Every year around 0.2% of business funding goes to Black women so last year when Joycelyn and I set out to raise £360k ($450k) whilst I had a very visible baby bump, we knew we'd have a serious fight on our hands...
At this years London Tech Week I was flicking through my notes and saw that a year ago we didn't know the difference between VC and angel investment. Under a year after attending events to learn about investment, in an environment where young black women aren't funded, we managed to smash our target and raise over £510k ($650) by our deadline. We even found ourselves in the position of saying no to some money that wasn't the best strategic move for our long term vision.
Now we've opened that door, we intend to hold it wide open for other founders who look like us.
We've had hundreds of questions from fellow underrepresented founders about the fundraising process so I'm writing this article to tell you how we did it and pass on tips we wish we had a year ago.
How Afrocenchix raised over $650,000 in VC and Angel investment as diverse underrepresented founders
May 2017: The idea begins to grow
We realised we needed a cash injection. Joycelyn and I were working on Afrocenchix with no salary. I was tutoring, contracting and generally side hustling to pay the bills and we were massively overstretched. We had our first advisory meeting with David McQueen (after a year of working to get his attention on Twitter) who encouraged us to raise investment and began on a basic pitch deck. David later invited us to join his Build Legacy group when it launched in 2018. Several of our angel investors came from this group.
February 2018: Pre Accelerator and Endless Meetings
We were selected for the FFWD London pre accelerator programme (YSYS were working with them to improve the diversity in their pipeline) and through this we had about 19 meetings with potential investors... but no money committed. We had a huge amount to learn.
Fortunately for us, Andy Davis, one of the mentors on the programme took us under his wings. He recommended books such as Venture Deals, Shoe Dog and The Facebook Effect and invited us to join 10x10, his group for Black entrepreneurs. We didn't yet know how important this would be.
We also met Arlan Hamilton at a Fireside chat and after asking an audience question she offered to speak to us afterwards. She connected us with two of her team who gave us feedback on our deck. This would later put us in good stead when applying for the Backstage accelerator.
March 2018: The Failed Crowdfunder
At this point we didn’t want to raise investment but needed a cash injection as product businesses are expensive to run and scale. After exploring loans and being quoted 20% and above, we decided to crowdfund.
We researched this approach and were told you need to put money behind a crowdfunder and have over 70% of the commitment before you even launch. We didn't have a marketing budget as all of our profit was reinvested into the company. We figured great products, loyal customers and an important mission and vision were enough. What could go wrong?
We launched with about 10 people committed to back an initial £500. Not the £15,000 we had been told be needed to kick things off. At first things were looking great, the campaign went viral and we raised £2500 in the first hours. It was featured on the Indiegogo site, backers from 12 countries pledged to support us and we were sure we'd hit our target.
Then it went quiet. And it stayed quiet. Our tiny team was still in the kitchen and busy running the company and we had no capacity to promote the crowdfunding campaign. We aimed to raise £25,000... After two months we raised only £6,657.
Now we had another problem. We already needed money to meet demand for our core range but now we had generated demand for our new products and promised them to the trailblazers who backed us and believed in our vision. We didn't raise enough to fulfil that promise so we had to speed up our fundraise.
In this time we also met CGV for advice. We later discovered that they ended up raising a fund so they could lead our all black angel round. As the saying goes, look for money you'll get advice. Look for advice, you'll get money.
April-July 2018: The Real Work Began
Everything up to this point was mainly research and preparation. Now we had our vision laser clear: we wanted to give every Black and mixed heritage person in the world access to our safe, effective products and scientific education.
We got focused. By this point we had a much better pitch deck after integrating feedback from all those meetings in February with the things we learnt from the Backstage team. Abadesi invited me to the Product Hunt Maker Goals beta platform, so I put it out there and got a few emails going with investors. More advice but no money. The advice was helpful in later securing money as it helped us improve our deck.
That spring we were laser focused. Failure was not an option but we didn’t have the warm introductions that people kept telling us we needed.
