leveraging her network to identify talent that everyone else has ignored.

Though she is still a small player in a venture landscape awash with money, Hamilton has proven adept at connecting entrepreneurs to a robust network of top-tier VCs and executives from Airbnb, Google, and more. Silicon Valley runs on warm introductions, and Hamilton, by force of will, is now able to offer them. “Time and time again I’ve seen Arlan tell the world, don’t count me out. It’s her persistence that I’m most inspired by,” says Uncharted Power founder and CEO Jessica Matthews, whose seven-year-old renewable energy startup has raised more than $7 million, with backing from Backstage.

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