Getting Ahead (One Day At A Time): Backstage Capital Founder Arlan Hamilton
Backstage Capital founder Arlan Hamilton on starting a VC firm that looks out for underestimated (aka underrepresented) entrepreneurs.
"Representation is vital, otherwise the butterfly, surrounded by a group of moths, unable to see itself, will keep trying to become the moth.” It is these words by acclaimed poet Rupi Kaur that came to my mind when I saw Backstage Capital founder Arlan Hamilton take centerstage at the 2019 Sharjah Entrepreneurship Festival in November last year.
Of course, it’s easy to see why this bit of poetry resonated with me as Hamilton both wowed and charmed the audience at the event- as a black woman who has built a venture capital (VC) firm from scratch in the US (indeed, she was homeless at one point during her journey to launch the company), Hamilton is a welcome departure from the legions of white men that are particularly predominant in this space. Add to that the mandate she has for her enterprise, which is to invest in underrepresented founders in the States (think women, people of color, etc.- folks like Hamilton, to put it simply), only serves to boost her particular appeal in the entrepreneurial community, and especially so with the minorities in this realm.
And while Hamilton may have had to go down a rocky road to start up her company, she has since proved that she was on the right track all along- the Backstage Capital website today proudly declares that since its launch in 2015, it has invested over US$7 million in more than 120 companies led by underrepresented founders. Hamilton prefers to call them “underestimated” founders- according to her, that’s a better description of what makes them such a great, untapped investment opportunity. “That’s what every investor is looking for, something that's going to come out of nowhere, and surprise and over-perform,” Hamilton says. “And I think that's what you get when you have someone who is constantly being counted out, constantly being judged by how they look, when they walk in a room. We all know what that feels like. And everybody knows what it feels like at some point, no matter what their privilege is. But if you have someone who is constantly feeling that way, you either have someone who goes inward and kind of folds into themselves, or you find someone (which I found over and over again in our founders) who has something to prove. And to me, that is an exciting person to be behind, if they have vision, if they have heart, if they can execute, if they have discernment, and if they have something to prove- you're going to have someone that reminds you of me.”
Hamilton’s confidence here is radiant, and I feel it’s fair to say that it’s a result of all the experiences she has had on the way to building Backstage Capital. Note here that Hamilton was an outsider to the investing world prior to her current role- she did, however, have an entrepreneurial stint as the founder and publisher of an indie magazine, and she also had quite a few years of experience under her belt as a tour manager for various musical performers. But she was interested in the VC space, and as such, she taught herself how to start a fund of her own, especially after she learnt about how little funding goes to anyone in the US who is not -to put it quite bluntly- a white man. “My networks have always been broad, and I've always had all types of people in my world, and so it wasn't something against white men,” Hamilton recalls. “It was just that it didn't make any sense. So, I decided to start asking around, getting other people's opinions, and seeing how founders are being treated. And that research was enough to let me know that a fund that specified, as a thesis, investing in the others would be needed, welcomed by the founders, and could quite possibly give someone an edge if they were to do it. After a little bit of soul searching, I decided I was going to give it a try.”
To say that Hamilton had a tough task ahead of her then is almost certainly an understatement, and she admits to having had several days where she questioned herself on why she was doing all this, or whether all the work she was doing was even worth it. “But every time, it always came back to the same answer that this fund should exist,” she remembers. “And it was almost like a calling. It was almost like something was telling me to do it, and, sort of, me grasping for it... It made so much sense to me that a fund like this should exist. I had also, at the same time, been telling other people, hey, this fund should exist. So, they could have started it- but they didn't. So, I thought, well, after all this time, maybe I'll keep trying, and I'll do it.”
And Hamilton did just that- Backstage Capital came into being with its first backer being a woman called Susan Kimberlinn, who Hamilton describes as “a product guru” that used to work at places like PayPal and Salesforce, and is known now as a prolific angel investor in the States. And since then, the company’s ascent has been palpable- today, Backstage Capital counts several noteworthy names in its list of supporters (these include celebrity investors like Chris Sacca, Mark Cuban, and Serena Williams), and besides its investment arm that has funded over 250 founders so far, Hamilton points out that it also has an accelerator program that is currently running in four cities across two countries. “I see at least 1,000 companies a year,” Hamilton says, before adding, “This year, actually with the last 12 months, with the application process, we probably saw 2,500 companies in a 12-month period. So, it's growing.” With its investments having ranged from $25,000 to $100,000, Backstage Capital is staying true to Hamilton’s vision of backing startups that are led by entrepreneurs falling in the “underestimated” category, but she also notes that they (and their offerings) also need to have a few choice characteristics that she keeps a keen eye out for. “Something that stands out is when the thing that you're working on feels urgent- why you, why now, why this?” Hamilton explains. “We've said this word a lot, passion, but it's more like, this is your destiny. You're following your destiny. You can't say that about all the companies that I see, and so, I'm always looking for that magic… It's a fire that's just right there in front of me that's undeniable.”