Joycelyn and I have always had to be scrappy. We didn’t have the network so we hustled. We hit every stage we could. We went to Cog X, Start Up Grind, The Pitch. Everything. Anywhere that there were investors and we could so much as ask an audience question to get their attention. I even pitched at Afro Tech Fest whilst breastfeeding my baby as we weren’t in a position to let opportunities pass us by.
July-Sep 2018: Focus
That summer we began having regular weekly catchups with Andy and tracking our progress on Trello. We recorded who we were speaking to, what we wanted from the conversation and what was committed. Knowing we had to update Andy was extra motivation to make sure everything was moving. Getting a clear no became as important as getting commitment. We needed conclusions, not platitudes.
We continued our PITCH EVERYWHERE approach. In some ways it was working... We won the KPMG Black Entrepreneurs award. We won The Pitch. We even travelled up to Birmingham (where we started Afrocenchix) for 4 rounds of a Midland wide competition and won Venture Fest WM.
Were we doing too much? Probably. We slowed down. The wins were validation that we had a good company, a strong vision and a killer pitch. Yet investors still didn't seem interested. Our frustration grew as we watched “pre revenue” White oxbridge male peers receive millions in investment (and watched many go on to quit/fail in their startups) whilst we were told “the market just isn’t big enough” or “the team lacks experience” despite the fact we’ve spent a decade changing a market valued at £4.2B in the UK alone.
Although we started at 19 with nothing but £50 each scrapped together from part time jobs at uni, our huge vision carried us through almost a decade of learning and developing to become the first brand for afro Hair to launch in all 9 Wholefoods stores last summer. Last month we were voted Best Natural Hair Brand in the BBFAs and to date we’ve sold thousands of bottles to customers in over 22 countries. We kept being told how amazing our product/team/pitch was and yet the money didn't follow.
Something was wrong and we couldn't fix it. Doors kept shutting in our faces. What we could do was focus in on the doors in front of us that were slightly ajar.
We examined the Trello board and our spreadsheet. We saw patterns - investors needed hard data on our place in a fragmented industry, but found it hard to navigate our data room (it was packed.)
So we arranged an investor evening with data stations. We invited all the serious investors and sent term sheets ahead of time. We created investment packs with a one pager of the investment proposition, the term sheet and further info. We laid out our prototypes of the new products and our awards as well as some good old refreshments as we figured hungry people will not invest in your project!
This helped. Some of our investors were just reassured to speak to others considering the proposition. Almost everyone used the data stations where we talked them through our data room and Gary, one of the committed angel investors, was super excited and he had a tonne of ideas. Again, we didn't know how important this would be.
Sep-Oct 2018: The Deadline and WeWork
I was due to give birth in October and was eager to close the round before I went on leave so that our overstretched core team of 3 wouldn't become a team of 2 but could hire and grow.
We wanted to share what we were learning and make it easier for the next generation of founders so we petitioned the Mayor's office to start a fund for underrepresented founders as part of the Where are the Faces campaign, and spoke at the WCAN event at Google on raising to share the reality.
During this busy time we were up to £200k committed but no term sheets had been signed. Whilst considering the investment, Gary who worked in a WeWork office, forwarded a link for the WeWork Creator Awards. The deadline was a couple of days away. Joycelyn was on holiday so Nadia, employee number one, and I had a lot of work to do and I had investors to chase. Plus we'd decided to stop doing competitions and focus on angels. I told him we probably wouldn't win something so big and maybe we'd look next year. He told us he thought it was worth a shot. So, against all reason, I cleared an afternoon from my diary to do the application, tweaked our deck to fit the requirements and Nadia edited down our crowdfunding video to meet the application criteria.
We forgot about it until weeks later when Joycelyn and I were invited to the semi finals. We prepared a pitch, sent over documents for due diligence and spent the whole day at WeWork trying to get to the main stage. We thought we probably wouldn't win but it would be great PR. The other founders we met were great and when the room was split into two groups, we thought it was the end of the line for us...
