Bambee Founder on Fundraising Challenges for Black Entrepreneurs

Allan Jones' Journey with Bambee and the Challenges Faced by Black Founders

Allan Jones embarked on his entrepreneurial path after leaving college, dedicating ten years to mastering the intricacies of startup operations. This extensive learning culminated in 2016 with the establishment of Bambee, a Los Angeles-based company designed to support small businesses.

Navigating a Biased Ecosystem

Bambee functions as a dedicated HR department for smaller companies, ensuring adherence to governmental rules and regulations. However, Jones encountered difficulties securing funding, attributing this partly to the challenges of being a Black man within the startup landscape.

He described the experience as navigating a predominantly white, cisgender male environment, which could either cultivate valuable skills or generate significant frustration. Jones felt he was constantly at risk of facing unfavorable judgment.

Achieving Success Despite Obstacles

Despite these hurdles, Jones persevered, honing his skills and ultimately founding his own company. Bambee has since achieved Series B funding, raising $33 million – a substantial amount, particularly for a startup led by a Black founder.

The Stark Reality of Venture Capital Funding

A February study by Crunchbase revealed that in 2020, venture capital firms distributed $150 billion in funding. However, less than 1%, approximately $1 billion, was allocated to Black founders. This statistic underscores the significant difficulties faced in securing capital, even with innovative ideas and strong business acumen.

Early Career and the Foundation for Bambee

Jones began his career at age 20 with Helio, a startup focused on multimedia services for young people via mobile phones. This company was later acquired by Virgin Mobile.

He subsequently held product leadership roles at various companies before becoming CMO at ZipRecruiter in 2013. He departed this position after three years to launch Bambee in 2016.

The "Potential" Label and Implicit Bias

Despite his extensive experience, Jones often felt labeled as “the kid with potential” within Silicon Valley, not always receiving the same level of seriousness as his white male peers. He believed this wasn’t necessarily malicious intent, but rather a deeply ingrained bias influencing perceptions of his capabilities.

Bambee's Mission and Service Offering

Bambee specifically targets small and medium-sized businesses (SMBs) with fewer than 500 employees, many of which lack dedicated HR departments. This often leads to non-compliance with federal regulations due to a lack of expertise.

“Bambee’s objective is to provide every American small business with access to an HR manager,” Jones explained. “We achieve this by offering a subscription model – $99 per month grants access to our platform and a dedicated HR professional who acts as the company’s human resource arm, ensuring compliance.”

Unconscious Bias in Investment Decisions

Jones acknowledges that while overt bias may be less prevalent as his business grows, unconscious bias remains a factor. Investors might perceive investing in Bambee as riskier than investing in a startup led by a more conventional founder.

He noted that early-stage investors often favor entrepreneurs who fit a specific profile – white, cisgender males from prestigious universities – benefiting from an inherent presumption of competence and confidence.

Overcoming Bias Through Performance

Consequently, Black founders must work harder to overcome these biases. Bambee currently demonstrates strong performance metrics, with revenue in the tens of millions, 300% year-over-year growth, and thousands of customers across all 50 states.

The company employs 100 people and plans to double its workforce by year-end.

A Tendency to Focus on Negatives

Even with these positive indicators, Jones observes a tendency among some investors to emphasize potential drawbacks. He believes building a successful company while simultaneously battling ingrained skepticism presents a formidable challenge.

“With less than 1% of venture capital going to Black founders, the issue isn’t a lack of qualified founders, but a lack of belief in our potential at a significant scale,” he stated.

Seeking Aligned Investors

As Jones continues to develop Bambee, he prioritizes finding investors who share his vision and believe in the company’s potential. He readily disengages from potential investors who express negativity, seeking partnerships built on mutual support and confidence.

This approach will remain consistent as he prepares to raise his C round, a milestone reached by few Black entrepreneurs.

Anticipating Continued Challenges

Jones anticipates that the biases he faces will not simply disappear with the company’s success. He believes the nature of the bias may evolve, requiring continued vigilance and resilience.

“I’m prepared for the challenges that lie ahead in my Series C funding round, as I’ve encountered similar obstacles in previous rounds,” he said.

Confidence in the Future

Jones remains confident that his progress and unwavering belief in Bambee will attract the right partners to support the company’s continued growth. He is optimistic about building a thriving business and forging lasting relationships with investors who share his vision.

“We will successfully navigate these challenges and ultimately connect with the partners who are meant to join us on this journey.”