At this point, I ask Hamilton for tips she’d give entrepreneurs, and she replies, “Stay true to yourself. Be very authentic in your thinking… Be very honest with yourself too. Be honest about your numbers, Be honest about the potential of the company. Be honest about why you're doing it. Be honest about the people you're doing it with. Keep your mind's eye open, and don't just kind of settle in.” Now, the qualities that Hamilton looks out for in founders are traits that she herself possesses, and these are what have essentially helped her break into an industry despite all of the hurdles (societal and otherwise) that were in her way. Given that Hamilton has come from a position of little to no privilege, she has received a lot of praise for her achievements today- but she has also had to deal with detractors who seem almost too eager to pull her down, for no real reason other than, well, just personal insecurities. “When you're a person who has privilege, and you've had it your whole life, anytime someone who had to overcome more than you've had can go further than you can, or can do the same as you, it is a direct attack on who you are,” Hamilton says.
Backstage Capital founder Arlan Hamilton at the 2019 Sharjah Entrepreneurship Festival. Source: SharjahEF 2019
“And there are a lot of people who can have privilege, and see that and say, you know, logically, that doesn't have anything to do with me, and good for them, and good for me. But [for] a lot of people, all the tools they have in their tool shed is to be paranoid, and to be bitter and angry. They're going to find out what the faults in what you're doing. It's someone who has very low self-esteem. And it's almost like a pattern, it's almost textbook, you can see it. It's like someone who has to have the last word, or someone who has to speak over you, or someone who has to be right all the time. It's very specific. And you know where that comes from: you're trying to make me smaller, in order for you to feel bigger. And I don't think we, the oppressed, need to allow that. We don't allow that; we don't accept that. I say that you can send me the package, but I'm not going to sign for it. You can send it all day in my direction, but I'm not accepting it. And that's what you just have to kind of learn and understand that they're probably dealing with something themselves, and they're probably very limited [in what they can offer]. I often feel pretty bad for them, for people who find their worth in hurting others, downplaying others’ accomplishments, stealing from others’ thoughts. I tend to just kind of look over at them, and say it's a pity to be you, you know, inside.”
Hamilton’s thoughts should resonate well with entrepreneurs (or anyone else, really) who have had to go through their careers and lives in a world where the scales are not exactly tipped in their direction. Indeed, her whole reason for launching Backstage Capital was to create a world where people like her wouldn’t have to struggle so hard to find funds to realize their business dreams. (Indeed, with that being the paradigm that is governing Backstage Capital, Hamilton says that the overall goal for them as an enterprise is “to make themselves obsolete.”) At the same time, Hamilton is clear that while no one wants to go through tiresome challenges or unfair experiences in their lives, there are still valuable lessons to be learnt from these occurrences. “Sometimes, it's going to feel bad,” she says. “But, hopefully, you take those moments, and you learn from them, and you know how not to treat someone else. There's no magic pill for it, and you wish you could stop someone else from feeling that bad. The work that we do today, though, does make it that better for them, because they will get less of it than they would have.”
And for those of us going through the lowest of lows, Hamilton draws on her own experience during especially difficult times in her life to offer some respite, as well as some advice. “There's a lot of things I can say that are great to embroider, or put on a wall- there's a lot of things, like, keep going, keep striving,” she says. “But I think when someone is that low as I have been, one of the things that kept me going, besides just wanting to be there for other people, was curiosity. I wasn't ready to let the light fade yet. I wasn't ready to let the glimmer of hope fade yet. And even in the darkest times, if you can just keep your eyes open long enough to find that, and follow that, it gets you through the day. You're not trying to get to 10 years from now, you're not trying to get to a year from now, you're trying to get through just the day... And then sometimes, every once in a while, something really beautiful happens that keeps you going.” Now, that’s the thought process that has got Hamilton to where she is today- and it certainly bodes well for what the next leg of her journey will look like. As for the rest of us, the strategy we should adopt is clear: keep your dreams alive, and work toward realizing it- just one day at a time will do.