As you probably know, we made it to the final. We had a great pitch deck as we were working on it for so long. We had a good video because we'd crowdfunded (or tried to.) We had our pitch perfect because we had done it so many times. We had our documents ready for the due diligence process because we were going through it with angels. When the amazing WeWork Opportunity arose, all of these things meant we were ready to seize hold of it and show our best effort.
The final was on my due date and we weren't sure if my bump would get in the way of the judges hearing our pitch. We'd had a few potential investors make an issue of my pregnancy and it was beyond the point where baggy clothes would help. After reading the WeWork values I was sure they wouldn't discriminate and I could tell my baby was coming on the Saturday, not the Thursday.
That Thursday, Joycelyn and I prayed backstage as the event opening music played. I took to the stage with Joycelyn ready to jump win if my waters broke, and, after being grilled by the judges, we were beyond shocked to win $360,000!
Nov 2018-April 2019: The Close
Business isn't all glamourous. The day after our win, Joycelyn spent hours in the kitchen making products to fulfil orders. I spent the day working from my bed with my phone ringing all day with investors, our lawyers and press. That's a story for another time. All I'll say now is that the angels who were on the fence either became a yes, or we told them it was a no. We were able to raise £60k from a small selection of black angel investors.
In this crazy period, WeWork flew Joycelyn to New York and she competed against winners from around the world and secured our place at the LA Global Finals where we won a further $180k convertible prize from celebrity judges Ashton Kutcher, Gary Vee, Kristen Green and Sean 'Diddy' Combs. We were also selected for the inaugural Backstage Capital accelerator from over 1800 applicants.
It took months to close the round and the full funds didn't arrive until April. That's about 6 months from signing the first term sheet to receiving the cash. If it wasn't for the angel investors swiftly buying shares, that could have been a disaster.
Where are we now? We're working on raising £3-5 million in late 2020. As fundraising as take such a long time, we're already having conversations with several of our top choice investors.
5 Tips for raising investment for underrepresented founders
1. Clarify your vision - do you need to raise?
VC isn't for everyone. Even Angel investment isn't necessarily the best route. Research the terms and speak to investors but first set out your vision and roadmap. If your aims are global, you will likely need investment. If you can achieve your mission by reinvesting profits then that is the best route to take. Fundraising is draining and time consuming, only do it if you have to.
2. Record your goals and set deadlines
Having the Trello board was invaluable as a way to visualise our progress. I initially thought it was a waste of time as we already had a spreadsheet, but I did set it up to get Andy to stop asking me questions. Now our team lives on Trello as it's so easy to see where you are and put information in the most useful places for collaborative working. Andy kindly put together this example Trello board for anyone currently raising investment.
Using Product Hunt Maker Goals and writing down the aims in our strategic documents and personal journals helped too. When you record goals you are more likely to achieve them.
3. Give to the Community
We've always tried to help others to rise up and grow with us as we progress. This attitude meant that people wanted to help us and without that community support, we couldn't have achieved our goals. We found advice, guidance and support in YSYS, 10x10 and Building Legacy.
4. Be visible
The invaluable advice we got from Andy Davis, Sharmadean Reid, David McQueen, Arlan Hamilton and others, was only available to us because they knew we were growing the company and raising investment. Everyone knew we were raising. We've had some criticism over this approach but in a system that works against us, underrepresented founders need to make themselves seen. When you do the work to be visible, things start to happen.
5. Have transparent term sheets
Our investors were all happy with our term sheets because they were fair. More than fair, our lawyers asked if we were sure we wanted to promise so much. We were inspired by the Spark Toro approach and figured that if we were fair to our investors, they would be fair to us. If we rewarded them as we grew then there ws no reason for undue pressure to exit in a way that compromises on our vision and values.
We hope that helps! If you want to join us in making our global vision a reality, check out our job specs. If you want to support our vision, please buy our products and tell a friend to tell a friend!
Thank you to Andy Davis, David McQueen, Sharmadean Reid, CGV, our wonderful angels, The WeWork Creator team, The Backstage Team and above all our customers who are making this dream a reality.